Marston’s (LSE:MARS) expects underlying profit before tax for the 52 weeks ended 26 September 2026 to exceed the upper end of market expectations, following an increase in operating margins and continued investment across its UK pub estate.
The hospitality group said the anticipated result would represent its third consecutive year of significant profit growth, with underlying profit now more than three times the level reported in FY2023.
Marston’s also expects its EBITDA margin to have increased by approximately 100 basis points during FY26, reflecting changes to its operating model and investment in its pub portfolio.
The company reported that recurring free cash flow had contributed to a reduction in leverage to approximately 4.2 times EBITDA, as it continued to manage debt alongside investment in its existing estate.
Following the improvement in cash generation and leverage, the board intends to introduce a shareholder returns programme through share buybacks.
The company did not disclose the proposed size or timetable of the buyback programme in the supplied update.
Marston’s has been implementing a programme of pub format conversions, with investment focused on adapting existing locations to different customer requirements and trading opportunities.
During FY26, the group completed 60 pub conversions, including sites adopting its Grandstand format.
The company reported that recent investments in its new pub formats generated sales increases of approximately 30%, with returns on invested capital exceeding 30%.
These figures relate to the performance of the format investments highlighted by management rather than the pub estate as a whole.
The Grandstand concept forms part of Marston’s strategy to develop its existing pub locations through changes to their operating formats and customer offerings.
Management said the results from these investments support plans to increase the pace of conversions during the next financial year.
Marston’s intends to complete at least 100 pub format conversions in FY27, compared with the 60 completed during FY26.
The planned programme represents an increase of at least 40 conversions, or approximately 67%, as the group expands the rollout across suitable locations in its estate.
The company expects these investments to contribute to future sales and profitability, although performance will depend on trading conditions and the results achieved at individual pubs.
Marston’s also reported stabilisation in like-for-like sales, alongside improvements in profitability associated with estate investment and operational changes.
The group has been focusing on developing its local pub portfolio while maintaining a combination of managed, franchised, tenanted and leased operating arrangements.
Its operating model is intended to support margins and cash generation through different management structures across the estate.
The expected increase in FY26 underlying profit before tax follows a period in which the company has prioritised operational efficiency, investment returns and debt reduction.
Management highlighted the contribution from its pub format programme, with the Grandstand concept among the formats generating increased sales following conversion.
The improvement in recurring free cash flow has also supported a reduction in the group’s leverage ratio, although debt remains equivalent to approximately 4.2 times EBITDA.
Marston’s plans to balance further investment in its estate with its proposed shareholder returns programme, subject to the board’s decisions on the timing and scale of repurchases.
The company’s immediate priorities include completing its FY26 reporting process, expanding the pub conversion programme and continuing to manage cash generation and leverage.
With at least 100 conversions planned for FY27, Marston’s is increasing investment activity across its existing portfolio while maintaining its focus on local pub operations.
About Marston’s PLC
Marston’s PLC is a UK hospitality company operating more than 1,300 pubs across the country.
The group manages a portfolio of local pubs through a combination of managed, franchised, tenanted and leased operating models.
Its business focuses on pub operations, customer hospitality and the development of its existing estate through investment in facilities, service offerings and operating formats.
Marston’s employs approximately 9,000 people and is listed on the London Stock Exchange under the ticker LSE:MARS.
The company has been implementing a programme of pub format conversions, including its Grandstand concept, as part of its strategy to improve trading performance and returns from its existing properties.
Its financial priorities include operating margin improvement, recurring free cash flow generation, debt reduction and investment in pub estate development.
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