The AIM-listed group said it will reduce employee costs both at its head office and its pubs around the UK, which its directors will also have their salaries reduced by 25%.
City Pubs also said that it is also looking to reduce variable costs such as Sky/BT Sport broadcasts and other entertainment expenditures where applicable as well as a review of its trading hours to reduce “non-productive opening times”.
Based on the above actions, the company said it was confident that will have “sufficient working capital to maintain its operations for at least another six months” even if the UK government mandated the temporary closure of all pubs and bars.
The firm is also entering negotiations with its landlords to seek rent holidays for the next 3-6 months.
For the 11 weeks to 15 March, the company reported that turnover was up 11% on the prior year, with like-for-like sales down 4.5%, however, it added that recent trading had been impacted by coronavirus and that certain sites had witnessed “noticeable reductions in trade”, although community pubs had been more resilient to the downturn.
As a result, the firm said it now expected “a material reduction” to its expectations for 2020, although it was “difficult to accurately assess” the extent to which the virus will impact its financial performance.
City Pubs said it will provide a further update with its full-year results in April.
In a note to clients, analysts at house broker Liberum Capital reduced their target price for City Pubs to 155p from 255p but retained their ‘buy’ rating, forecasting that the outbreak could reduce trading by 50% over the next six months. However, they added that, despite this, the company “should be able to trade at breakeven on a six month view”.
City Pubs shares were down 14.6% at 70p in early deals.