Bob Ivell, the chairman of Regent Inns, has been telling people for three years that the company needed to take part in industry consolidation. There were, he claimed, too many sub-scale pub and bar operators carrying too much cost at a central level. Well, it finally looks as though Mr Ivell will be proved right, although not perhaps in quite the circumstances he had hoped.
Three weeks ago, on the back of a series of profit warnings, Regent revealed it was being courted by a number of suitors, although the latest disappointing news makes a premium takeout look increasingly unlikely. The shares, off a further 1.5p at 17.75p, look ludicrously cheap compared to the 118p they were trading at almost a year ago, although the fall is hardly surprising given the steady stream of bad news since then.
The problem for Regent is that the smoking ban and the consumer downturn have conspired to hit trading at a key point in the strategic turnaround being wrought by Mr Ivell. In a bid to move the company away from its reliance on drink sales, he bought the Old Orleans restaurant chain. Although questions remain over the brand’s strength, pushing the emphasis onto food looked a sensible move. Unfortunately, the revamp of Old Orleans has hit a number of glitches and has yet to have a meaningful impact.
Although an improvement in the weather should mitigate the impact of the smoking ban, the immediate consumer outlook looks increasingly uncertain. Mr Ivell’s decision to keep a lid on costs and cut debts through asset disposals is prudent, but it does look as though investors’ only hope of recovering some of their losses lies in a competitive auction process.