SHARE PUNT OF THE WEEK: Pub chain Fuller’s is exposed to Brexit… but will there really be a shortage of after-work drinkers in the City?
Trusty: Fuller’s now has an estate stretching from Brighton to Birmingham
WHO IS IT? Home of the trusty Fuller’s pub brand, Fuller Smith & Turner dates back to a private brewhouse which began operating in the 1600s.
It now runs 179 tenanted pubs and 209 managed pubs and hotels, with an estate stretching from Brighton to Birmingham. The group still has its own brewery and produces brands such as London Pride and Frontier. It also owns cider brand Cornish Orchards and craft brewer Dark Star.
WHAT’S THE LATEST? Over the summer, Fuller’s said the months from April to July had seen strong trading. Sales in the managed pubs and hotels climbed 4 per cent, profits in the tenanted inns were up 4 per cent and total beer and cider volumes were flat.
It said it was planning two railway station sites at Euston and Liverpool Street, but warned that Brexit may impact its business if it puts pressure on consumer spending.
WHO BACKS IT? Lady Fuller, an ancestor of John Fuller who was instrumental in the pub group’s founding in the 1800s, is still the tenth largest shareholder. Others on the list include Lindsell Train, Blackrock, Standard Life Aberdeen and Columbia Threadneedle.
WHY YOU SHOULD INVEST… Laith Khalaf, an analyst at Hargreaves Lansdown, says: ‘Fullers is a solid company which boasts seven decades of unbroken dividend growth and a sizeable real estate portfolio.’
Beer-making accounts for around 7 per cent of its profits, he adds, and the company is trading below its five-year average valuation, making it a potentially good time to get involved.
… AND WHY YOU SHOULDN’T The next few months might not be plain sailing. Khalaf says: ‘It’s exposed to the UK consumer, and in particular the London consumer, and hence Brexit – though it’s hard to foresee a shortage of after-work drinkers in the City.’
As with many other High Street and hospitality businesses, profits are being eaten up by rises in the national living wage, sky-high business rates and the apprenticeship levy.