Like for like sales growth for the first 14 weeks of the year to the 4th of January was +2.6% (versus our H1 expectation of c.2.2%) with food +3.0% and Drink +1.8%. Implies growth of +3.5% in the most recent 7 weeks (Food +4% & Drink +2.7%). Total sales growth for the 14 weeks is +2.6%. The festive period showed good LFL sales growth of +5.6% over the three weeks, with +6.5% growth across the 5 key festive days.
View – This was a good update from MAB given it faced really tough comps and implies growth on growth. The group continues to trade at a discount to peers on 11x P/E and 7.7x EV/EBITDA. Although we see plenty of headwinds for the pubs sector it does have its virtues. It has stable and defensive cash flow characteristics, is freehold backed and is relatively defensive. In MABS case the cash flows translate to a debt to equity transfer and the continued investment in the estate along with driving operating efficiency means it is delivering some of the better top line growth in the sector.
Precis
ANALYSTS VERDICT
Mitchells & Butlers – Good Christmas helps H1 momentum
Like for like sales growth for the first 14 weeks of the year to the 4th of January was +2.6% (versus our H1 expectation of c.2.2%) with food +3.0% and Drink +1.8%. Implies growth of +3.5% in the most recent 7 weeks (Food +4% & Drink +2.7%). Total sales growth for the 14 weeks is +2.6%. The festive period showed good LFL sales growth of +5.6% over the three weeks, with +6.5% growth across the 5 key festive days.
