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M&B results confirm improving sales trend
So summer is over. It wasn’t the “barbecue” sizzler the weathermen predicted but nor was it as disastrous for drinks retailers, especially publicans and hoteliers, as many would have had us believe. For a start, takings were buoyed by “staycationers”, the Brits who stayed at home for their holidays, despite a last minute rush for the Mediterranean sun in August.
We are now entering the autumn financial results season, and while unemployment continues to rise rapidly and the economy remains hard-pressed, the mood has moved from one of unremitting gloom to nervous optimism that the worst is behind us. Anecdotal evidence suggest that trade has held up better than was expected. Already the London stock market has easily eclipsed the 5,000 mark that only weeks ago forecasters were predicting that it might attain by Christmas. Fears remain that this could be a false dawn and that shares could turn down as quickly as they have risen but one of the first companies to issue figures, Mitchells & Butlers, confirms that the upturn has a factual basis.
In the past 10 weeks, the group’s like-for-like sales were 2.6% ahead of the same period in 2008 and in the 51 weeks to 19 September, total retail sales were 3.4% up while like-for-like sales grew by 1.6%. In the company’s own words, “this represents an improving sales trend”. Much of the growth was driven by food sales, but like-for-like data show drink takings increasing by 1.2% in the past 10 weeks and by 1.9% since the end of last September.
M&B operates at the more profitable end of the market. Its estate comprises mainly large pubs in residential locations, which means that although it has only 3% of the pubs in the UK, they account for more than 10% of the sector’s sales. The average M&B outlet has average weekly sales four times higher than a typical UK pub, if there is such a thing.
The optimism generated by the latest trading statement, notably that M&B expects earnings for the year to be slightly higher than analysts’ estimates, must therefore be moderated by the reality that many other groups will not have fared as well. As the company points out, the outlook for consumer expenditure remains precarious, especially as the rate of VAT is set to increase on 1 January. That is why analysts will be looking to build a wider picture as other groups release their autumn figures. But at least it’s a positive start.
Finance on Friday, 25.09.09