Mitchells & Butlers’ third quarter like-for-like sales flat
Efficiency program underpins confidence in meeting forecasts
Shares open down 7%
Derren Nathan, head of equity research, Hargreaves Lansdown:
“Mitchells & Butlers investors might normally expect hot weather to be good news for its pubs, but with an estate that includes Toby Carvery and Miller & Carter steakhouses, it has been struggling to fill its tables, with a decline in like-for-like food sales offsetting a 2.6% increase in drinks sales. While the unfavourable timing of the Easter weekend took some froth off the top, this was an underwhelming performance against the backdrop of a strong run for England in the World Cup.
Although demand challenges persist, the company continues to actively pull on its operational levers. Its focus on efficiency and investment in the business underpins management’s view that consensus forecasts remain achievable. That’s a lot of work just to keep underlying operating profit flat at £329mn. Recent strength in the share price suggests investors may have been hoping for more, and with the shares down 7% at the open, Downing Street’s olive branch to the hospitality industry hasn’t been enough to maintain the positive mood.
The sector is now due to receive some welcome relief in the form of a 20% cut to business rates from April, which number 10 estimates will save the average pub £1,100 next year. To put things in perspective that would equate to under 1% of the group’s operating profit. Economic conditions and strategic delivery will remain the key drivers of performance.”
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