Punch sees trouble ahead but rival reports sales hike

PUB operator Punch Taverns yesterday reported a drop in full-year profits and warned of challenging conditions, although rival JD Wetherspoon bucked an increasingly gloomy trend for the industry by reporting a rise in sales.

A vicious economic downturn, last year's smoking ban in England, a hike in beer duty, poor summer weather and cheap offers in supermarkets have all combined to encourage drinkers to stay at home, hitting pubs hard and accelerating the rate of closures.

Insolvency specialists at PriceWaterhouseCoopers recently suggested 4,000 British pubs would go out of business in the next two years.

Punch, which has seen the size of its estate shrink by about 7 per cent to just over 8,400 pubs over the past year, reported a pre-tax profit of £262 million for the 53 weeks to 23 August, down from £282m the previous year.

However, Wetherspoon said like-for-like sales increased 1.5 per cent in the 13 weeks to 26 October. Numis Securities said the chain was benefiting from weakening comparatives with a year earlier, but added it was also likely that casual diners were trading down to cheaper options such as Wetherspoon.