Weather and inflation put pressure on Mitchells & Butlers

Mitchells & Butlers posted its pre-close trading update ahead of its full-year results on Thursday, reporting that following a “strong sales performance” in early summer, the market had become more challenging in recent weeks, with poor weather compared to last year particularly impacting drink sales.

The FTSE 250 pubco said like-for-like sales growth continued to be ahead of the market, with total sales improving 2.9% in the year-to-date.

Like-for-like sales in the 51 weeks to 16 September were ahead 1.8% over the previous year, the board claimed, with food sales up 1.4% in that period and drink sales ahead 2.1%.

As it had previously indicated, however, margins for the full year were set to be below the prior year as a result of inflationary cost pressures.

On the investment front, Mitchells & Butlers said it opened 13 new sites and completed 236 conversions and remodels in the financial year to date, while it disposed of 79 sited which did not fit into its long-term estate plan.

The company said 73 of those were sold as a package in a transaction which completed in July, while the remainder were sold individually.

It said the proceeds from disposals totalled £46m, which was marginally above the net book value of the properties.

“Whilst the weather in August and September has adversely affected the market we remain encouraged that our like-for-like sales performance continues to outperform the market,” said chief executive Phil Urban.

“This performance reflects the progress we have made towards our strategic priorities.”

Urban said the company was continuing to “work hard” to mitigate the cost headwinds faced by the industry, and expected to deliver a full year performance in line with the board's expectations.

“We will enter the new financial year with the momentum of solid sales growth, enhanced clarity on pension contributions and a clear strategy which we believe positions the company well to deliver long term shareholder value.”