Mitchells & Butlers sees strong holiday sales growth despite cost pressures By Investing.com
Investing.com — Stocks Mitchells & Butlers (LON: ) jumped over 4% on Wednesday after reporting strong sales growth during the holiday season despite facing cost challenges.
The UK-based pub and restaurant operator saw a 10% increase in like-for-like sales over the critical Christmas period, contributing to a solid start to the financial year.
Total sales growth for the first quarter of FY25 was 3.8%, which is in line with the company’s expectations for the full year.
This performance was achieved even amid adverse weather conditions in recent weeks, which had a significant impact on sales during the final weeks of the quarter.
The company’s holiday trading period was particularly strong, with sales up 10.4% in the key three-week period from October to December.
Analysis of sales results showed that food sales increased by 4%, while beverage sales increased by 3.6%.
Despite these gains, Mitchells & Butlers is still struggling with cost pressures, having previously warned of £100m of additional costs for FY25, mainly driven by employment-related costs.
However, M&B remains confident in its ability to manage these headwinds and is still forecasting profit growth for the year.
Looking ahead, M&B remains focused on its competitive positioning in a sector facing increasing cost challenges.
The company’s scale, strong market leadership and diverse product portfolio, including numerous freehold properties, place it in a favorable position to capture market share.
Analysts at Jefferies also noted that M&B’s strong cash generation is expected to contribute to a shift in its debt-to-equity ratio over the next few years, with an estimated debt reduction of 30% over three years and 50% over five years.
Despite the optimism surrounding its growth prospects, there is some concern about potential short-term volatility, particularly in light of changes in consumer behavior that could follow the UK Budget.
Despite this, analysts remain positive about M&B’s long-term trajectory, with consensus forecasts calling for a modest 1% rise in EBIT to £314m and a 6% rise in pre-tax profits to £224m for FY25.
