Punch's glass remains half empty

Punch Taverns' profits are slipping down like a line of tequilas at the office Christmas do.

Last Updated: 06 Nov 2012

Britain's biggest pub company says its like-for-like profits are continuing to fall at the same rate as last year - an 11% drop in the 16 weeks to 12 December, thanks to less beer being shifted and weaker rental income. The news (which downed its shares by 3% today) wasn't really a surprise; as Punch says, it has to contend with high levels of unemployment, impending duty and VAT increases, plus an uncertain UK consumer environment - none of which prompts the beer to fly out the pumps any faster. But it's not all doom and gloom...

Well, perhaps it is for Punch, whose problems continue to pile up. As it wrestles a net debt of £3.3bn, it's already been forced to dispose of hundreds of under-performing pubs - and it's now pouring away £2m a month helping its troubled licensees stay afloat via discount schemes and rent concessions. That's up from £1.6m a month in the year to August, when the group revealed losses of £405.7m for the year. That's enough to drive anyone to drink.

On the other hand, Punch's rival Mitchells & Butlers has experienced a bit of festive fizz: the owner of All Bar One and Harvester thinks it has spotted the first signs that consumers are regaining their confidence. And it looks like the pub operator isn't just looking at the world through rose-tinted beer goggles: like-for-like sales rose by 3.2% in the first eight weeks of the current financial year, which is twice as good as the same period last year.

And remarkably, there was also some festive optimism today at Laura Ashley - sales at the home furnishings chain (which looked like a basket case not too long ago) are up 8.8% thanks to new store openings, the growth of its online arm, and 'targeted' promotional activity. The group expects pre-tax profits of £11.5m for the year to January, up from £9.6m a year earlier.

Could we finally be seeing the signs of a brighter outlook for Britain's beleaguered high street? Or is it just a pre-Christmas blip? Only time will tell, though today's dismal November sales figures suggest we're not out of the woods yet...

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Punch's glass remains half empty

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