Greene King sales rise but outlook mixed
GREENE King, Britain’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.
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.
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’s Belhaven managed pubs in Scotland saw like-for-like sales growth of 10.9 per cent.
Deutsche Bank analyst Geof Collyer said the performance had been “very robust”, 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.
Managed pubs have generally outperformed tenanted pubs throughout the consumer downturn, benefiting from greater flexibility for pricing and promotional activity.
Average earnings before interest, tax, depreciation and amortisation at the group’s 1,500 tenanted pubs, which accounted for just over a third of earnings last year, fell by 7.2 per cent.
Shares in Greene King , which have outperformed the FTSE All Share Travel & Leisure Index by 20 per cent since the start of the year, were up half a per cent to 482.90.
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’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.