Pub giant Mitchells & Butlers has revealed that it is looking to raise equity capital to ensure it can survive the national lockdown which has forced the closure of all of its UK sites.
In a trading update, the Birmingham-headquartered company revealed that first quarter sales dropped by 67.1 per cent on the previous year and, for the same period last year, trading was down 30.1 per cent when only taking into account when sites were open.
In a statement to the stock exchange covering the 14 weeks to January 2, 2021 the company – which owns brands including Harvester, Toby Carvery, All Bar One and Ember Inns – also revealed that all of its 1,700 plus sites have been closed since December 30.
It added that, with no sites trading, it is losing between £35m and £40m a month before £50m of quarterly debt payment during lockdown.
The statement said: “Since the announcement of our preliminary results on November 26 we have emerged from the second national shutdown, the new regional tier system was introduced and now we have entered a third national shutdown.
“Over the period, progressively tighter restrictions were imposed through December both across the UK and in Germany resulting in an ever smaller number of sites open and significantly reduced sales activity being possible through the important festive trading season.
“Since the UK government announcement reallocating regions in England between tiers, on December 30, we have had no sites open.”
It added: “We welcome recent positive news on vaccine approval and roll-out but the future facing the hospitality sector remains extremely uncertain. It is not possible to estimate with any confidence what restrictions on our ability to trade lie ahead of us and for how long.”
As a result, the group said it is ‘prudent to explore an equity capital raise to give the group increased financial and operational flexibility.’
It added that no decision has yet been made on the timing or size of the equity capital raise.
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Chief executive Phil Urban said: “We are now in a third national lockdown. I am consistently impressed by the resilience and energy of our teams as we repeatedly open and close businesses that we have invested in to make Covid secure and urge the government to better understand the huge impact these restrictions are having on the hospitality sector.
“The Job Retention Scheme is temporarily protecting some employment but there is a real and pressing need for support for businesses themselves if we are to return to being the vibrant sector and important employers that we were.
“Mitchells & Butlers was a high performing business going into the pandemic and with the support of our main stakeholders I have every confidence that we can emerge in a strong competitive position once the current restrictions on us are lifted.”
The pub company has already made around 1,300 redundancies as a result of the coronavirus pandemic after recording an annual loss of £123m for the year to September 26, 2020.
Revenues also dropped by 34 per cent year-on-year from £2.23 billion to £1.47 billion.