Mitchells buoyed by busy Christmas

By Graeme Evans
Published on Thursday 26 January 2012 11:27

The owner of some of Britain’s best known pubs today revealed busier-than-expected Christmas trading despite the economic storm clouds.

Harvester and Toby Carvery owner Mitchells & Butlers said customers were still keen to treat themselves, while milder weather also contributed to the 6.5 per cent jump in like-for-like sales for the nine weeks to 21 January.

Trading since Christmas has been more subdued, however, with like-for-like sales back in the summer’s growth range of around 1 per cent.

Mitchells also warned that costs in areas such as food, duty and energy remained a problem, although it is looking to mitigate this through higher sales and menu initiatives.

The firm, which is going through a major shake up in the boardroom following several departures in the past year, has around 1,600 sites in the UK, including those trading as All Bar One, O’Neill’s and Crown Carveries. It serves an estimated 125 million meals and 425 million drinks a year.

Shares opened higher today as overall growth of 4.4 per cent for the first 17 weeks of the company’s financial year came in higher than market expectations.

Executive chairman Bob Ivell said: “These results reflect a successful Christmas performance. Although assisted by better weather, they show that customers are still keen to treat themselves even in a difficult economic environment.”

Mitchells said food sales were up 8.1 per cent in the nine week period, with drink revenues ahead 5.4 per cent.

Despite the improvement, analysts remained wary about prospects in light of the lacklustre performance during January.

Investec Securities analyst Paul Leyland said: “We do not believe this is sufficient to offset cost pressures, notwithstanding headcount cuts.”

He also noted the company has yet to appoint a new chief executive, although today’s statement reported “good progress” in the search as well as with the addition of new non-executive directors.

Ivell is in temporary charge after Jeremy Blood and Adam Fowle left in quick succession, while the company also lost its chairman Simon Burke last year.

Burke’s departure reportedly came after he fell out with billionaire activist investor and owner of Tottenham Hotspur football club Joe Lewis, who owns nearly a quarter of the shares in the company.

Lewis recently tried to buy Mitchells but a second indicative bid worth £940 million was rejected as a “significant undervaluation” of the business.

The company, which held its annual meeting in Birmingham today, is currently worth around £1.1 billion.

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