(Adds further details, share price)
May 17 British pubs, bars and restaurants
operator Mitchells & Butlers Plc reported a 9.6 percent
drop in first-half pretax profits on Wednesday, saying that
consumer confidence has remained "fragile" throughout this year
and last, sending its share price lower.
The group, which operates over 1,800 pubs, bars and
restaurants and whose brands include All Bar One, Harvester,
Toby Carvery and All Bar One, Nicholson's and O'Neill's, said it
was operating in a "challenging and uncertain environment" and
there was therefore some caution over predicting future demand.
Rising inflation and muted wage growth following Britain's
vote to leave the European Union last June has left consumers
feeling the need to rein in spending.
Mitchells & Butlers' share price was down by over 4.5
percent at 262.5 pence at 0803 GMT, the biggest faller in the
FTSE 250 Mid-Cap index.
The company said its adjusted operating profit for the first
half fell 4.5 percent, mainly due to inflationary cost
pressures which the company said it expected would continue to
be felt at a similar level in the second half of the year and
going into next year.
"Margins have been adversely impacted by increased costs,
most notably from wage inflation, property costs and exchange
rate movements," Chief Executive Phil Urban said.
"In order to partially mitigate these costs we have been
working hard to encourage our guests to trade up and increase
spend per head for a more premium experience whilst challenging
our general managers to run their businesses as cost effectively
The company also said that it was continuously monitoring
its prices and had carried out some price adjustments, both up
and down, after wholesale food price inflation increased in
recent months, with a 6 percent rise in March.
Nevertheless, the company said comparable sales in the 28
weeks to April 8 were up 1.6 percent, sharply lower than the 4.7
percent rise reported over the four weeks to Jan. 7, when
trading over the festive period was 'particularly strong',
although the latest results were affected by a later Easter
holiday this year.
Including Easter, like-for-like sales in the year so far, up
to May 13, were up 1.9 percent, the company said, noting that
although unit sales volumes were down, both food and drink sales
were up as it seeks to innovate on products and service.
Revenue for the half-year period rose 2.5 percent to 1.12
billion pounds ($1.45 billion) but pretax profit slipped from 83
million pounds to 75 million pounds. The interim dividend was
maintained at 2.5 pence a share.
($1 = 0.7733 pounds)
(Reporting by Rahul B in Bengaluru; Editing by Greg Mahlich)