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Mitchells & Butlers sales rally on sunny weather

Sales at the pub group did well thanks to sunny weather during the third quarter, but pressures on margins linger
August 2, 2017

Shares in Mitchells & Butlers (MAB) shot up by around 18 per cent after the pub group released a third-quarter trading update that revealed like-for-like sales growth of 2.6 per cent during the period, with total sales up 3.1 per cent year-to-date. Chief executive Phil Urban said that sunny weather helped get more customers into its pubs, leading to a 3.8 per cent boost to drink sales and 1.8 per cent increase in food.

IC TIP: Sell at 238p

Although this is an encouraging update, Mr Urban said costs remain “challenging”. And while the company is working to mitigate the impact of higher costs on profits, margins are nevertheless expected to be lower than last year. This was already evident at the half-year point when the adjusted operating margin fell from 14.2 per cent to 13.3 per cent. At that point the company was attempting to push through price increases in some areas while encouraging customers to choose more expensive options.