All Bar One, Harvester, and O’Neills pubs chains owner Mitchells & Butlers PLC (LON:MAB) today raised a glass to “particularly strong” Christmas and New Year trading across all its brands.
The FTSE 250-listed group, which also owns Nicholson's pubs, said like-for-like sales over the four weeks to January 7, covering the festive period, were up 4.7% year-on-year.
M&B added that for the 15 weeks to January 7 – its fiscal first quarter - like-for-like sales rose 1.7% year-on-year, with 1.6% growth in food sales and 1.7% growth in drink sales over the period.
However, as previously advised, the firm said increased cost pressure from the likes of rising inflation and the introduction of the National Living Wage last year are expected to lead to margins being lower than last year.
Phil Urban, M&B’s chief executive said: “This is an encouraging performance, building on positive momentum from earlier in the year.
“We are starting to benefit from the many initiatives we continue to put in place, which gives us confidence in successfully delivering our strategic priorities going into the new year and a performance in line with the board's expectations.”
The pubs group said it opened one new site and completed 69 conversion and remodels in its first quarter.
The firm expects to do around 300 remodels and conversions over the course of the full year to September.
Shares up ...
In reaction to the bullish update, M&B shares jumped almost 5% higher in early trading, up 12.8p at 273.0p.
However, analysts at Cantor Fitzgerald remained cautious, reiterating a 'reduce' rating on M&B shares.
In a note to clients, they said: "In general we see several one off factors boosting Christmas 2016: favourable timing, with Christmas day on a Sunday and clear/dry weather."
They added: "On the negative side, the statement reiterates that margins will be lower than last year pressures will remain pronounced - for FY17 we estimate the group will need c.3% lfl sales growth to be margin neutral."
-- Adds share price, broker comment --