Greene King reports increased festive sales
BREWER and pub company Greene King has provided a glimmer of hope for the battered sector with news of rising festive sales and no sign yet of the feared post New Year slowdown.
The firm said like-for-like sales for its retail arm over the past eight weeks, covering Christmas and New Year, grew by 2.4%.
Comparable sales in the 38 weeks to January 25 dipped 1.1%, but continue to show an improvement on the near-3% drop seen earlier in the year as the group’s efforts to offset a declining market pay off.
Greene King said it had delivered strong Christmas bookings, while also benefiting from investment in sports-led local pubs and improvements in the Hungry Horse chain.
Shares raced 12% ahead at one stage after the sales cheer.
However, the update revealed that profits in its near 1,400-strong Pub Partners leased estate continue to take a hit from costs relating to licensee support and falling beer sales volumes.
Underlying profits fell 5.3% in the year to date across the business.
Pub groups have been forced to help prop up landlords in the face of tough conditions over the past year, with the sector hammered by lower consumer spending, higher alcohol duty and an ongoing decline in beer and ale sales.
Greene King said it had seen a stabilising in licensee ``vital signs", helped by efforts to reorganise the division to adapt the business to face the ``most extreme trading conditions we and our licensees have seen".
It said: ``The anticipated post-New Year slowdown has not, as yet, taken place, but we remain very cautious as to trading prospects for 2009, and we anticipate that the outlook for the rest of the year will remain very challenging.
``However, Greene King is well placed to cope with a prolonged consumer downturn, particularly given the steps being taken to further strengthen each element of our business."
The Suffolk-based group has around 1,800 managed and tenanted pubs across the UK, while it also owns the Loch Fyne restaurant group, the Hungry Horse chain, and a brewing arm.
It said its Scottish pub and brewing business, Belhaven, performed well, with year-to-date comparable sales up 2.4%, although the market was now showing signs of a slowdown amid the recession.
The UK brewing operation, which produces brands such as Greene King IPA, Old Speckled Hen and Abbot Ale, posted a 1.5% drop in own-branded beer volumes in the 38-week period.
Kate Pettem, analyst at Teathers, described the update as ``confident in the face of bleak industry conditions", although she raised concerns over a steep slide in tenanted division profits compared to close rival Marston’s.
"Given Greene King’s tradition of creative approaches to management and its establishment of a sub-division to deal with the specific problem of difficult tenancies, we are confident that Greene King’s relative performance will improve," she added.
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