27th Sep 2005 07:01
Mitchells & Butlers PLC27 September 2005 27 September 2005 Mitchells & Butlers plc Pre Close Trading Update Mitchells & Butlers is pleased to report strong trading in the 19 weeks to 17September 2005 with same outlet like-for-like sales up 4.7%. Amidst challenging trading conditions, we have continued to achieve market sharegains through our sales strategy, focused on improving amenity, range, serviceand value to our customers. Same outlet volume growth in the 19 weeks of 10% infood and 3% in drinks has supported further purchasing gains and increases instaff productivity. As a result, overall trading for the 53 week period ending 1October 2005 is expected to be at the top end of the Board's expectations. Same Outlet Like-for-Like Sales 19 weeks* to 17 September 2005 51 weeks to 17 September 2005Residential 5.7% 5.7%High Street 3.0% 3.3% Total 4.7% 4.8% Uninvested Like-for-Like Sales 19 weeks* to 17 September 2005 51 weeks to 17 September 2005Residential 3.3% 3.6%High Street 1.9% 2.3% Total 2.7% 3.0% * Last reported like-for-like sales included 32 weeks to ensure comparability ofEaster trading. The 70% of the Mitchells & Butlers estate in residential areas continues todrive our growth, with same outlet sales up 5.7% in the 19 weeks, led by thestrong performance of Ember Inns, Harvester, Sizzling Pub Co, Toby and PubCarveries. In the High Street, our businesses continue to perform well despitethe competitive pressures, with same outlet sales up 3.0% in the 19 weeks, ledby our Town Pubs and Classics formats. The July terrorist attacks are having asignificant impact on our Central London estate. In the 11 weeks since theattacks, same outlet sales growth in Central London was 2.2% compared with the7.6% growth trend for the 40 weeks prior to the attacks. Total retail sales for the 51 week period were up 4.4%, net of the impact ofdisposals and outlets moving to franchise. Average retail prices for food anddrink were unchanged against last year and the total gross margin was broadlymaintained despite the faster growth of food and wine. With strong volumeperformance and further cost efficiencies the net retail operating margin wasslightly above last year, having absorbed approximately £17m of regulatory andenergy cost increases. Average sales per managed pub have increased to £16,400 per week, well overthree times the industry average, a rise of 8% in the 51 week period. This hasbeen driven by the success of our sales strategy and the continued investment inour estate, achieving high returns and significant organic growth. Cash generation remains strong and we are intent on continuing to deploy ourcash resources in the best interests of shareholders, through reinvestment forhigh returns, value creative acquisitions or return by way of dividend and sharebuy-back. The share buy-back programme of £100m announced last December has nowbeen completed. On 30 November 2005, Mitchells & Butlers will announce its Preliminary Resultsfor the 53 week period ending 1 October 2005. Outlook for 2006 Our business is increasingly focused on the informal, value for money, eatingand drinking-out market in residential areas, where we see sustainable long-termmarket growth and where our pubs are well positioned competitively to capture adisproportionate share. However the outlook on external costs remains verychallenging for the next twelve months. Energy costs have risen sharply in thepast few months and, combined with higher regulatory costs, we expect to incurexternal cost increases next year in the range of £23m to £27m. All of our applications for licence conversion and variation under the newLicensing Act were submitted before the due date of 6 August. On average, wehave applied for an extension of one extra hour in the evening, depending onlocal circumstances, and so far over 50% of our applications for variation havebeen granted. We remain committed to the responsible retailing of alcoholthroughout the estate as defined by our rigorous and industry-leading Alcoholand Social Responsibility policy. Consumer spending continues to weaken. However, we remain confident that ourstrategy of investing in our brands and formats and leveraging our scaleeconomies will enable us to capture additional market share and generate furthergrowth and cash returns for shareholders. For further information please contact: Investor Relations:Erik Castenskiold 0121 498 4907Media:Simon Ward 0121 498 5795James Murgatroyd (Finsbury Group) 020 7251 3801 There will be a conference call for analysts and investors at 8.30am; pleasedial 020 7162 0081. The replay will be available for one week on 020 7031 4064,passcode 674942. Notes for editors:- Same outlet (invested) like-for-like sales include the sales performance of all managed pubs that were trading for the two periods being compared. 95% of the estate is included in this measure.- Uninvested like-for-like sales include the sales performance of those managed pubs that have not received expansionary investment of more than £30,000 in the two periods being compared. 89% of the estate 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 take per pub of well over three times the industry average. Cautionary note regarding forward-looking statementsThis announcement contains certain forward-looking statements as defined underUS legislation (section 21E of the Securities Exchange Act of 1934) with respectto the financial condition, results of operations and business of Mitchells &Butlers and certain of the plans and objectives of the board of directors withrespect thereto. These forward-looking statements can be identified by the factthat they do not relate only to historical or current facts. Forward-lookingstatements often use such words as 'anticipate', 'target', 'expect', 'estimate','intend', 'plan', 'goal', 'believe' or other words of similar meaning. Theforward-looking statements contained herein are based on assumptions andassessments made by the Mitchells & Butlers' management in light of theirexperience and their perception of historical trends, current conditions,expected future developments and other factors they believe to be appropriate.By their nature, forward-looking statements are inherently predictive,speculative and involve risk and uncertainty, and there are a number of factorsthat could cause actual results and developments to differ materially from thoseexpressed in or implied by such forward-looking statements. These factorsinclude, but are not limited to: the future balance between supply and demandfor Mitchells & Butlers' sites; the effect of economic conditions and unforeseenexternal events on Mitchells & Butlers' business; the availability of suitableproperties and necessary licences; consumer and business spending, changes inconsumer tastes and preference; levels of marketing and promotional expenditureby Mitchells & Butlers' and its competitors; changes in the cost andavailability of supplies; key personnel and changes in supplier dynamics;significant fluctuations in exchange rates; interest rates and tax rates; theavailability and effects of any future business combinations, acquisitions ordispositions; the impact of legal and regulatory actions or developments; theimpact of the European Economic and Monetary Union; the ability of Mitchells &Butlers to maintain appropriate levels of insurance; the maintenance ofMitchells & Butlers' IT structure; competition in markets in which Mitchells &Butlers operates; political and economic developments and currency exchangefluctuations; economic recession; management of Mitchells & Butlers'indebtedness and capital resource requirements; material litigation againstMitchells & Butlers; substantial trading activity in Mitchells & Butlers'shares; the reputation of Mitchells & Butlers' brands; the level of costsassociated with leased properties; and the weather. 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