Shepherd Neame launches buyback, reports strong festive sales

(Sharecast News) - Kent-based brewer Shepherd Neame has unveiled a �0.5m share buyback programme as it reported strong Christmas trading, helped by record takings from a number of pubs.

However, the company warned that it would have to raise prices and cut costs as a result of the tax changes announced in the Autumn Budget as well as higher logistics spending.

The company, which is Britain's older brewer with more than 300 pubs across London and the South East, said it was launching the repurchase plan to reduce its share capital, and enhance earnings and net asset value per share. "The board believes this action to be in shareholders' interests," the company said.

Shepherd Neame said it had traded strongly over the festive period, with like-for-like retail sales up 7.4% year-on-year the five weeks to 6 January. "We enjoyed many record-breaking days in individual pubs, with particularly strong trading in the final few days up to Christmas day itself," the company said.

As a result, LFL sales growth over the first half ended 28 December was pushed up to 4.4%, with interim results expected to be in line with market expectations.

Shepherd Neame, like others in the sector, highlighted the impact that upcoming increases in the national living wage and national insurance would have on the business from April, with the company's labour bill to increase by �2.6m annually from those two costs combined.

Meanwhile, additional costs associated with a change in logistics arrangements with supply chain management firm GXO will increase to �1.5m from earlier guidance of �1.2m.

"We have plans to mitigate the majority of the cost increases over the next 18 months, through proactive management action including price increases and cost efficiencies."