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16 July 2021

Pub chain Fuller’s expects to benefit from weddings

United Kingdom | Even before the pandemic struck, the London pub company Fuller’s was a very different business from the one founded in 1845. In 2019, it had sold its beer operations, including the London brewery in Chiswick, to Japan’s brewer Asahi for GBP 250 million (USD 330 million). In those days, the pubs proved far more profitable.

What remained of the original Fuller’s was the pub and hotels business, comprising 212 directly managed pubs, 176 pubs leased to tenants and 1,028 boutique hotel rooms. Little did the stock market listed firm know that covid would hit one year later.

Coming out of the lockdowns, Fuller’s suffers from two strategic disadvantages compared with other pub companies: It is smaller than its peers and a lot of its pubs are in London, where foreign tourists as well as office workers remain scarce.

Fuller’s swings into a loss and axes dividend

Fuller’s 2021 annual results (12 months to end of March), released on 8 July 2021, make woeful reading. Since its pubs were shuttered for 71 percent of the trading days, its turnover dropped to GBP 73 million (USD 100 million) from GBP 320 million in the previous year. It made a loss of nearly GBP 60 million after a profit of GBP 166 million in 2020, having burnt GBP 5 million (USD 7 million) cash each month during the pandemic. Net debt rose to GBP 218 million (USD 300 million) from GBP 179 million.

The pub group already tapped investors for GBP 52 million (USD 72 million) in new equity.

It is the same story all over the pubs industry. The full reopening will not mean a return to full health, or life as it used to be. Fuller’s said that like for like sales for the 12 weeks to 3 July 2021 were at only 76 percent of 2019 levels.

Saved by wedding parties

However, the desire to get back out with friends has led to strong trading in parts of its estate, particularly its Cotswold Inns & Hotels chain and its rural pubs with rooms. Fuller’s expects a busy summer with numerous weddings and a high level of advance bookings.

So, Fuller’s remains hopeful. Controlling the purse strings, it will not pay a dividend in 2021. Besides, if things get really perilous, Fuller’s could still issue more debt, or sell some of its freehold properties.