The planned hike in the minimum wage due to take effect in April is expected to hit pub and beer business Marston’s to the tune of up to £3 million, the company has said.
Bosses said the 6.2% increase to £8.72 an hour for workers 25 years and above and a 6.5% increase for those aged 21 to 24, is “higher than anticipated and will increase second half-year costs by a further £2 million to £3 million”.
The warning comes as the chain, which has 1,400 pubs, revealed a strong Christmas fortnight, although this was offset by “subdued trading” at the start to December “as a consequence of poor weather”.
Ahead of its annual shareholder meeting on Friday morning, the company also revealed pub sales during the 16 weeks to January 18 were up 1% – although during the two weeks over Christmas, like-for-like sales rose 4.5%.
On its beer business at the Marston’s Brewery in Burton, the company said the amount sold is slightly down, due to weak sales of its lager through supermarkets and high street stores, rather than in pubs – although overall sales remain in line with expectations.
Chief executive Ralph Findlay said: “Trading in the key Christmas fortnight was good and has remained solid since which is encouraging.
He added: “Looking forward, greater clarity on the political agenda should positively impact consumer confidence.
“Overall the economic environment for the consumer looks encouraging with low unemployment and healthy wage growth providing us with increasing confidence that the market will grow in 2020.”
The boss also said a planned debt reduction strategy is ahead of targets to cut borrowings by £200 million by 2023.
Marston’s pointed out: “In the year to date, we have completed or exchanged on £60 million of disposals.
“Having originally targeted £40 million of disposal proceeds, we increased that to £70 million in November 2019 and today further increase the target to £85 million to 90 million.”