Eldridge Pope slumps after pubs profits warning

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The Independent Online

The Gloom in the pubs sector continued yesterday as Eldridge Pope became the third pub company this week to issue a profits warning after a slump in drinking at its high street bars.

The Gloom in the pubs sector continued yesterday as Eldridge Pope became the third pub company this week to issue a profits warning after a slump in drinking at its high street bars.

Following news on Thursday from JD Wetherspoon and Regent Inns that their large, high street venues were seeing desperate trading conditions, Eldridge said that like-for-like sales in its bars were down 11.3 per cent in the past six months. This means that profits for the year are likely to be "materially below" current expectations. Shares in Eldridge yesterday fell 9.5p, or 5 per cent, to 163.5p as analysts slashed their profit forecasts by some 30 per cent.

Echoing the words of Wetherspoon and Regent, Susan Barratt also confessed to the problem of overcapacity on the high street. "It is pretty tough out there.... It is very competitive and pricing is paramount," Ms Barratt said, who promised further aggressive price and promotional activity to attract new customers.

"You can't get away from pricing in this business. But you have to target it so that you get additional customers rather than giving a discount to your existing customers. The pub industry traditionally hasn't been very sophisticated at that."

Eldridge is, however, suffering its own unique problems in addition to the general malaise affecting high street pub operators. The company's inns have also fallen out of favour, with like-for-like sales down 3.7 per cent, mainly on slowing sales of food.

The 167-year-old company, which started out as a brewer, is also trying to sell off five underperforming bars, but has yet to find a buyer. The dire like-for-likes did not include the figures from these five bars.

Ms Barratt said the group would consider offers for some of its other leasehold properties.

Of its 152 pubs, 109 are managed pubs where Eldridge absorbs all the costs of running the business. In its 43 pubs where tenants are in control, like-for-like sales were up 4.1 per cent.

Consolidation in the pubs sector is now looking ever more necessary given the current state of trading.

Eldridge, in which the Pope family still has a 30 per cent share, has already rebuffed one takeover offer last year. This was thought to have been from its rival Wolverhampton & Dudley. The pubs entrepreneur Michael Cannon, who recently increased his stake in Eldridge to 22.3 per cent, is also believed to interested in buying the group.

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