The UK smoking ban, miserable weather and declining consumer confidence all combined to produce a gloomy set of full-year results for Solihull-based pub chain Enterprise Inns.
The company, the UK's second largest pubs group, yesterday said it had been forced to put 96 of its underperforming 'wet-led' pubs on the market as they were no longer viable due to the smoking ban.
It also warned that trading conditions over the coming months would remain "difficult" as the industry faced a series of challenges.
The results showed a 4.4 per cent fall in reported pre-exceptional pre-tax profits to £301 million, largely because of the sale of 769 pubs to Admiral Taverns and the Scottish estate last year.
The group, which operates around 7,760 tenanted outlets across the country, said that while its core estate had "responded well" to the smoking ban - which came into full effect in July - some of its smaller 'wet-led' pubs, which rely on beer sales, were struggling in the new environment.
Chief executive Ted Tuppen, sounding the death knell for the traditional pub, said: "We took a look at our estate and decided that some of the smaller units were not going to make it in the new world."
He added that he remained "extremely cautious" about the impact of the smoking ban through the coming winter months and blamed rising food, fuel and mortgage bills for creating "a climate of uncertainty" for consumers.
"It is difficult to tell how this will impact on consumer spending over the next year, but caution would seem to be the watchword," he said.
Some industry watchers have predicted a five to seven per cent slide in beer volumes next year as the smoking ban takes full effect. The summer flooding left an unwelcome legacy for the firm as it was forced to temporarily close 207 of its outlets while refurbishment and repairs were carried out.
The company also said that many of its licensees had invested heavily in outdoor facilities in expectation of the smoking ban and few had seen a return.
Revenues for the year to September 30 declined to £921 million compared with £970 million a year earlier, while pre-tax profits slipped 19 per cent to £337 million from £415 million last year.
However, food sales improved with revenues up 13 per cent over the year and to the point where they now account for 20 per cent of all sales.
Enterprise delivered further disappointment to shareholders as it said the Government had refused to allow it to switch to tax-efficient Real Estate Investment Trust status due to the firm's current structure.
REITs have become the hot topic in the industry as firms come under pressure from shareholders to spin off their property holdings into the new listed entities in a bid to enhance potential value.
Enterprise said that despite the Govern-ment's stance it remained in talks with HM Revenues and Customs over a potential restructuring that would allow conversion into a REIT in the future. A decision is expected early next year.
"It's a very complex issue, but we're still talking; our financial advisers still seem confident that we can qualify for the scheme," said Mr Tuppen.
In the stock market, investors reacted well to the news with shares up 14.5p to 523p.
Keith Bowman, equity analyst at Hargreaves Lansdown, said that while profits were down, the results were very much in line with analysts' forecasts.