M&B FY lfl sales up 5.3%, cost headwinds are now anticipated to total c£100m: Mitchells & Butlers (M&B), the Toby Carvery, Harvester and All Bar One operator, has reported a 5.3% increase in like-for-like sales in the year to 28 September 2024, as it said that cost headwinds are now anticipated to total circa £100m in this financial year, an increase of just over 5% on its current cost base. The company said that it had made a “strong start to FY 2025”, with like-for-like sales up 4% in the first seven weeks. For the year to 28 September 2024, the company reported total sales of £2.61bn reflecting 6.1% growth on FY 2023. Like-for-like sales increased by 5.3% with strong performances through the brand portfolio and continued out-performance against the market as a whole. It said that volumes of food and drink were in decline of circa 1.5% across the year. Adjusted pre-tax profit for the company stood at £211m (2023: £112m). The business said that operating profit, after separately disclosed items, of £300m reflected a “notable recovery” from last year (FY 2023 £98m) built on this strong sales performance coupled with falling cost inflation. Adjusted operating profit of £312m represents a £91m increase in profitability from last year. The company said: “We made a very good start to the year with like-for-like sales growth of 7.2% over the first seven weeks. Strong trading over the important festive period then led to an acceleration of like-for-like sales growth over the latter half of the quarter to 8.2%, resulting in overall like-for-like sales growth for the quarter of 7.7%. Sales remained strong through the second quarter particularly on key trading dates. Across the quarter, we recorded like-for-like sales growth of 6.1%, comprising drink sales growth of 5.3% and food sales growth of 6.6%, benefitting from the movement of Easter forward from the third quarter in the prior year. Over the third quarter like-for-like sales grew by 3.4%, adversely impacted by the movement of Easter, the easing of the inflationary environment and a period of generally wet weather. In the fourth quarter sales grew by 3.4% having been negatively impacted by riots in city centres during August, as well as an unseasonably cool and wet summer.” The company said that as it moves into FY 2025 it expects more normalised levels of sales growth as the inflationary environment eases. It said: “Cost headwinds are now anticipated to total circa £100m this financial year, an increase of just over 5% on our current cost base. Against a benign backdrop of general inflation (including food and drink inputs) by far the most significant increase is now expected to be in relation to labour costs due both to increases in the statutory National Living Wage and in the recently announced increase in employer national insurance contributions, both of which take effect from April 2025. We anticipate that energy costs this year, of which just over one half have been bought forward, will broadly stabilise overall with no further deflation, as has been seen in FY 2024. Notwithstanding future cost increases we feel that the business is in very good shape. Our balance sheet continues to strengthen, with reduced debt and a substantially de-risked pension surplus, and we expect to out-perform the market driving further profit growth in the year ahead.” Phil Urban, M&B chief executive, said: “We are delighted by the very strong performance during the year. Like-for-like sales continued to outperform the market which, coupled with easing inflationary costs and focus on efficiencies, has resulted in very strong profit recovery. We face increased inflationary cost headwinds in the year ahead. However, we shall remain focused on our established Ignite programme of initiatives and our successful capital investment programme, to drive further cost efficiencies and increased sales. Coupled with our market-leading estate and customer offers, we are confident that this will enable us to further grow market share and secure continued long-term outperformance.”