A strong Christmas helped boost Mitchells & Butlers' (M&B) start to its financial year, the group told investors today.
Speaking at the company's AGM, chairman Roger Carr said like-for-like sales in M&B's residential estate - which accounts for 70 per cent of the business - were up 4.7 per cent (2.5 per cent on an uninvested basis), while its high street operations saw sales ahead 2.8 per cent ((2.2 per cent).
Total retail sales were three per cent up on last year. Food sales grew five per cent, while drink sales increased two per cent.
Despite this good performance it still represented a decline in overall growth on the previous year, with consumers reining in their discretionary spending.
Mr Carr said gross margins dipped largely as a result of the faster growth in lower margin product categories of food and wine, which now account for 40 per cent of total sales.
The focus on this area, together with increased costs in the region of £25m "will continue to hit net operating margins", he said.
On the smoking debate, Mr Carr noted the company remained prepared for either a food-led ban or total prohibition - which, of the two proposals, it preferred.
"We believe that the level playing field outcome of a full ban would be much the better of the two alternatives, rather than an unworkable compromise which has little prospect of providing a lasting solution," he said.
M&B had trialled a no-smoking policy throughout its pubs and bars in Grimsby last year, but ceased the experiment before it had been completed, citing the results as "predictable" - with sources close to the company preferring to use the word "disastrous".
Meanwhile, with speculation mounting over its interest in pubs in the former Spirit estate, now owned by Punch Taverns, M&B's chief executive Tim Clarke (pictured) told thepublican.com that the group was always on the lookout for potential new sites to add its estate.
"They might be from Whitbread, where we make 70 per cent more profit per site than they do, or they might be from the old Spirit estate. The key thing here is they have to be at the right price. If they are then we will take a look," he said.
Mr Clarke stressed M&B had been a "powerful organic growth story" in recent years, with no major deals for some time, while the company's share price "had doubled over the last 24 months".