Pub Operator Greene King's Happy Easter Doused By Cost Pressures
Greene King Plc has forecast annual pre-tax profit above analysts' expectations as more UK residents headed to its pubs over a warm and sunny Easter, but worries over persistently high costs pushed its shares lower.
The company, which replaced its long-time boss in November, has been battling with an increase in the minimum wage, higher property prices and a move away from pub drinking by younger people.
Although the company reported higher like-for-like sales in the 52 weeks to April 28, helped in part by better spring weather conditions compared to last year, JP Morgan analyst Ted Nyhan expects pressure from higher input costs, labour and utilities to continue in 2019.
"The company itself does not expect to be able to mitigate all of the cost headwinds it faces...despite significant savings anticipated in the second half," Nyhan said.
Greene King said it expects to limit net cost inflation for its financial year just ended to between £10 million and £20 million.
Comparable Sales And Expectations
Total comparable sales for Greene King's Pub Company, through which it manages its chain of about 2,800 pubs, restaurants and hotels, rose 2.9% for the year ended April 28, while Easter weekend comparable sales rose 4.6%.
Greene King said it expects annual pre-tax profit excluding items of between £244 million and £247 million for the year just ended, compared to the company-compiled average analyst consensus of £243.9 million.
It will publish full-year results on June 27.