The chairman of Regent Inns said yesterday that the industry was suffering some of the toughest trading conditions of his 30-year career.

Echoing comments by some of his rivals, Bob Ivell, executive chairman of the pub and restaurant operator, said that it was “very difficult to determine what trading will be like going forward. It’s one of the most challenging markets I’ve come across.”

Shares in Regent, which said last month that it had received several bid approaches, fell by 1¾p to 17½p as it reported a 66 per cent decline in first-half pretax profit to £1.23 million. The shares were 118p less than a year ago.

Like-for-like sales fell by 3.8 per cent in the half-year and the rate of decline worsened in recent weeks under the impact of the smoking ban and a slow-down in consumer spending.

Mr Ivell said that he had experienced downturns, but market conditions were “sharper than I’ve seen before”. He cited new licensing laws and rising costs as further factors that had conspired against the pub trade.

Mr Ivell insisted that the group was not in danger of following Sports Café Holdings and Massive Pub Company into administration and that it was not at risk of breaching banking covenants.

He planned to reduce the company’s £80 million of debt to mitigate against the effects of a prolonged trading downturn by cutting costs and conducting a sale and leaseback of eight freehold bars with a book value of about £25 million. “The market for very good sites is still strong,” he said.

The group said that it would not pay a dividend after half-year operating profits before exceptionals fell from £6.7 million to £4.4 million. Basic earnings per share from continuing operations fell from 1.8p to 0.5p.

One bright spot was the 5.3 per cent rise in like-for-like sales at its Jongleurs comedy clubs during December, while newly refurbished Old Orleans restaurants had delivered strong sales uplifts. Walkabout, the chain of Australia-themed sports bars, suffered a “single-digit decline” over Christmas.

The Walkabout units were taking an average of £35,000 a week, which, Mr Ivell said, was “better than most other people” despite having fallen from about £39,000 a year ago. The Cardiff outlet took £107,000 on Saturday as rugby fans celebrated Wales’s victory over England at Twickenham.

Regent said that talks with potential bidders were ongoing. It refused to identify the suitors. Speculation has centred on Alchemy Partners, which owns the Revolution vodka bar chain, and Novus Leisure, owner of the Tiger Tiger brand. Robert Tchenguiz’s Laurel Pub Company was not among the potential buyers. Mr Ivell said: “At the right price it is probably the right thing for the company to become part of the consolidation.”

Analysts said that a takeover was the best hope for investors. Greg Feehely, of Altium Securities, said: “The immediate trading outlook for Regent remains pretty grim. The best outlook for investors would be a competitive auction process.”

Peter Backman, a food-service market analyst for Horizons, said that the Old Orleans chain had been “crying out for revitalisation”, but the jury was still out on the impact of Regent’s investment programme.

“The fact it has been a drinks-led concept in a market where drinks sales are falling makes it even tougher to modernise,” Mr Backman said. “Any brand that is starting to look jaded will suffer the downturn more acutely.”

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