Mitchells & Butlers sees modest consumer recovery

Managed pub operator Mitchells & Butlers (M&B) has created three new retail 'channels' in order to appeal to different spending patterns among its customers.

Noting it had seen a slight upturn in consumer confidence in recent weeks, with like-for-like sales up 3.2 per cent, M&B said the new channels were part of a strategy to keep pace with customer expectations.

'Value' pubs will appeal to price conscious punters, with 'City & Country' likely to be aimed more at consumers focusing on quality. 'Suburban' is being driven more towards the mid-range customers who look for value during the week and a more premium offer at weekends.

Adam Fowle, M&B's chief executive, said: "To sustain our sales growth within the market we have refined our value and volume strategy to ensure that these differing notions of value are being satisfied appropriately across the eating and drinking out market."

Fowle was speaking as M&B announced annual pre-tax profits for the year to September 26, 2009, of £134m, down 23.9 per cent on the previous year, although this figure was ahead of a number of City analysts' forecasts. Turnover for the year was up 2.6 per cent at £1,958m.

Operating profits were down 12.5 per cent at £428m. The second half saw a stemming of the decline in operating profitability, down 2.4 per cent, versus a fall in the first half of nearly 17 per cent.

Earnings per share were 1p, and no dividend is to be paid, as the group said it preferred to use cash resources to reduce debt.

Like-for-like sales grew 1.6 per cent over the year, with like-for-like food sales up 3.1 per cent and like-for-like drink sales up 1.8 per cent.

Gross margins were 1.5 per cent points lower than last year on what the group called "an improving trend".