Wet June Hurts Greene King Pub Sales But Robust 2018 Lifts Shares
British pub operator Greene King Plc has said that a wet summer so far and poor sentiment have hurt its sales in its new financial year, but it posted higher-than-expected annual profit in the previous 12 months, driving shares up some 4%.
Suffolk-based Greene King replaced its long-time boss in November, and has been battling a higher minimum wage, increased property prices and a move away from pub drinking by younger Britons.
"Political and consumer uncertainty is likely to continue to weigh on confidence and the cost inflationary environment persists," CEO Nick Mackenzie said in a statement.
The brewer of Old Speckled Hen and Abbot Ale said that total comparable sales for Pub Company, through which it manages its chain of about 2,730 pubs, restaurants and hotels, rose 2.9% in the year ended on April 28, 2019, helped by investments, sunny weather and the football.
Adjusted profit before tax rose 1.6% to £246.9 million for the year, higher than company compiled estimates of £243.9 million.
Reported pre-tax profit fell 12.5% to £172.8 million in the year, hit by growing costs.
A Potentially Tougher Year
"For the first time in 14 years, Greene King is under new management. While performance last year was robust enough, one can't help but feel 2019/20 will be tougher. The sun that accompanied the football last year hasn't returned either," George Salmon, equity analyst at Hargreaves Lansdown, said.
Greene King rival JD Wetherspoon said last month that its costs were significantly higher than last year, mainly stemming from labour costs in the wake of very low unemployment.
"The industry has seen significant cost inflation...driven by labour, the national minimum wage along with the inflation cost of goods sold and also taxes that we have," Mackenzie told reporters.
Bad Weather Impact And Hope Given By Cricket
Cold weather in May and wet weather in June has prompted Britons to stay home, with many retailers also hit.
Mackenzie, who joined Greene King from Merlin Entertainments in May, is hopeful of attracting pub goers during the cricket World Cup which finishes in mid-July.
"I think a lot of our pubs and businesses have TVs, I know a lot of people have been coming in to watch cricket and I think as momentum builds, through the rest of the tournament that would be good for us," he said.