Fuller’s takes £4 million knock from strikes after train cancellations leave London’s pubs empty
The scale of the impact of the wave of rail strikes on London’s hospitality trade was laid bare today as shares in pub chain Fuller’s slumped after it revealed a £4 million hit from industrial action.
In a trading update for 43 weeks to January 21, the Chiswick-based firm said the knock-on effect of the disputes were eroding its profits, warning they would come in below City expectations, as thousands of train cancellations forced workers to stay at home, leaving the capital a ghost town on strike days.
The loss of income since October for Fuller’s alone would suggest London’s pub industry has taken a knock of as much as £84 million from industrial action in recent weeks, based on an Evening Standard analysis of the firm’s financial results. Fuller’s shares sunk 9.3% to 448p this morning.
Russ Mould, investment director at brokers AJ Bell, said: “Normally picking up business from commuters seeking a drink after work or tourists enjoying its premium-end pub offering, disruption to trains going in and out of the capital meant it was up to locals to keep the tills ringing, and that wasn’t enough to keep earnings on track.
“With more train strikes on the cards, there is little that Fuller’s can do apart from hope there is an imminent resolution to the fight over transport worker pay.”
Both the main rail unions the RMT and Aslef have rejected pay offers and there have been a series of stoppages since the summer. In the most damaging walkout central London was largely brought to a halt in a key December week in the run up to Christmas. Rail drivers union Aslef is planning another round of strikes in the first week of February.
Fuller’s said strikes cost it around £1 million profits in the six months to the end of September 2022. But this is set to grow fivefold to £5 million by the end of March 2023, analysts at research group Stifel said, adding the profit impact to the pub group “may be a little higher than investors were thinking.”
As early as November last year, Fuller’s boss Simon Emeny had warned the strikes were leading to waves of cancellations of office parties across pubs over Christmas, regarded by the sector as a crucial trading period ahead of a typically quiet January.
Speaking on the BBC Today programme, Emeny urged union bosses to call of further strike action, adding: “The people that will suffer the most outside the sector will be our colleagues who rely on the hours and the tips they get during those big events.”
Visiting a Fuller’s pub in mid-December, the Standard’s transport editor Ross Lydall found the venue to be deserted.
“Rail strike has left the City of London a virtual ghost town,” he tweeted.
“This great Fuller’s pub had 196 cancellations today and only three people in at lunchtime.”
The transport strikes have brought huge disruption to London, costing the capital’s economy an estimated £180 million in December, according to Simon French, chief economist at City brokers Panmure Gordon, who added the national impact will have been around £625 million but London will have been hit far harder than other regions.
The disruption has added to the continued woes facing the hospitality sector, as it wrestles with staff shortages, soaring energy costs and diminished consumer disposable incomes. Some hospitality businesses including restaurant and cocktail group Revolution Bars, have cut the number of days venues are open from seven to five in a bid to slash operating costs.
Sacha Lord, the Night Time Economy Adviser for Greater Manchester, has called for an urgent inquiry into evidence of withheld energy support for the struggling hospitality sector as financial deadlines loom.
“Pubs, bars and restaurants have been most damaged by the economic turbulence of the past three years, and support is now being pulled from under businesses that are only just beginning to recover,” he said.
“I’m hearing from pubs where monthly energy bills are exceeding rent payments, and others who have temporarily shut sites during the colder winter months to save on gas and electricity costs.”
Original article here: https://uk.finance.yahoo.com/news/fuller-takes-4-million-knock-101349325.html
Author: Simon Hunt, Tech Reporter, Evening Standard
Managing Director, Head of Research