As falling unemployment levels, rising consumer confidence and lower inflation has given a welcome boost to real wages, shares in Mitchells & Butlers (MAB) have staged a comeback from their 12-month low of 316p. Chief executive Alistair Darby isn't counting his chickens, however: he recognises that after a period of austerity, and with personal debt levels still significant, people remain "highly selective" about where they spend their money.
Yet it appears Mitchells' strategy of focusing on food - and giving customers more bang for their buck - is paying off. In the first half of its financial year a 3 per cent climb in food volumes, as well as a small increase in spend per head, helped boost total like-for-like sales by 1.7 per cent. That was despite a 2.2 per cent dip in drink volumes.
The fact that margins dipped 80 basis points to 13.7 per cent in the first half also shows how Mitchells - like many of its competitors - has been cutting prices to support sales. But that's not the whole story: last year’s Orchid acquisition had a temporary dilutive effect on margins before Mitchells closed down an inherited head office.
Analysts at Numis expect pre-tax profits of £192m this year, giving EPS of 35.1p, up from £172m and 32.4p, respectively, in 2014.
| MITCHELLS & BUTLERS (MAB) | ||||
|---|---|---|---|---|
| ORD PRICE: | 450p | MARKET VALUE: | £1.9bn | |
| TOUCH: | 450-451p | 12-MONTH HIGH: | 469p | LOW: 316p |
| DIVIDEND YIELD: | nil | PE RATIO: | 19 | |
| NET ASSET VALUE: | 283p | NET DEBT: | 163% | |
| Half-year to 11 Apr | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 1.02 | 68 | 12.9 | nil |
| 2015 | 1.11 | 75 | 14.4 | nil |
| % change | +9 | +10 | +12 | - |
Ex-div: na Payment: na | ||||
