Pub operators dragged down by cold snap

Market report Scott Reid

Shares in Mitchells & Butlers and Marston’s lost their strength after the pub groups outlined the impact of a tough first half following the Beast from the East and rising costs.

M&B, which has a vast portfolio including All Bar One, O’neill’s and Toby Carvery, fell 7.2 per cent to 255.4p as it revealed an 8 per cent slide in half-year pre-tax profits to £69 million after soaring costs took their toll.

It said profit margins were eaten into by higher staff costs from the national living wage together with rising business rates, energy tariffs and food and drink costs.

Like-for-like sales rose by 1.6 per cent in the 28 weeks to 14 April, but would have been 2.5 per cent higher with the impact of the snow disruption stripped out, according to Mitchells, which also owns Browns and Miller & Carter.

Two For One and Pitcher & Piano rival Marston’s likewise saw sales knocked by the cold snap, with its drive-to pubs suffering in particular as customers stayed at home.

Its so-called destination and premium pubs saw sales fall 1.8 per cent as a result, although sales at its taverns rose 2.9 per cent, leaving like-for-like sales flat across managed and franchised bars.

Shares in Marston’s, which has been expanding in Scotland in recent years, fell 12.2 per cent to 98.3p as it also swung into the red with interim pre-tax losses of £13.4m against profits of £36.7m a year earlier after booking writedowns. On an underlying basis, pre-tax profits lifted 8 per cent to £36.3m.

The benchmark FTSE 100 Index closed up just 11.22 points at 7,734.2. The suit retailer has said trading improved in the first quarter, despite booking another steep fall in sales. It has seen an easing of supplier woes. Shares in Crest Nicholson tumbled after the housebuilder said flat property prices and higher costs are putting the squeeze on margins.