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Mitchells & Butlers posts loss, axes 1,300 staff but says it will recover

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Mitchells & Butlers PLC (LON:MAB), the All Bar One and Miller & Carter pubs and restaurants owner, fell into a loss and cut jobs in the year to September 26, 2020, as it bore the brunt of the coronavirus (COVID-19) lockdown.

At one point, 99% of its employees were on furlough, the FTSE 250 group said, adding that its accounts had been prepared on a going concern basis.

Mitchells laid off 1,300 staff during the period and alongside other cost-cutting measures, this has reduced the group’s monthly cash burn to £35mln to £40mln before debt costs of £50mln per quarter.

As of November 25, 2020, the group said it had cash balances of £125mln and total liquidity of £225mln. 

A second lockdown began in England on November 5 requiring the closure of all pubs and restaurants.  

Like-for-like sales since September 26 have declined by 26.5%, Mitchells said, reflecting the new restrictions with total sales over the same period down by 50.8%.  

The company added that with an estate of largely freehold assets it would recover once trading restrictions ease. 

In the results statement, Phil Urban, Mitchells’ chief executive, said: “Throughout a very uncertain and challenging year our businesses and teams have adapted quickly, creating a safe environment for guests and putting us in a strong position to benefit when consumers are able to eat out again.

“We saw direct evidence of this from a strong trading period in July and August before further restrictions came into force.”

Losses for the year to September 26, 2020 were £123mln compared to a profit of £177mln twelve months earlier. Revenues fell by 34% to £1.48bn.

Like-for-like sales declined by 3.5% over the financial period, with sales growth of 0.9% before closure more than offset by the impact of the subsequent lockdown.

Eat Out to Help Out meant food performed better than drink and Mitchells said it had received £30mln from the Government through the scheme.

Mitchells ‘walking on a tightrope’

Russ Mould, investment director at AJ Bell, added: “The pub company is walking on a tightrope and management are determined they will make it to the other side without plunging to the depths.

“A lot of Mitchells & Butlers’ pubs are reliant on being rammed full of people such as All Bar One and O’Neill’s which are tailored to the party crowd, so not exactly social-distancing friendly. The idea of the country operating in tiers until at least Easter therefore poses a major threat to pub and bar trading for many months to come.

“Mitchells & Butler’s saving grace could be the widespread availability of food in its establishments. That could be the pulling power it needs to get people through the doors, assuming that people are happy to venture outdoors.”

Shares eased 0.7% to 222p.

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