Regent Inns ousts top two directors

Regent Inns, the struggling pubs group that has issued three profits warnings this year, yesterday sacked its chief executive and finance director, four days before its full-year results are due.

Regent Inns, the struggling pubs group that has issued three profits warnings this year, yesterday sacked its chief executive and finance director, four days before its full-year results are due.

Stephen Haupt and Simon Rowe were ordered to leave immediately, four years after they were hired to turn around the company. Both were on a one-year contract and are likely to receive compensation for their abrupt departure.

The move leaves the group without executive directors during one of the most challenging environments for pub operators. JD Wetherspoon last week warned its profits would be hit for the next two years because it needed to lower its already cheap prices.

The company refused to give any explanation for its sudden decision but said Peter Savage, its chairman, would take up a "part-time" executive role. Its other non-executives are Nigel Potter, the former chief executive of the gaming group Wembley, who is still fighting bribery charges in the US, and Nigel Batchelor, a former stockbroker. The group ousted Michael Thiele, who used to run its Walkabout estate, in April.

Yesterday brought back unhappy memories for Regent's shareholders, who have seen the value of their holdings yo-yo since an accounting error six years ago destroyed the company's reputation.

Mr Haupt, who joined from Scottish & Newcastle, took over from David Franks, Regent's founder who presided over the infamous profits warning in 1998. Selling off the group's unbranded traditional pub estate in favour of focusing on its two high street chains initially helped the share price recover to 204p in early 2001. But the City has since punished Mr Haupt's overambitious expansion programme, which culminated in multiple profits warnings and saw the company rack up debts of more than £70m. The shares, which traded at 98p a year ago, were flat yesterday at 37p, giving the group a stock market valuation of just £41.6m.

One top ten institutional investor said: "There has been an active dialogue with the company. The time was right for a change. You've only got to look at the share price to realise there has been a general lack of support for the executive team."

Analysts expect the company to report pre-tax profits of about £12m on Tuesday, down from £14.4m the previous year. Nigel Popham, at Teather & Greenwood, said even this reduced figure would mask a massive deterioration during the second half, which is likely to have seen profits fall to £4.2m from £7.7m during the first six months. He expects forecasts for 2005 to be "materially reduced" to about £8m from £12m.

"The company operates in a very difficult marketplace but it has overspent and will have to pay the consequences," Mr Popham said.