Regent Inns, the operator of the Walkabout pub chain, yesterday added further gloom to the pub and bar sector, as it blamed the consumer slowdown and the smoking ban for its unexpectedly poor performance.
The group, which is in bid talks with a number of private equity and trade buyers, announced it would sell off non-core assets in order to reduce its £80m debt mountain. Executive chairman Bob Ivell said the group would not pay a dividend for the second year in a row.
The company, which also runs the Jongleurs comedy club chain, reported a 63 per cent drop in pre-tax profits to £825,000 for the six months to 29 December. Like-for-like sales fell 3.8 per cent in the 26-week period, a worsening from the 1 per cent fall in the first 14 weeks.
Mr Ivell said consumers were feeling the pinch from mortgages and rising household bills. "We have seen a bit of a downturn with consumers at high-street retailers and bars. We are all finding it more difficult," he said.
The cold weather had also had an impact as smokers were less likely to want to step outside for a cigarette. "As soon as the weather changes and it becomes cold and wet, it becomes more difficult. The ban has a greater impact than people felt it would."
The group is to sell off eight freehold pubs with a book value of about £25m on a sale and leaseback basis in addition to seven or eight unbranded pubs.
Regent told the stock exchange last month that it had received a takeover approach. It is understood to be in talks with private equity firm Alchemy Partners and Novus Leisure, the owner of the Tiger Tiger brand, along with a number of other parties.
Mr Ivell said the talks were ongoing and "may or may not lead to an offer or offers being made for the entire share capital of the company".
Analysts said the figures were disappointing. Although the Rugby World Cup boosted sales in October, trading deteriorated in November and December. Investec Securities said it was downgrading its estimates for 2008 and 2009 by 30 to 35 per cent. The stock has underperformed the travel and leisure sector by 75 per cent over the past year.
Other companies in the sector, including London Pride brewer Fuller, Smith and Turner and Greene King have also blamed the smoking ban and the effects of higher interest rates on spending for slower sales.