M&B reports 34th consecutive quarter of growth

M&B stressed that an offer for the company of 230p a share from Lewis’s Piedmont investment vehicle “significantly undervalued” the company in its view.

Like-for-likes at M&B were up 2.7% for the first 51 weeks of the year to 17 September but sales did slow in the last nine weeks with a reported 0.5% like-for-like growth.

Like-for-like food sales for the nine weeks increased 1.1%, while drinks sales remained flat, up just 0.2%.

Total sales for the retained estate were up by 4.7% in the first 51 weeks with total company sales down 9.4%, including the impact of disposals, on last year.

M&B said that there has been pressure on net operating margins as a result of input cost inflation, increased promotional activity and initial costs from its brand roll out programme.

It has spent £75m in converting 48 sites to its core brands and acquiring 53 sites in the period. Earnings Before Interest Tax and Depreciation for expansionary investments in the last two years have improved to slightly over 20%.

However, M&B warned that the UK consumer environment continues to be challenging. “We expect cost pressures to remain next year especially from energy, duty and food,” it said.

“We continue to drive increases in productivity and cost effectiveness and have identified a number of initiatives to offset inflationary cost headwinds.

“These initiatives are in areas such as menu improvements; drinks sales initiatives; gross margin management; IT costs; and organisation changes to improve efficiency and effectiveness.

“Overall, our focus remains on expanding and strengthening the business, lowering costs, driving sustainable revenue growth and improving customer experience as we better utilise our high quality sites and brands.

“We continue to make good progress towards achieving the objectives laid out in our March 2010 Strategic Plans and are confident in the future prospects of the business.”

Interim chief executive Jeremy Blood added: “Mitchells & Butlers is reporting robust results including our 34th consecutive quarter of like-for-like sales growth. This is a testament to the strength of the Company’s sites, brands and employees.

“I would like to thank the 38,000 people in our businesses for their dedication, drive and continuing focus on delivering great customer experiences.”