By Scott Wright
PUB giant Mitchells & Butlers has raised tentative hopes of recovery from the pandemic, which wiped out trading for large chunks of its most recent financial year.
The company, which owns around 1,700 pubs including Glasgow’s Horseshoe Bar, said yesterday that it had returned to like-for-like sales growth since trading resumed without restrictions on July 19, boosted by the lower rate of value-added tax (VAT) on food and non-alcoholic drink sales.
And it noted the momentum had been maintained since its year-end on September 25, with the company reporting that like-for-like sales had increased by 2.7 per cent in the first eight weeks of its current financial year.
The impact of lockdowns on the hospitality trade was writ large in M&Bs’ most recent full-year results, published yesterday, which shows that total revenue had tumbled by 27.8% to £1.06 billion. Its underlying profit fell by 70.7% to £29 million.
At the height of lockdown in February, the company raised £351m from an open offer to shore up its balance sheet. It said at the time that it had been burning through between £30m and £35m of cash for every four-week since its estate was closed in early January.
M&Bs said it was well positioned to emerge from the pandemic, though it warned of “cost headwinds”, citing rising energy prices and employment costs.
Dividends will not be paid again to shareholders until January 2023 at the earliest.
Matt Britzman, equity analyst at Hargreaves Lansdown, said conditions early this year “couldn’t have been much worse for a large pub operator” but said “there are signs that things are picking back up”.
Mr Britzman said: “Like-for-like sales grew in the final quarter as 98% of pubs and restaurants were open, and that trend has continued in the eight weeks since the end of the financial period.
“Although, it’s by no means out of the woods. Ongoing cost pressures due to rising energy costs are expected to remain, and footfall has been slow to recover in city centres and traditional pubs.”
M&Bs’ chief executive Phil Urban said: “Despite the inevitable challenges faced by our business over the past year we are now well positioned to regain the momentum previously built as we come out of the pandemic.”
Shares closed up 8.4p, or 3.6%, at 244.4p.
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