The company said in a trading update back in November that Christmas bookings were “well ahead” of last year, and it wasn’t wrong: like-for-like sales rose 10.9% in the two weeks covering Christmas and New Year.
That included a record Christmas Day for the group, with its 2,800-strong portfolio of pubs raking in £7.7mln.
So far in its financial year, which is 36 weeks in, like-for-like sales, are up 3.2%, boosted by the “strong trading” over the holiday season.
That is better than the market and significantly better than some analysts had pencilled in. City broker Peel Hunt, for example, had only forecast growth of 1.5%.
“All sales categories saw LFL sales growth over the last six weeks with our Greene King branded Local Pubs driving strong drink sales growth,” read Tuesday’s update.
“Last year's additional investment in Value, Service and Quality continues to underpin our performance.”
Tough times for pubs
It has been a difficult year or so for UK pub operators with all of them having to deal with higher costs which they have, by and large, been unable to pass onto consumers.
Those issues have impacted profits at Greene King’s Pub Partners tenanted division, too, where net profits are down around 1% so far this year.
The company is taking measures to mitigate some of the rising expenses and remains on track to limit cost inflation to £10-20mln in the year. It is also on course to dispose of 100-110 pubs and open nine new ones.
“While the ongoing uncertainty around Brexit may still have an impact on consumer confidence and spending during the year, we remain confident of our outlook for the financial year.”
GNK is Peel Hunt’s top sector pick
Peel Hunt, which was impressed with the results, left its forecasts on hold for the time being but said there was some “upgrade risk” to its numbers as it repeated its ‘buy’ recommendation and 700p price target.
“We believe ongoing political-economic uncertainty, particularly around Brexit, has materially undermined Greene King’s share price, yet the company’s LFL sales are continuing to accelerate, with soft comps to look forward to in Q4,” read a note to clients.
“Based on asset quality, performance, cash flow (investing in the estate, paying dividends and paying down debt), balance sheet and valuation, Greene King is our top pick in the pub sector.”
Greene King shares were up 4.2% to 547p in early deals on Tuesday.