It appears that Punch Taverns are having a bit of a 'mare.
Punch Taverns Plc, the U.K.’s largest pub owner, fell to a record low in London trading after reporting reduced sales and profitability, and saying it sees no improvement in business conditions as the economy weakens.
Punch dropped as much as 23 percent and traded down 11 pence to 46.75 pence at 12:16 p.m. local time, heading for the lowest close since a May 2002 initial public offering. Shares of rivals Enterprise Inns Plc and Greene King Plc also slid.
Profit at outlets leased to tenants and open at least a year fell 12 percent in the 20 weeks ended Jan. 10, Burton-Upon-Trent, England-based Punch said today. Sales at outlets managed by Punch dropped 2.5 percent on the same basis, while the operating margin, a gauge of profitability, narrowed by 5 percentage points because of rising food and energy costs, and price promotions.
Punch scrapped its second- half dividend in September and is repurchasing bonds to whittle away at debt that’s about 35 times more than its market value.
In fact, the pub chain's share price has fallen by 92% in the past year. So what is to blame?
Business conditions are likely to remain difficult “for the foreseeable future,” the pub owner said. The slowing economy, coupled with supermarket discounts on beer, are leading Britons to cut back on nights out.
Take your fingers out of your ears Punch, stop saying 'lalalalala', and think again. Below is how Punch shares have performed since 2003, they peaked at just over £13 per share in around about, ooh let's see, July 2007. It's been all downhill, quite literally, since then.
It's a startingly different outcome to the one they were naively expecting 18 months ago.
Francis Patton, customer services director said: “Too many people are looking at the smoking ban as a threat, but we know this is a huge opportunity. The smoking ban is a great opportunity to get new customers (who want to eat) into pubs and also keep people there who go regularly.”
Prior to the smoking ban experiment, Punch Taverns chose to spout execrable guff like that rather than speak up for their business and their industry, and fight the Government on behalf of their customers. Instead they just rolled over and let the righteous tickle their tum.
At time of writing, their share price has further collapsed to 43p per share.