M&B cheers City as consumers warm to top brands
The upbeat performance and outlook came despite the group, whose estate includes scores of Scotland’s best known watering holes, saying “2013 has not been an easy year for UK consumers”.
Alistair Darby, M&B’s chief executive, said he was proud the company had been able to grow sales and profit margins against a testing consumer backdrop.
“We still think that a lot of our customers are under a fair amount of pressure when it comes to cash in pocket,” he said.
M&B, whose Scottish pubs include the Conan Doyle, Sheep Heid Inn and Deacon Brodie’s Tavern in Edinburgh, revealed that pre-tax profits lifted to £150 million from £83m in the year to 28 September.
Earnings per share rose to 32.9p from 17.1p. Total sales advanced 2.2 per cent to £1.9 billion, while same-floorspace sales growth in the year lifted 0.4 per cent.
The company said operating profit margins rose to 16.5 per cent from 16 per cent, while in the first eight weeks of its new financial year like-for-like sales inched up 0.1 per cent.
That followed a sales decline of 1 per cent in the nine weeks to 21 September.
Darby said the overall performance in the last financial year was aided by demand for food at its Harvester, All Bar One and Browns subsidiaries. M&B, Britain’s biggest operator of managed pubs and restaurants, serves about 130 million meals a year.
The company said that 16 sites opened in the period “across the upmarket social, family and special market spaces”.
M&B, whose other brands include Nicholson’s, O’Neill’s, Sizzling Pubs and Toby Carvery, said the eating and drinking out market was worth £75bn a year and that there was a “significant opportunity” for bigger operators like itself to take market share with leading brands.
The company currently has 3 per cent of the market, with its largest brand by sales, Harvester, currently having 210 outlets.
Three-quarters of M&B’s turnover comes from people eating in its restaurants and pubs, with the company also saying it benefits from its geographical bias towards the more affluent east and south east of England.
Darby also hailed the importance of well-known brands in the extended downturn from which Britain is only now emerging.
“Although the majority of the industry is unbranded, the branded restaurant and pub sector has consistently grown at a faster rate than the unbranded sector and this has accelerated in the downturn as guests seek the guarantee of quality that a brand can offer,” he added.
M&B’s shares rose as much as 8.7 per cent to a two-month high of 425p, later closing at 404.7p, an increase of 3.5 per cent. Broker Numis said in a note: “Over the medium term we believe there is good scope for the shares to recover through like-for-like sales picking up, expansion accelerating, dividends resuming and the £600 million pension deficit falling.”