Enterprise Inns (LSE: ETI), the operator of public houses via a leased and tenanted pub model with a portfolio including Fuller, Smith & Turner, today released a trading update for the 44 weeks to 3 August 2013, revealing like-for-like net income for the third quarter down 2.7%.
This is still disappointing, but encouraging given that the first half of the year saw like-for-like net income decline by 4.2%. A glimmer of light can be seen at the end of this tunnel, though, as the first five weeks of the final quarter have actually seen like-for-like net income growth.
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Enterprise does cite some mitigating factors for the first-half performance, such as poor weather and the cessation of trading of Waverley, their wines and spirits distributor. In the third quarter, the results are competing against 2012 — with its backdrop of Euro 2012 and the Queen’s Diamond Jubilee celebrations — and have compared rather unfavourably.
The rate of business failures within the pubs has fallen, though, and new services are being rolled out such as free Wi-Fi and Sky entertainment to entice customers back in. Additionally, 656 exterior redecorations have been completed during June and July.
Following asset disposals with proceeds expecting to be around £150m bank borrowings have reduced to £217m and total net debt is expected to be around £2.5bn by the year end. Looking to the future, Enterprise is committed to improving like-for-like net income by improving the quality of pubs and remain optimistic for the final quarter.
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> Barry does not own shares in Enterprise Inns.