Greene King disappoints with slower managed pub sales

10th Sep 2014 08:02

Trading at Greene King's managed pubs lacked fizz in the first quarter as a "disappointing" World Cup provided an insufficient kick to help match a strong comparative period last year, leading analysts to downgrade full-year figures.Like-for-like (LFL) sales in the group's dominant retail segment were up 0.4% in the first 18 weeks of the year, meaning recent weeks have seen a marked slowdown after bullish remarks from the company in July's annual results.It had said that the first eight weeks of the new year had shown LFL up 1.1%. Last year the first quarter saw a 2.5% LFL increase.Management said they anticipate that retail LFL sales "will improve as the year progresses" and expected continuing growth from the smaller businesses units, Pub Partners and Brewing & Brands.Pub Partners lifted total LFL net income 3.7% higher after 16 weeks, while the brewing arm increased own-brewed volume 6.2% after 18 weeks, driven by strong growth from Old Speckled Hen.But retail is key and the compay observed that the market was characterised by customers remaining "cautious" and "spending very carefully" despite the UK economy continuing to strengthen.In response, management acted to protect profit margins by easing back on short-term promotional activities, while opening a net five new sites to take the total estate to 1,037 sites.There is a "healthy" pipeline of potential new sites in place, with the weight of openings expected to significantly lean towards the second half of the year, having previously given full year guidance of around 68 new sites.Within the managed retail unit, the accommodation business performed well thanks mainly to strong trading at the premium Metropolitan London pubs and Farmhouse Inns carvery restaurants.The balance sheet and cash generation "remain strong" and in line with internal expectations.Broker Shore Capital made "modest downgrades" to its full year forecasts after the sluggish trading, lowering its pre-tax profit estimate by £4m to £170.7m and earnings per share to 61.4p, reflecting a lowering in LFL sales growth to 2% from 3%.N+1Singer said it envisaged pulling its full year estimates back by 2-3% towards £175m versus a current consensus among analysts of £179.8m."This would imply flat profitability in the current year versus 8% recent historical average."Shares in Greene King were down 1.5% to 819p by 08:40 on Wednesday.