M&B warns on 'uncertain' consumer spending
Mitchells & Butlers (M&B) has warned the outlook for consumer spending is "uncertain" because of rising unemployment and the scheduled VAT rise in January 2010 — despite recording a sales uplift.
The warning comes as the managed operator recorded a 2.6% growth in same outlet like-for-like sales for the 10 weeks to 19 September — representing an improved sales trend. Food sales grew 5.8%, due to an improved performance in its Residential pubs in the holidays, and drinks grew 1.2%.
For the 51 weeks to 19 September, same outlet like-for-like sales grew 1.6% with total retail sales up by 3.4% on last year.
In its Residential sector, which represents 77% of total sales, same outlet like-for-like sales were up 3.8% in the 10 weeks but 0.4% down in its High Street pubs "reflecting a slight slowing in the growth rates in London and across our other high street pubs".
Net operating margins for the second half of the year are expected to be 1.1% below those achieved last year — but is an improvement on the 3.2% decline of the first half year as a result of "lessening input cost pressures and a stronger sales performance".
M&B raised £74m through disposals and drawings on its £500m unsecured medium term facility are now well below £400m. The facility steps down to £475m in December 2009. Year end net debt is expected to be slightly below the half year figure of £2.64bn.
"The outlook for consumer expenditure is uncertain as unemployment continues to rise and is predicted to grow through the first half of next year," said chief executive Adam Fowle.
"In addition, the prospective increase in VAT in January 2010 is likely to impact consumer spending. These factors highlight the difficult economic environment that the industry faces over the next twelve months. However, we believe that the company's combination of strong sites, brands, operational skills and cost management leave the business well positioned in the face of these challenging market conditions."
