Greene King Toasts Growth Cocktail Of Sun And Soccer
British brewer and pub group Greene King recovered from a flat 2017 performance in its first quarter, with sales growth driven by England's World Cup soccer run and a summer heatwave.
Greene King has been battling rising costs from a minimum wage increase, higher property prices, a Brexit-spurred slide in sterling and a move away from pub drinking by younger Britons.
Analysts from brokerage Peel Hunt said the sales numbers made Greene King's stock, which is down 6% this year, look significantly undervalued and upgraded its recommendation on the shares to "buy".
Greene King, which was founded in 1799, said comparable sales for Pub Company, through which it manages its chain of 2,900 pubs, restaurants and hotels, had risen 3.2% over the last 10 weeks.
The brewer said it sold 3.7 million pints of beer in total during England's seven World Cup soccer matches, with sales on the day of the team's semi-final against Croatia up 61% compared to the same day a year ago.
Total beer volumes in its Brewing & Brands business rose 4 percent and GreeneKing said its comparable pub sales growth was ahead of the overall market, which grew 1.2 percent according to the Coffer Peach Business Tracker.
Greene King, which plans to close between 100 and 110 pubs this year, said its plan to help offset cost inflation of £45 million to £50 million was on track.
Anna Barnfather, an analyst with brokerage Liberum, said although Greene King's improvement in underlying trading was encouraging, consumer pressures and uncertainty over Brexit meant it was "prudent to retain some caution".
Greene King said its branded local pubs traded "particularly well", with comparable sales rising 5.5%.