Greene King confident about full year after record Christmas day sales

Pub operator Greene King posted a jump in like-for-like sales on Tuesday as it hailed "strong" trading over the Christmas period and expressed confidence over the full year.

The group said in an update that pub company like-for-like sales were up 3.2% after 36 weeks of its financial year following strong trading over Christmas, as it continues to trade ahead of the market.

In the last two weeks of 2018, which cover Christmas and the New Year, LFL sales rose 10.9% and Greene King achieved record Christmas day sales of £7.7m.

There was LFL sales growth across all sales categories over the last six weeks, with Greene King branded local pubs driving strong drink sales growth. The company said last year’s additional investment in value, service and quality continues to underpin its performance.

LFL net profit in Pub Partners dipped 1% during the period, with total beer volumes in brewing & brands up 1.8% and own-brewed volumes down 2.3%.

Greene King said that its cost mitigation programme is on track to limit net cost inflation to £10-20m in the year, while it also made further progress on its estate optimisation programme, remaining on course to dispose of 100-110 pubs and open around nine new pubs in the financial year.

The group has bought back £62m of the Spirit A5 bonds to data as part of its ongoing debt refinancing programme.

"While the ongoing uncertainty around Brexit may still have an impact on consumer confidence and spending during the year, we remain confident of our outlook for the financial year.

"We remain focused on our strategic priorities of driving profitable sales growth, developing a more streamlined and efficient organisation, and further strengthening and improving the flexibility of our capital structure to deliver long-term value for our shareholders."

At 1240 GMT, the shares were up 6.2% to 587.60p.

Russ Mould, investment director at AJ Bell, said: "It’s about time that Greene King served up a decent trading update, having disappointed on several occasions over the past year or two.

"Sales growth has accelerated in its managed pubs division over the past six weeks, helped by a good Christmas period. However, it is worth noting that the pub company had easy year-on-year comparative figures to beat. A year ago trading was hit by snow so mild weather this time round will have worked in Greene King’s favour.

"Chief executive Rooney Anand is now into his final run before stepping down in April. His successor will inherit a business which is ripe for shaking up, through such actions as selling assets, streamlining some of the brands and tidying up the estate to focus on the more profitable sites.

"As it stands, analysts don’t expect the business to grow pre-tax profit until the year ending April 2021.

"Despite positive factors in the latest trading update, Greene King looks like it is stuck in the mud in a sector that is at the mercy of fragile consumer spending. It will be hoping that Brexit doesn’t cause any major economic setbacks in the UK and that consumers don’t tighten their purse strings on discretionary spending."