ii view: Mitchells & Butlers celebrates strong festive sales
With twice as many outlets as Wetherspoon and a reported net asset value comfortably above the current share price. Buy, sell, or hold?
16th January 2026 10:56
by Keith Bowman from interactive investor
First-quarter trading update to 10 January
- Like-for-like sales up 4.5%
Chief executive Phil Urban said:
“Our focus remains on tackling the significant cost headwinds faced by the industry this financial year through the effective execution of our Ignite programme and our successful capital investment programme, driving both cost efficiencies and increased sales.
“We remain well positioned to further grow market share in the year ahead by leveraging the strength of our diverse portfolio of established brands and enviable estate locations."
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ii round-up:
Mitchells & Butlers (LSE:MAB) detailed quarterly sales that beat City forecasts, with the owner of brands including All Bar One flagging record sales on Christmas day itself.
Like-for-like (LFL) sales for the first eight weeks of first quarter trading rose 3.8% from a year ago, accelerating to growth of 5.2% for the seven weeks to 10 January. Total LFL sales up 4.5% for the quarter exceeded analysts hopes for a gain of 4%.
Shares in the FTSE 250 company rose 2% in post announcement trading having come into this latest news up by just under a tenth in 2025, similar to the FTSE 250 index itself. Budget rival Wetherspoon (J D) (LSE:JDW) rose by just over a fifth last year.
M&B operates over 1,700 pubs and restaurants including brands such as Nicholson’s, Miller & Carter, Toby Carvery, and Innkeeper hotels.
Management remains confident in its ability to manage the expected £130 million of addition costs expected in 2026, just under 6% of the total cost basis, and fuelled primarily by increased labour and food costs. That’s potentially up from 2025’s £100 million addition.
Food sales on a like-for-like basis, up 5.1% during the period, outpaced a rise of 3.8% in drink sales.
Like-for-like sales over the five key days of the festive period (Christmas Eve, Christmas Day, Boxing Day, New Year's Eve, New Year's Day) improved 10.5% compared to 2024.
The City is currently forecasting adjusted operating profit for the 2026 financial year ahead of between £318 million and £338 million versus £330 million in 2025.
ii view:
Started with the coming together of two Midlands based families in 1898, Birmingham headquartered M&B today employs around 50,000 people. Food generated most sales during the last financial year at 54%, with drink at 43%, and services such as rents from unlicensed properties, a small balance of 3%. As well as other UK brands such as O'Neill's, Harvester and Ember Inns, the group also operates the ‘Alex’ chain of bars in Germany, generating 4% of overall sales.
For investors, consumer headwinds including an increasing UK government tax take potentially reducing customer spending cannot be ignored. Higher labour costs are being battled with food and energy costs historically volatile. The impact of unseasonal weather always deserves thought, while the halted dividend payment contrasts with forecast future yields of over 1.5% for rivals Wetherspoons and Fuller Smith & Turner Class A (LSE:FSTA).
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On the upside, 19 different brands across the mid-to-upper market segments offer diverse consumer exposure with customer demand currently robust. A fall in group net debt and refinancing was previously highlighted as underpinning management’s current pondering for a restarting of shareholder returns. Ongoing group initiatives include the installation of solar panels and sensors to reduce costs, while management’s estimated net asset value of 476p per share as of late September sits comfortably above the current share price.
In all, and despite continuing risks, a diversity of established brand names and consensus analyst fair value estimate above 345p per share will likely continue to generate investor interest.
Positives:
- Diversity of brands
- Ongoing management efficiency programme
Negatives:
- Uncertain economic outlook
- Potential currency headwinds from Germany business
The average rating of stock market analysts:
Buy
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