Pub operator Greene King’s (GNK) upbeat Christmas trading update has been warmly received by the market, raising confidence in its ability to meet its £245m full year pre-tax profit guidance.
Shares in the company have gained 4.6% to 579p although they are still 10% below their June high of 643p.
Greene King continues to outpace its rivals but investors are still cautious over the prospects for consumer spending and Brexit looms larger than ever over the outlook.
Over Christmas and New Year, life-for-like sales surged 10.9% and Christmas Day sales hit a record £7.7m with drink sales continuing to drive growth.
The company’s main division Pub Company, which accounts for over 75% of sales, enjoyed a 3.2% rise in like-for-like sales in the nine months to January.
PROFIT GROWTH STALLED UNTIL 2021
AJ Bell investment director Russ Mould says the mild weather and easier comparative numbers worked in the company’s favour with snow impacting Greene King’s performance last year.
With analysts expecting no growth in pre-tax profit until April 2021 and chief executive Rooney Anand set to retire in April, the pub operator may need to make changes to improve trading.
‘His successor will inherit a business which is ripe for shaking up through selling assets, streamlining some of its brands and tidying up its estate to focus on the more profitable sites’, comments Mould.
Langton Capital’s Mark Brumby is also sceptical, flagging that there is no guarantee of a strong read-across for the rest of the year.
