Regent shares slump on profits warning as sales go Walkabout

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A slide in the popularity of Australian theme pubs caused Regent Inns, the owner of the Walkabout chain, to warn yesterday that its profits would be "materially" damaged this year.

JD Wetherspoon, a rival high street pubs chain, echoed the gloom voiced by Regent by also warning that its sales had slowed and profits would come in at the low end of expectations.

Shares in Regent plummeted more than 24 per cent yesterday before closing nearly 18 per cent down at 50.5p as analysts pencilled in a 10 per cent drop in pre-tax profits. Wetherspoon shares also suffered after the group said its three-month like-for-like sales growth had slowed to 3.7 per cent, closing more than 5 per cent down at 305p.

Regent revealed that at least a dozen of its 60 Walkabout bars had underperformed in the past eight weeks. These were mainly in the North and the Midlands.

The dire sales figures at Walkabout brought an end to Michael Thiele's four-year stint at the group. Mr Thiele was the operations director with direct responsibility for Walkabout, and yesterday he resigned with immediate effect. David Turner, the group's property director, has replaced him.

Stephen Haupt, the chief executive of Regent, yesterday defended the Walkabout brand and said he was not considering the closure of any of its unprofitable sites. "There is not a problem with the brand. It is a great brand and one of the strongest on the high street, but it is a very difficult environment," Mr Haupt said, rejecting criticism that Regent has focused too heavily on a single brand that is now out of fashion with customers.

But the company yesterday said there would be no new Walkabout openings this year and that more aggressive pricing strategies would have to take place to bring back drinkers.

Mr Haupt said the problems Regent and Wetherspoon were experiencing were down to overcapacity of large, chain bars on the high street. "There is a general problem on the high street. There are just too many bars out there and too much competition" he said.

Wetherspoon has sold 10 underperforming pubs in the past six months and has earmarked another 10 for disposal.

While the high street chains are suffering, village and out-of-town pubs are enjoying strong sales figures and increasing customer numbers. Punch Taverns yesterday posted a 30 per cent rise in pre-tax profits and said it was continuing to enjoy growing sales.

Punch leases out pubs to tenants who run them autonomously, which it says reduces costs. Its like-for-like sales over the past six months were up 2.4 per cent, helped by the acquisition of Pubmaster.

The problems at Regent were yesterday considered so severe that it might have to find a buyer to survive. But both Wetherspoon and Punch said yesterday they would not be interested in the group.