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Tue 3rd Dec 2013 - Breaking News - Greene King LfLs up 3.5%, targets 90 new pubs
Greene King like-for-likes up 3.5%, targets 90 new managed pubs: Greene King has reported sales up 5.4% to £595.4m in the 24 weeks to 13 October. Managed like-for-likes rose 3.5% and retail margin improved ten basis points to 20.5%. The average Ebitda per pub in its Pub Partners tenanted division rose 5.2% and core like-for-like Ebitda was up 1.7%. The brewing division grew volumes by 1.7%. Food is now 41% of retail sales and the company added 22 managed pubs to grow the estate to 1,008 sites. Greene King is targeting the addition of 90 sites over the next 18 months. The company sold 59 tenanted pubs to leave an estate of 1,218 sites, down 28% from its peak. Chief executive Rooney Anand said: “This is a very pleasing set of figures and we have made great progress in the first half of this financial year. Growth has once again been led by our retail business, which grew profits by 8% over last year, helped by a combination of organic growth and further strategic acquisitions. The tenanted and brewing businesses also performed well, helping the overall business to deliver healthy earnings, dividend growth and further improvement in our return on capital employed. While trading through the first half of the year and since the period-end has been strong, and the economic outlook looks to be improving, customers remain careful with their money, particularly outside London and the south east. We believe that our strategy, tailored for these conditions, will continue to deliver growth and further value to our shareholders across the rest of this year and beyond.” 

The company stated that its continued success in Retail is driven by a number of key factors, including:

1.  The consistent delivery of excellent value, service and quality: Examples of value initiatives include our ‘Two for £3.99’ offer for over 60’s in Meet & Eat and our new weekly offers in Hungry Horse such as ‘Clucking Monday’ and ‘Rib Tickling Wednesday’. On service, Hungry Horse won a national award at the Annual Customer Experience Awards and the number of colleague commendations from customers rose 18%. On quality, we introduced a 28 day aged Black Angus steak in Flame Grill and we significantly improved the quality of our salads, across the business, by including new items such as edamame beans and pomegranate seeds. 

2.  Broadening our appeal through growth categories such as food, rooms and hot beverages: Total food sales grew 10.4%, with side orders and desserts growing 18% and 16% respectively. We launched a weekend breakfast offer across part of the Hungry Horse estate, we widened our range of sharing platters and we introduced ‘Stoups’, which are a cross between a soup and a stew and served with grilled flatbread. Revenue per available room across Retail rose 5.3% as a result of our ongoing room investment programme in OEI, while we introduced unlimited Big Bean coffee with breakfast in Hungry Horse and Joe’s Tea into our premium local pubs.

3.  Understanding important consumer trends such as convenience, customisation and health: Our Local Pubs lunchtime ‘deli deal’ accounts for 19% of covers in ‘Mainstream High Street’ sites. The new Flame Grill menu has eleven different meat and fish grilling options, while we introduced ‘flip your chips’ in Hungry Horse, so that customers can choose a healthy option such as salads or jacket potatoes, instead of chips.

4.  Continued investment in our core estate: We invested £25.4m in our core estate, up 4% on last year. Based on their first half performance, these developments are achieving an annualised return on investment (ROI) of 34.0% with the efficacy of our investments improved by clear branding and segmentation across the retail estate. 

5.  Targeted acquisitions: We spent £9.6m acquiring new sites and invested an additional £24.1m into these, previously acquired sites and transfers from Pub Partners. We acquired seven sites and opened four newly-built sites during the period, in Sheffield, Wallsend, Bristol and Braintree. Immediately after the period-end, we opened our first new-build site in Scotland. Sites added since we began our retail expansion strategy have delivered an average site EBITDA ROI of 15.0%. 

6.  Employing the best trained and most motivated people in the sector: Either ‘in learning’ or ‘achieved’, we have seen 3,400 colleagues go on an apprenticeship programme since February 2011, with 2,000 qualifying and an ongoing retention rate of 75%. Our progress has been recognised through winning the Eastern Region Macro Employer award, becoming a Top 100 Apprenticeship Employer and coming runner-up in the national competition at the National Apprenticeship awards. 

7.  Expanding our digital platform: Visits to our websites grew 22% to 3.9m with almost half now from mobile platforms. Our online sales and reservations were up 13% and 17% respectively, while our Facebook followers rose 76% to 298,000. Finally, we launched a gift card offer across our estate for the first time, ahead of Christmas, and initial sales have been very encouraging.

The company added: “Momentum across the business has continued since the period-end, helped by a strong sales performance around half-term week and Halloween. After 30 weeks of the year, LFL sales in Retail were up 3.5%, with food LFL sales particularly strong over the last six weeks. After 28 weeks, average EBITDA in Pub Partners was up 5.6% while, in the last six weeks, core OBV in Brewing & Brands was up 7.0%, taking year-to-date growth to 2.7%. Christmas bookings are ahead of last year by 13%. Although the economy is showing increasingly positive signs of picking up, we remain cautious given the ongoing weakness in real disposable income for our customers and the competitive nature of our markets. However, we are confident that we have the right strategy for current conditions and expect to open around 20 new-build sites in the second half of the year. Looking ahead, we will continue to tailor our strategy to maximise opportunities as and when conditions improve. As a result, we are confident we can continue to provide sustainable earnings and dividend growth, and improving returns, to our shareholders.”

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