Mitchells & Butlers (LSE:MAB) shares fell more than 5% on Thursday after the pub and restaurant group reported a sharp slowdown in recent like-for-like sales growth, despite first-half earnings broadly matching market expectations.
The company, which owns brands including Harvester, Miller & Carter and Toby Carvery, generated adjusted operating profit of £181 million for the 28 weeks ended April 11, unchanged from the same period last year.
The result was broadly in line with analyst expectations, compared with forecasts of £182 million from both Morgan Stanley and Visible Alpha consensus estimates.
Revenue increased to £1.49 billion from £1.45 billion a year earlier, although this came in slightly below analyst forecasts of between £1.50 billion and £1.51 billion.
Like-for-like sales rose 3.3% during the first half, supported by strong trading in the first quarter when growth reached 4.5%. However, momentum slowed during the second quarter, where comparable sales growth eased to 1.8%.
For the 30 weeks to April 25, like-for-like sales growth stood at 3%.
The company said growth slowed further to just 1.1% in the most recent three-week period, attributing the weaker performance to “a strong prior year comparative, which benefited from favourable weather alongside some indications of macroeconomic pressures and, more recently, disruption from tube strikes.”
Adjusted earnings per share came in at 17.4 pence, slightly ahead of Morgan Stanley’s forecast of 17.1 pence but below the Visible Alpha consensus estimate of 17.8 pence.
Adjusted pre-tax profit totaled £139 million, compared with analyst estimates ranging from £138 million to £143 million.
Adjusted EBITDA reached £256 million, exceeding both Morgan Stanley’s £254 million estimate and the Visible Alpha consensus forecast of £251 million.
The group’s adjusted operating margin narrowed by 0.3 percentage points to 12.1%.
“The company puts weakness down to unhelpful weather, tube strikes and some broader macro uncertainty, but sounds upbeat on the outlook. We currently model FY26e LfL sales +3.5% which implies an improvement to +3.7% in H2, which looks a tad ambitious,” Morgan Stanley said.
Mitchells & Butlers said full-year cost headwinds are now expected to total around £120 million before mitigation measures, equivalent to roughly 5.5% of the company’s cost base and around £10 million lower than previous guidance.
Management added that approximately 60% of those cost pressures are expected to fall within the first half of the financial year.
Looking ahead to fiscal 2027, the company expects annual cost headwinds before mitigation to moderate to around £95 million, representing approximately 4% of the cost base.
Net debt excluding leases fell to £747 million from £860 million a year earlier.
Cash inflow before bond amortisation totaled £98 million compared with £131 million in the prior-year period, while capital expenditure increased to £117 million from £92 million.
Mitchells & Butlers currently operates 1,712 locations across the UK and Germany, including 1,638 directly managed sites.
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