Fuller’s pub chain optimistic on easing inflation and urges business rates cut

Fuller Smith & Turner have entered a recovery period, with year-to-date sales proving a positive sign for the bruised hospitality sector.

Sales at the London-listed company grew by 5.3 per cent for the first 16 weeks of the financial year, the pub chain said, boosted by major events including the Euro football championships.

“With inflationary pressures easing, our margins are recovering,” Fuller’s added.

Earlier this year, the chain of pubs sold 37 of its locations in the South East of England to Admiral Taverns. The sale completed last month and netted Fuller’s £18.3m in cash.

The Mad Hatter in Southwark was also sold for £20m.

“[The sales] leave us well positioned to take advantage of appropriate acquisition opportunities”, the company said. They reduced Fuller’s net debt to £92m, from £133m.

Chief executive of Fuller’s, Simon Emeny, said: “I am delighted to see our sales growth momentum continue, particularly against the backdrop of easing inflation, which will help us to grow margins and profit, as well as revenue. 

We have had a strong start to the financial year, and we look forward to the opportunities the future will bring.”

Analysts at Peel Hunt cautioned that “although inflationary pressure has been easing, another large increase in labour costs has been signalled by the new government at a time when some customers might be tiring of price rises.”

Nonetheless, analysts remained optimistic and raised their target share price for Fuller’s to 750p, to 725p.

Emeny also called on Prime Minister Keir Starmer to “stand by his commitment to overhaul our archaic business rates system”.

“The Labour Party has a clearly stated objective to grow the economy and the hospitality sector can be an excellent engine to help deliver that growth,” he said.

On average, a company will pay business rates equal to 50 per cent of their annual rent, although business rate relief for retail, leisure and hospitality companies has been extended throughout the 2023/2024 financial year to aid these sectors in their economic recovery.

It is currently set at 75 per cent (subject to a £110,000 cash cap).

Labour have pledged to replace business rates with a “new system of business property taxation“, which “rebalances the burden and levels the playing field between our high streets and online giants”.