Pub retailer and brewer Greene King Plc (GNK.L, GRKGF.PK) said Tuesday that it expects to meet its full year estimates despite the current trading challenges and lackluster outlook for the UK economy. In its interim management statement for the 16 weeks to August 24, the company noted that it benefited from food sales at its larger pubs rather than the sales of drinks. Following the news, Green King stock is trading up by nearly 7% on the London Stock Exchange.
Across the pub industry, beer sales have declined due to the negative impact of the smoking ban in the U.K as well as a slowdown in the British economy, leading to reduced consumer spending.
In the statement released ahead of its annual shareholders meeting, the company noted that its trading environment continued to be challenging. The difficulties resulted from the dwindling consumer confidence and the resultant consumer expenditure reduction. However, the company is still confident that it is "well placed to withstand many of the pressures these trends create."
For the first 16-week period that followed its fiscal 2008 results announcement on July 3, the Suffolk, U.K.-based company noted that Greene King Retail's like-for-like sales were down 1.6%, compared with a 2.8% decline seen in July. Larger, food-led pub sites remained strong, whereas smaller, wet-led community pub sites were adversely affected by the difficult markets, the company added.
The company, which has operated pubs and breweries for over 200 years, further noted that new Hungry Horse, its value for money segment, was still growing, while both Loch Fyne restaurants and the Inns division at a more premium position were performing well.
Greene King's Pub Partners, which is the segment running its tenanted and leased pubs, reported a 1.7% decline in like-for-like sales profits. Its Brewing Company, the division that produces and sells its quality range of ales and beers like Greene King IPA, Abbot Ale, Old Speckled Hen, and Ruddles Count, reported that own-brewed volumes were down 3%. The Group's Scotland-based Belhaven unit, which it acquired in 2005, continued to perform above expectations, with like-for-like sales growth of 4.6%.
GNK.L is currently trading on the LSE at 568.00, up 35.50 pence, or 6.67%, with a volume of 352,446 shares.
GRKGF.PK closed last traded on August 12 at $17.70.
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