Pubco M&B remains upbeat despite a slowdown in sales

The group, whose chains include Toby Carvery and O’Neill’s, disclosed yesterday that like‑for‑like sales rose 2.6 per cent in the year to 24 September, as underlying pre‑tax profits fell 7.7 per cent to £156 million from £169m.

However, M&B, whose 100-plus pubs in Scotland include the Sheep Heid Inn in Edinburgh and Glasgow’s Horseshoe Bar, said same‑floorspace sales in the eight weeks since 25 September rose by a lower 2 per cent. The dividend is again passed at the group, whose other chains include All Bar One.

Bob Ivell, executive chairman at M&B, which has been disrupted by serial management change and also rejected two recent takeover approaches from billionaire currency trader Joe Lewis, said the latest results demonstrated the group’s resilience.

“Mitchells & Butlers is a good business and our ambition is to make it a great business,” Ivell said. “We have a number of initiatives in place to do this including the simplification of our central support functions. Overall, this gives us confidence in successfully growing the business in the year ahead.”

Lewis, who remains the company’s largest shareholder, with a 24 per cent holding, abandoned plans to take it over last month after the board rejected the higher offer of 230p-a-share as undervaluing the business.

Lewis, who also owns Tottenham Hotspur football club, cited M&B’s weak trading at the time and volatile market conditions. Sources close to Lewis’s Piedmont investment vehicle said last night that he remained concerned that there was no reinstatement of the dividend and that profit margins had fallen to 16.3 per cent from 17 per cent.

M&B scrapped dividend payments in 2008 in order to pay down debt. The group saw the departure last month of its interim chief executive, former Scottish & Newcastle Breweries executive Jeremy Blood.

It came after M&B’s ex-chairman Simon Burke and former chief executive Adam Fowle announced their abrupt resignations from the board earlier this year.

Fowle had been in situ for less than two years, while Burke took over from private equity guru and former Debenhams boss John Lovering less than six months ago.

Operationally, the company has placed greater emphasis on food offerings at its pub restaurants in the past 18 months, and same‑floorspace food sales lifted 4.8 per cent in its latest trading year.

The group said: “The consumer environment remains challenging. We expect inflationary cost pressures to persist in the new financial year, especially from energy, duty and food.”