Bad weather is continuing to blight performance at pub operators. Mitchells & Butlers (MAB), the O'Neill's and All Bar One chains-owner, is the latest to blame poor weather for dismal sales growth.
The £988m business - after today's near 5% share price decline to 235p - saw like-for-like sales growth of just 0.3% in the eight weeks to 16 September.
SLUMP IN DRINK SALES
Mitchells & Butlers is not alone. Earlier this month, pub retailer Greene King (GNK) shocked the market with a 1.2% decline in sales, citing the same reason.
Pub companies have struggled in July and August because there hasn't been a repeat of last year's sunny summer weather, which boosted sales in 2016.
Mitchells & Butlers' drink sales declined 1.2% over the eight weeks to 16 September, although they were up in the 10 weeks to 22 July, highlighting the drastic impact that the weather can have on sales.
At least food has held up better. Sales here are up 1.5% in the eight weeks to 16 September, although biting inflation will likely eat into profit margins this year.
'OUTPERFORMANCE SHOULD BE WIDER'
Liberum’s Anna Barnfather is unimpressed by the trading update and believes Mitchells & Butlers' outperformance against the sector should be wider.
‘While the summer dip in trading is a familiar story, the estate has benefitted from significant investment over the last two years,’ the analyst says.
The analyst is currently leaving her full year pre-tax profit forecast at £176.8m for the 12 months to 30 September 2017. But her estimates were already below £181m consensus.
Adjusted pre-tax profit is expected to fall to £172.9m in 2018, which helps explain why the stock is currently trading on a dismal 2018 price to earnings multiple of 7.1-times earnings.
