Regent shares plunge on profits warning

News Analysis: Stock exchange may investigate fall in price

THE RAPID growth of pub operator Regent Inns came to a dramatic halt yesterday when it issued a profits warning caused by "inconsistencies and inaccuracies" in its accounts and the incorrect calculation of key sales figures. Regent also blamed weaker profits at new branches caused by increased competition and delays in opening new branches.

Regent Inns' shares plunged 44 per cent on the warning, falling 140p to 176.5p. The news dragged down shares in rival pubs companies, such as JD Wetherspoon and Slug & Lettuce, which have been trading on high ratings. There may be a stock exchange inquiry into the steady fall in Regent's shares ahead of yesterday's announcement. Analysts have cut profit estimates for Regent from around pounds 16m to pounds 13m.

Regent Inns said that a review by new finance director Paul Huberman, who joined from Asda Properties in March, had uncovered a number of inconsistencies in various accounting treatments totalling pounds 1.7m. The board has also reviewed the basis of its like-for-like sales and found they had been calculated incorrectly.

Like-for-like sales for the year to date are now said to be running at 1.5 per cent higher than the same period last year. At the time of its half-year profits in February, Regent said its like-for-like sales were 7 per cent ahead.

Regent stressed that its financial results for earlier years were not affected, that there was no "black hole" in the accounts and no evidence of "improper conduct" by directors.

Analysts said the business had been built up as an entrepreneurial company but was now moving towards a more corporate structure and culture as it grew.

Clive Watson, the former finance director, left in February to pursue other interests. Mr Watson, who was finance director of Regent for eight years, issued a statement yesterday to clarify his position. It said: "The current-year budgets were prepared in July 1997 and were approved by the group's executive board. These were reviewed by the full board of Regent Inns in September and the components of the budget received their full endorsement." It is understood he was only informed of the company's impending announcement in the early hours of yesterday morning.

Sector analysts said the trading problems at Regent were not a surprise given the rapid expansion undertaken by all the major pubs groups. Nigel Popham, of Teather & Greenwood, said Regent's problems could be "the tip of the iceberg" as far as other smaller pubs operators were concerned.

"Pub chains have spent vast amounts of money on building up their estates just at a time when consumer demand is slowing and competition in the high street is at its most intense. The statement from Regent doesn't paint too rosy a picture for the industry as a whole," said Mr Popham.

There has been an explosive growth in new themed pubs, including Regent's Australian-themed Walkabout Inns, but this has forced pub rents into a relentless spiral, particularly on the high street where most new bars are located. "There are too many people spending too much money too quickly for people to make an adequate return on their investment," one analyst said. Whitbread says it has been "walking away from more sites than ever" recently, deterred by high rentals.

Whitbread estimates that concept bars such as Bass's All Bar One and its own Hogshead brand have staying power in the longer term, but they question the longevity of so-called "fashion pubs". Pub groups have already cut back on opening Irish themed bars as they feel this sector of market has neared saturation.

Whitbread said: "There has been this mad rush to catch up by some operators, particularly in food pubs where the growth is strongest. Operators have been paying through the nose for available sites, but these costs must be stretching people's models on viability."

Until yesterday, Regent Inns had been one of the stock market's success stories. Floated in 1993, the shares soared eightfold to a high of 388p earlier this year helped by a booming pub market, high margins and a rapid roll-out of new outlets. But critics have warned of over-expansion just when higher interest rates are hitting consumer spending.

Sport
Thiago Silva pulls Arjen Robben back to concede a penalty
world cup 2014Brazil 0 Netherlands 3: More misery for hosts as Dutch take third place
Sport
Robin van Persie hands his third-place medal to a supporter
Van Persie gives bronze medal to eccentric fan moments after being handed it by Blatter
News
Ian Thorpe had Rio 2016 in his sights
people
Life and Style
Swimsuit, £245, by Agent Provocateur
fashion

Diving in at the deep end is no excuse for shirking the style stakes

PROMOTED VIDEO
News
scienceScientists have developed a material so dark you can't see it...
News
Monkey business: Serkis is the king of the non-human character performance
peopleFirst Gollum, then King Kong - now the actor is swinging through trees in Dawn of the Planet of the Apes
Arts and Entertainment
Blackman: Landscape of children’s literature does not reflect the cultural diversity of young people
booksMalorie Blackman appeals for a better ethnic mix of authors and characters and the illustrator Quentin Blake comes to the rescue
Voices
Mrs Brown's Boy: D'Movie has been a huge commercial success
voicesWhen it comes to national stereotyping, the Irish know it can pay to play up to outsiders' expectations, says DJ Taylor
Arts and Entertainment
Curtain calls: Madani Younis
theatreMadani Younis wants the neighbourhood to follow his work as closely as his audiences do
Life and Style
Douglas McMaster says the food industry is ‘traumatised’
food + drinkSilo in Brighton will have just six staple dishes on the menu every day, including one meat option, one fish, one vegan, and one 'wild card'
Life and Style
Once a month, waistline watcher Suran steps into a 3D body scanner that maps his body shape and records measurements with pinpoint accuracy
techFrom heart rates to happiness, there is little this fast-growing, self-tracking community won't monitor
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Sport
Mario Balotelli, Divock Origi, Loic Remy, Wilfried Bony and Karim Benzema
transfersBony, Benzema and the other transfer targets
News
Soft power: Matthew Barzun
peopleThe US Ambassador to London, Matthew Barzun, holds 'jeans and beer' gigs at his official residence. He says it's all part of the job
Sport
Joe Root and James Anderson celebrate their record-beaking partnership
cricketEngland's last-wicket stand against India rewrites the history books
News
Gavin Maxwell in Sandaig with one of his pet otters
peopleWas the otter man the wildlife champion he appeared to be?
News
Rowsell says: 'Wearing wigs is a way of looking normal. I pick a style and colour and stick to it because I don't want to keep wearing different styles'
peopleThe World Champion cyclist Joanna Rowsell on breaking her collarbone, shattering her teeth - and dealing with alopecia
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Information Security Manager (ISO 27001, Accreditation, ITIL)

£70000 per annum: Harrington Starr: Information Security Manager (ISO 27001, A...

Biztalk - outstanding opportunity

£75000 - £85000 per annum + ex bens: Deerfoot IT Resources Limited: Biztalk Te...

Trade Desk Specialist (FIX, Linux, Windows, Network Security)

£60000 per annum: Harrington Starr: Trade Desk Specialist (FIX, Linux, Windows...

Service Desk Analyst (Windows, Active Directory, ITIL, Reuter)

£35000 per annum: Harrington Starr: Service Desk Analyst (Windows, Active Dire...

Day In a Page

Iraq crisis: How Saudi Arabia helped Isis take over the north of the country

How Saudi Arabia helped Isis take over northern Iraq

A speech by an ex-MI6 boss hints at a plan going back over a decade. In some areas, being Shia is akin to being a Jew in Nazi Germany, says Patrick Cockburn
The evolution of Andy Serkis: First Gollum, then King Kong - now the actor is swinging through the trees in Dawn of the Planet of the Apes

The evolution of Andy Serkis

First Gollum, then King Kong - now the actor is swinging through the trees in Dawn of the Planet of the Apes
You thought 'Benefits Street' was controversial: Follow-up documentary 'Immigrant Street' has got locals worried

You thought 'Benefits Street' was controversial...

Follow-up documentary 'Immigrant Street' has got locals worried
Refugee children from Central America let down by Washington's high ideals

Refugee children let down by Washington's high ideals

Democrats and Republicans refuse to set aside their differences to cope with the influx of desperate Central Americas, says Rupert Cornwell
Children's books are too white, says Laureate

Children's books are too white, says Laureate

Malorie Blackman appeals for a better ethnic mix of authors and characters and the illustrator Quentin Blake comes to the rescue
Blackest is the new black: Scientists have developed a material so dark that you can't see it...

Blackest is the new black

Scientists have developed a material so dark that you can't see it...
Matthew Barzun: America's diplomatic dude

Matthew Barzun: America's diplomatic dude

The US Ambassador to London holds 'jeans and beer' gigs at his official residence – it's all part of the job, he tells Chris Green
Meet the Quantified Selfers: From heart rates to happiness, there is little this fast-growing, self-tracking community won't monitor

Meet the 'Quantified Selfers'

From heart rates to happiness, there is little this fast-growing, self-tracking community won't monitor
Madani Younis: Five-star reviews are just the opening act for British theatre's first non-white artistic director

Five-star reviews are just the opening act for British theatre's first non-white artistic director

Madani Younis wants the neighbourhood to follow his work as closely as his audiences do
Mrs Brown and her boys: are they having a laugh?

Mrs Brown and her boys: are they having a laugh?

When it comes to national stereotyping, the Irish – among others – know it can pay to play up to outsiders' expectations, says DJ Taylor
Gavin Maxwell's bitter legacy: Was the otter man the wildlife champion he appeared to be?

Otter man Gavin Maxwell's bitter legacy

The aristocrat's eccentric devotion to his pets inspired a generation. But our greatest living nature writer believes his legacy has been quite toxic
Joanna Rowsell: The World Champion cyclist on breaking her collarbone, shattering her teeth - and dealing with alopecia

Joanna Rowsell: 'I wear my wig to look normal'

The World Champion cyclist on breaking her collarbone, shattering her teeth - and dealing with alopecia
Bill Granger recipes: Our chef gives raw ingredients a lift with his quick marinades

Bill Granger's quick and delicious marinades

Our chef's marinades are great for weekend barbecuing, but are also a delicious way of injecting flavour into, and breaking the monotony of, weekday meals
Germany vs Argentina World Cup 2014 preview: Why Brazilians don't love their neighbours Argentina any more

Anyone but Argentina – why Brazilians don’t love their neighbours any more

The hosts will be supporting Germany in today's World Cup final, reports Alex Bellos
The Open 2014: Time again to ask that major question - can Lee Westwood win at last?

The Open 2014

Time again to ask that major question - can Lee Westwood win at last?