Yates revamps bars to halt slide in sales

Yates, the pubs group that is struggling to revive its fortunes, yesterday announced that it was stepping up its refurbishment programme in an attempt to halt sliding sales.

The company also issued a profits warning for the current year after like-for-like sales fell 3.4 per cent in the past five weeks. Its shares, which traded at 168.5p earlier this year, fell 6p to 95.5p. ABN Amro, its house broker, slashed its profits forecast by 13 per cent to £12.1m.

Mike Hennessy, the executive chairman, said the sales decline reflected less buoyant trading conditions across the pubs and bars sector. "After the World Cup, the market began to soften. No one can put a finger on exactly why but there's a general negative sentiment, with not so many people out on week nights," he said.

While the situation is "slightly worse" in the South, where the fear of unemployment and falling stock markets is more ingrained, no one is exempt, with even students drinking less, Mr Hennessy said.

The fall in sales, which was worst at the older-style Yates's bars, has stymied the group's tentative recovery of earlier this year. Even the football World Cup turned out to be "reasonably neutral", according to Mr Hennessy, as gains from extra sales were offset by higher staff costs on the back of longer opening hours.

Yates, which also owns the Ha! Ha! Bar & Canteen brand, said it would extend its refurbishment programme across its Yates's units to 61 more sites. It has already completed 28 revamps and had originally bargained for just another 40. The group said the refurbished bars were proving popular, with like-for-like sales in the sites already completed up by 5.5 per cent. Refurbishing a site costs £175,000 and takes two weeks, which cost the group 37 lost trading weeks in the first half.

Asked if the extra costs put Yates in danger of following in the footsteps of rival pubs group SFI, which recently breached its banking covenants, Mr Hennessy said: "There is no similarity between us and the rest. Our gearing is the second-lowest in the sector."

The group reported pre-tax profits for the six months to 29 September of £5m, before an exceptional profit of £26,000 from property sales.