Friday preview: Greene King to report strong third quarter trading update
(ShareCast News) - Pub operator Greene King is expected to report a robust third quarter trading update on Friday during a strong performance across the rest of the sector.
Numis anticipates the company will report a small recovery in Christmas trading, in line with the sector, but believes the pressure on mainstream pub restaurants remains.
"Overall, we remain cautious on earnings momentum at Greene King, although-11% relative underperformance over the last three months suggests the market may be starting to price this in," said Numis analyst Tim Barrett.
The group's like-for-like sales have been "relatively disappointing" in recent quarters with managed growth of 1.3% in the 24 weeks to 16 October 2016, according to Numis. The broker said this implies flat sales for the last five weeks over that period.
In November, Greene King reported revenue growth of 13.8% for the 24 weeks to 16 October last year while adjusted pre-tax profit increased 14.6% to £139m.
However, the company warned that it faces a challenging consumer environment due to inflationary pressures following the Brexit vote. The industry has also had to contend with the higher salary costs due to the National Living Wage, along with an apprenticeship levy.
Rooney Anand, chief executive, said: "Looking ahead, increasing levels of consumer uncertainty, further cost pressures and the changing dynamics of eating out, mean the consumer environment is likely to become more challenging.
"However, we are confident that the strength of our brands, pubs, people and cash generation leaves us well placed to deliver another year of progress, value creation and returns for our shareholders."
Friday 10 February
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