Two Midland pub firms have reported contrasting fortunes to investors – but both fared badly on the markets.
Birmingham-based Mitchells & Butlers reported a 1.7 per cent rise in sales in the past eight weeks after June’s heatwave boosted business at its estate of community pubs.
But Enterprise Inns, which is based in Solihull, said it had seen no improvement this summer, and was raising the level of support given to struggling tenants after the number of closures across its estate rose by 50 per cent.
Investors reacted badly to both statements in early trading, with M&B shares slumping more than four per cent, to 249.75p and Enterprise Inns seeing a 5.5 per cent fall, to 128.5p.
M&B said its locals division, which accounts for 77 per cent of total trade, saw like-for-like sales lift 3.1 per cent in the eight weeks to July 11, up from the two per cent improvement seen in the previous 33 weeks.
This was partly offset by a dip in sales on the high street, where outlets are less affected by weather conditions.
The company, whose brands include Ember Inns, Harvester, All Bar One and O’Neills, said it continued to take market share with overall like-for-like sales 1.7 per cent higher in the eight weeks.
M&B has continued to benefit from the popularity of its value-for-money food offering, with sales on a like-for-like basis up by two per cent. Drink sales are up by 3.2 per cent.
With cost inflation also starting to unwind, City firm Investec Securities said there was a potential five per cent to ten per cent upside to full-year forecasts.
Analyst Matthew Gerard said: “Trading remains steady, helped by the recent better weather and its outside exposure in residential pubs.”
M&B owns and operates about 2,000 pubs, generating some ten per cent of industry sales.
It also said the Bahamas-based investor Joe Lewis – the company’s biggest shareholder at 23 per cent – had been granted boardroom representation.
Meanwhile, Enterprise, which has about 7,500 leased and tenanted pubs, said it had increased the assistance it gives to tenants to £1.7 million from £1.4 million.
Britain’s second-biggest pubs company said 800 licensees were relying on the rent concessions and special discounts to survive tough trading conditions.
However, it said business failures were still occurring at a rate 50 per cent ahead of last year –costing it £2 million a month in lost income.
Chief executive Ted Tuppen said: “Consumer confidence is very fragile and pubs have got to be good to perform. I am pleased that the vast majority of our estate is still doing well.”
The company, which has debts of £3.6 billion, said it intended to refinance its existing bank facilities before the end of the next financial year.
Enterprise said there were signs that trading conditions had stabilised, with the rate of decline in beer sales reducing.
The company is under pressure from campaigners calling for reform of the beer tie, under which licensees are obliged to buy products from one pub company. Lobby groups such as Fair Pint have argued that the tie has made pubs uncompetitive at a time of gruelling trading conditions.