Greene King sales rise but outlook mixed

City A.M. Reporter
GREENE King, Britain&rsquo;s fourth-biggest pubs company, yesterday said strong appetite for pub food had pushed sales up sharply in the first four months of its financial year, lifting its shares.<br /><br />The company, which has about 2,400 pubs in England and Scotland, said like-for-like sales at managed pubs in England grew by 4.6 per cent in the 17 weeks to 30 August.<br /><br />Pubs with a strong food offering were the best performers, benefiting from like-for-like food sales rising by 8.1 per cent. The company&rsquo;s Belhaven managed pubs in Scotland saw like-for-like sales growth of 10.9 per cent.<br /><br />Deutsche Bank analyst Geof Collyer said the performance had been &ldquo;very robust&rdquo;, adding that a decline in operating margin of less than 100 basis points over the period was 50-60 basis points better than his forecast.<br /><br />Managed pubs have generally outperformed tenanted pubs throughout the consumer downturn, benefiting from greater flexibility for pricing and promotional activity.<br /><br />Average earnings before interest, tax, depreciation and amortisation at the group&rsquo;s 1,500 tenanted pubs, which accounted for just over a third of earnings last year, fell by 7.2 per cent.<br /><br />Shares in Greene King , which have outperformed the FTSE All Share Travel &amp; Leisure Index by 20 per cent since the start of the year, were up half a per cent to 482.90.<br /><br />Greene King said it was cautious over the outlook for the industry and wider economy, and expected sales growth to moderate in the second-half due to tougher year-on-year comparatives. Britain&rsquo;s pubs have had a torrid couple of years as a smoking ban, the recession, hikes in beer taxes, poor weather and cheap alcohol offers in supermarkets have kept drinkers at home.