Mitchells & Butlers PLC
01 February 2007
1 February 2007
MITCHELLS & BUTLERS PLC
AGM TRADING UPDATE
At the Annual General Meeting to be held at 11am this morning, Roger Carr,
Chairman, will make the following comment on the Company's trading for the first
16 weeks to 20 January 2007 of the current financial year:
"I am pleased to announce that our strategy has continued to drive strong market
share gains and to deliver good sales growth. In the first 16 weeks
like-for-like sales were 4.0% ahead of the comparable period last year, 2.4% on
an uninvested basis. Overall trading is in line with the Board's expectations.
"Mitchells & Butlers' pubs in residential areas have continued to trade strongly
generating like-for-like sales growth of 4.6% for the first 16 weeks. This
performance reflects a slow build up to Christmas, a good festive fortnight and
a relatively quiet start to the New Year in our pub restaurants. Our local pubs,
Sizzling Pub Co and Ember Inns traded well with high food sales growth. The 25%
of the business on the high street achieved like-for-like sales growth of 2.7%
with our central London pubs performing particularly well.
"Like-for-like food sales continued to grow strongly at 7.2% ahead of last year.
Like-for-like drinks sales were up 2.9% reflecting significant market share
gains in an on-trade market where beer volumes declined by 4.1% in the quarter
to December 2006, due to the increasingly aggressive discounting of alcohol by
supermarkets. Retail gross margin was maintained with average prices of food and
drink 3% higher than last year. The effective training and deployment of retail
staff has delivered further gains in productivity.
"In Scotland (which represents 5% of the estate), like-for-like sales were 0.4%
ahead of last year in the first 16 weeks. Like-for-like food sales were up 5%
whilst drink sales continued to decline at 2%. Cumulatively since the
introduction of the smoking ban last March, like-for-like sales are 1.3% ahead
of last year. We are continuing to build on our experience in Scotland in
preparation for the ban in England and Wales later this year, developing the
reputation of our pubs for serving good food at attractive prices to ensure we
are well placed to attract new customers who do not currently use pubs to eat
out. In this context, the strong food sales growth in the first 16 weeks of this
year is very encouraging.
"We are making excellent progress in our conversion of the former Whitbread pubs
("The Acquired Sites"). We currently have 56 pubs re-opened and operating under
our brands and formats with sales uplifts in line with our expectations. We
expect to have completed over half of the conversions by the time of our interim
results. We are confident that we will continue building the average weekly
sales of this estate to at least 30% above the level at which we acquired it.
"Before conversion, our focus is on maximising the short term profit
contribution from the pubs. We have removed unprofitable sales promotions which,
combined with the greater number of pubs where closure has been notified in
preparation for conversion, has had an inevitable impact on sales. As a result,
in the first 16 weeks of this year, sales in the 160 pubs still trading pre
conversion are running 8.3% below the comparable period last year
(pre-acquisition). Costs have been tightly controlled, particularly employment
costs, where our forecasting and scheduling disciplines are producing good
results. These actions are helping to mitigate the impact on profitability of
the declining sales trend. Overall, the acquisition is performing in line with
the Board's expectations. As stated at the time, the acquisition will be
marginally dilutive to earnings this year, due to the impact of the conversion
programme on margins, particularly in the first half.
"For the Group as a whole, total Retail sales were 12% ahead of last year
reflecting the good trading performance and the addition of the Acquired Sites,
net of the impact of disposals and the sales disruption from closure.
"As announced in November, the Board is rigorously evaluating the risks and
rewards of a REIT structure and will report to shareholders by the Interim
Results in May. The review is focussed on whether we can unlock the tax
advantages and any value uplift in the short term, whilst being sure that this
would deliver sustainable value longer term.
"Given the recent rise in interest rates, it is uncertain whether consumer
demand will continue to grow at the current levels. Nevertheless, we are
confident of our ability to make further market share gains through our focus on
offering value and choice for customers, together with high levels of amenity
and service. With further improvements in productivity and purchasing, as well
as the opportunity to generate significant sales and profit uplifts from the
conversion of the Acquired Sites, the Board remains confident in the future
growth prospects of the company."
Mitchells & Butlers will announce Interim Results for the 28 weeks to 14 April
2007 on 22 May.
For further information please contact:
Kate Holligon 0121 498 5092
Kathryn Holland 0121 498 4526
James Murgatroyd (Finsbury Group) 020 7251 3801
Appendix: Like-for-like sales
16 weeks ended 20/1/2007 Like-for-like Uninvested
(same outlet) like-for-like
Residential 4.6% 2.5%
High Street 2.7% 2.1%
Total 4.0% 2.4%
Notes for editors:
- Like-for-like sales include the sales performance for the comparable period of
all managed pubs that were trading in the Mitchells & Butlers estate for the
two periods being compared. 85% of the estate (96% excluding the Acquired
Sites) is included in this measure.
- Uninvested like-for-like sales include the sales performance for the
comparable period of those managed pubs that have not received expansionary
investment of more than £30,000 in the two periods being compared. 78% of the
estate (88% excluding the Acquired Sites) is included in this measure.
Mitchells & Butlers owns and operates around 2,000 high quality pubs in prime
locations nationwide. The Group's predominantly freehold, managed estate is
biased towards large pubs in residential locations. With around 3% of the pubs
in the UK, Mitchells & Butlers has 10% of industry sales, and average weekly
sales per pub of over three times the industry average.
- Mitchells & Butlers' leading portfolio of brands and formats includes Ember
Inns, Harvester, Sizzling Pub Co., Toby Carvery, Vintage Inns, All Bar One,
O'Neill's, Nicholson's and Browns. In addition, Mitchells & Butlers operates a
large number of individual city centre and residential pubs.
This information is provided by RNS
The company news service from the London Stock Exchange