Regent Inns cuts dividend after bar sales slump

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The Independent Online

There was further sign yesterday of the strains being felt in the high street pubs sector as Regent Inns, the owner of the Walkabout bars, cut its dividend as it revealed a drop in sales.

There was further sign yesterday of the strains being felt in the high street pubs sector as Regent Inns, the owner of the Walkabout bars, cut its dividend as it revealed a drop in sales.

Regent yesterday said it would halve its final dividend for the year to 3 July 2004. That decision sent the group's shares down nearly 13 per cent.

The dividend cut follows a profits warning from the company in April. Regent shares have fallen nearly 40 per cent since then and yesterday closed at 38p.

Like-for-like sales in Regent's branded pubs, which include the Jongleurs venues, dropped by 5.4 per cent over the past year.

While the group enjoyed a strong rebound in sales during Euro 2004, when like-for-like sales grew 15.2 per cent, this has not been enough to offset the continuing malaise. In the six-week period prior to the start of the tournament, like-for-like sales were down 3.5 per cent.

But despite the current trading conditions, Regent did say it still expects to meet current City forecasts for profits. Investors will instead feel the pinch on their dividend payout.

"The impact of Euro 2004 was a more significant contributor to overall performance than had been forecast and consequently masked the underlying difficult market conditions. The board no longer believes it is appropriate to contemplate a dividend at previous levels," the company said. The board will recommend a final dividend per share of 1.68p against 3.36p in 2003.

JD Wetherspoon, a rival operator, issued a profits warning at the same time as Regent in April, and this week issued a second, citing competition from supermarkets and difficult trading.

High street chains are struggling against a glut of over-capacity and are having to discount their prices to entice customers. This has damaged margins and has come as costs, particularly wage bills, are rising. Regent yesterday said pricing and promotional activity had resulted in "materially lower profits" this year.

Regent has abandoned its expansion plans for Walkabout, and has said it will get rid of some of its worst-performing venues. It yesterday warned of an impairment charge in its 2003-04 results after selling 14 venues that have been performing poorly.

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