(Reuters) -British restaurant and pub operator Mitchells & Butlers reported a rise in like-for-like quarterly sales on Wednesday due to strong demand during the Christmas season but said it witnessed a slowdown amid cold weather during the last couple of weeks.
WHY IT’S IMPORTANT
UK pub groups, which saw a higher footfall during the year-end festive season, are bracing for challenging times ahead due to a steep rise in payroll taxes and escalating costs, particularly related to labour.
The London-listed pub operator’s cautious stance on rising expenses comes at a time when many UK businesses have flagged higher costs due to the increase in employer social security contributions introduced in the UK budget.
BY THE NUMBERS
The owner of brands such as Toby Carvery, Harvester and All Bar One said its like-for-like sales during the 15 weeks to Jan. 11 were up 3.9% year-on-year but grew at a slower pace compared to the year-ago 7.7% growth.
Mitchells said that sales growth was strong during the key festive days, with record sales on Christmas.
Its peer Fuller Smith & Turner on Wednesday posted a 5.9% increase in like-for-like sales for the 41-week period to Jan. 11.
QUOTE
“Cold and stormy weather over recent weeks has subsequently had a material adverse impact on trading but we remain confident in the strength of underlying sales growth,” CEO Phil Urban said in a statement.
MARKET REACTION
Analysts at Jefferies said that Mitchells & Butlers is poised to increase market share in a cost-intensive sector, but warned that concerns over post-UK budget consumer behaviour could impact the short-term share price of this favored pub sector player.
Shares in the FTSE 250 index pub operator opened up 5% at 240 pence, while the index was 0.24% higher.
(Reporting by Anandita Mehrotra and Radhika Anilkumar in Bengaluru; Editing by Sonia Cheema and Mrigank Dhaniwala)
