Sales growth has slowed at pubs group and brewer Greene King PLC (LON:GNK) despite a strong showing over Christmas, especially in London.
The group again broke its Christmas Day sales figure, with the tills stuffed full as a turkey. The group's pubs raked in £7.4mln on the big day, up 6.0% year-on-year.
In the 40 weeks to 5 February, like-for-like (LFL) sales in the group's managed pubs were up 1.1% on a year earlier. This represents a slow-down from the growth rate in the first 24 weeks of the current year, where LFL sales were up 1.3%.
That's despite LFL sales rising 4.5% from a year earlier over the hectic three-week Christmas period.
Stripping out the troublesome Fayre & Square division, LFL sales were up 1.6% year-on-year.
Its leased pubs unit – Pub Partners, as Greene King calls them – saw LFL net income rise 3.5% from a year earlier, down from 4.2% at the 24 weeks stage.
Brewing volumes were down 4.2% at week 40 having been down 3.8% at week 24.
Greene King said it had made further progress on the integration of the Spirit pubs business, with more than 1,000 pubs now having been converted to use Greene King's information technology system.
“Looking ahead, despite continued economic uncertainty and significant cost pressures, we will remain focused on building our retail pub brands, delivering great experiences to our guests and completing the Spirit integration,” the group said.
Mark Brumby at booze and food-focused Langton Capital, noted there was no mention of margins in this morning's trading statement, and that current trading suggests Greene King is facing further head-winds.
“Across the group’s three divisions, trading has slipped between weeks 24 and 40,” Brumby said.
Whipping out a pencil and using the back of an envelope, Brumby said a rough estimate would suggest that managed LFLs over the last 16 weeks are around 0.8%, which is “still positive but slowing”, while in the Pub Partners division LFL sales appear to have grown 2.5% year-on-year.
“Brewing must have seen volumes down c4.8% over the last 16 weeks in order to make the numbers add up,” Brumby said.
“Considering that the 3wks of Xmas were +4.5% (managed) and ‘sales were driven by particularly strong growth in London’, we believe that non-London, non-Xmas sales were weak,” Brumby said.
“GNK is one of the UK’s better-positioned pub companies and, with its shares now trading at a single-digit multiple, it is not expensive; however, with a big acquisition under its belt, the group has to execute on its strategy and cautionary comments may put off would-be buyers in the short term,” Brumby suggested.
Shares in Greene King were off 2.5% at 684p in early deals.