Weather causes dip for Belhaven owners Greene King
A poor summer and customers tightening their belts have resulted in a sales decline, said Belhaven owners Greene King in a trading statement for the 18 weeks to 3 September. The company saw like-for-like sales (LFL) declining -1.2% against a market which only declined 0.7%. The company revealed that for the first ten weeks, LFL sales for the Pub Company were in line with expectations and broadly in line with last year, despite the tough comparisons from Euro 2016. However, since the second half of July, when the weather worsened, sales dropped.
Most of the LFL sales decline can be attributed to value food, although the company said, “We are continuing to address the challenges of the value food sector through measured capital investment to upgrade and reposition pubs and through selective disposals.”
“We are strengthening our customer offer with both our net promoter scores and our food quality scores across Pub Company continuing to improve this year, while our brand conversion programme is delivering returns in excess of 20%.
“In terms of costs, our programme to deliver £45m of cost savings this year, including further cost synergies from the Spirit acquisition, is on track. The scale of our cost saving programme helps to reduce the impact of weaker than anticipated sales through limiting margin declines from unprecedented industry cost pressures.”
However the news was not as bad when it came to Greene King’s other two businesses, Pub Partners and Brewing & Brands, which saw LFL net profit in Pub Partners rise 1.4% after 16 weeks, with the impact of MRO in line with our expectations. In Brewing & Brands, own-brewed volume was down –0.5% against a UK ale market down –2.9%** and a cask ale market down– 7.0%**.
Said company concluded, “We remain cautious about the trading environment and expect the challenges of weaker consumer confidence, increased costs and increasing competition to persist over the near term. In the longer term, utilising the benefits of the Spirit acquisition, our brand conversion and cost saving programmes, our robust balance sheet and our strong cash generation will be important levers to help deliver competitive advantage, growth and attractive and sustainable dividends for our shareholders.”
*CGA Trading Index 16 weeks to 20 August 2017 **BBPA Three months to July 2017