1st Feb 2007 07:01
Mitchells & Butlers PLC01 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 first16 weeks to 20 January 2007 of the current financial year: "I am pleased to announce that our strategy has continued to drive strong marketshare gains and to deliver good sales growth. In the first 16 weekslike-for-like sales were 4.0% ahead of the comparable period last year, 2.4% onan uninvested basis. Overall trading is in line with the Board's expectations. "Mitchells & Butlers' pubs in residential areas have continued to trade stronglygenerating like-for-like sales growth of 4.6% for the first 16 weeks. Thisperformance reflects a slow build up to Christmas, a good festive fortnight anda 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 sharegains in an on-trade market where beer volumes declined by 4.1% in the quarterto December 2006, due to the increasingly aggressive discounting of alcohol bysupermarkets. Retail gross margin was maintained with average prices of food anddrink 3% higher than last year. The effective training and deployment of retailstaff 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 theintroduction of the smoking ban last March, like-for-like sales are 1.3% aheadof last year. We are continuing to build on our experience in Scotland inpreparation for the ban in England and Wales later this year, developing thereputation of our pubs for serving good food at attractive prices to ensure weare well placed to attract new customers who do not currently use pubs to eatout. In this context, the strong food sales growth in the first 16 weeks of thisyear 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 underour brands and formats with sales uplifts in line with our expectations. Weexpect to have completed over half of the conversions by the time of our interimresults. We are confident that we will continue building the average weeklysales 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 profitcontribution from the pubs. We have removed unprofitable sales promotions which,combined with the greater number of pubs where closure has been notified inpreparation 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 preconversion are running 8.3% below the comparable period last year(pre-acquisition). Costs have been tightly controlled, particularly employmentcosts, where our forecasting and scheduling disciplines are producing goodresults. These actions are helping to mitigate the impact on profitability ofthe declining sales trend. Overall, the acquisition is performing in line withthe Board's expectations. As stated at the time, the acquisition will bemarginally dilutive to earnings this year, due to the impact of the conversionprogramme on margins, particularly in the first half."For the Group as a whole, total Retail sales were 12% ahead of last yearreflecting 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 andrewards of a REIT structure and will report to shareholders by the InterimResults in May. The review is focussed on whether we can unlock the taxadvantages and any value uplift in the short term, whilst being sure that thiswould deliver sustainable value longer term. "Given the recent rise in interest rates, it is uncertain whether consumerdemand will continue to grow at the current levels. Nevertheless, we areconfident of our ability to make further market share gains through our focus onoffering value and choice for customers, together with high levels of amenityand service. With further improvements in productivity and purchasing, as wellas the opportunity to generate significant sales and profit uplifts from theconversion of the Acquired Sites, the Board remains confident in the futuregrowth prospects of the company." Mitchells & Butlers will announce Interim Results for the 28 weeks to 14 April2007 on 22 May. For further information please contact: Investor Relations:Kate Holligon 0121 498 5092Media:Kathryn Holland 0121 498 4526James 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-likeResidential 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 ExchangeRelated Shares:
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