Greene King sales rise, cautious on outlook

By Matt Scuffham

LONDON (Reuters) - Greene King (GNK.L), Britain's fourth-biggest pubs company, said strong appetite for pub food had pushed sales up sharply in the first four months of its financial year, lifting its shares on Tuesday.

Greene King, which has about 2,400 pubs in England and Scotland, said like-for-like sales at managed pubs in England grew by 4.6 percent in the 17 weeks to August 30.

Pubs with a strong food offering were the best performers, benefiting from like-for-like food sales rising by 8.1 percent.

The company's Belhaven managed pubs in Scotland saw like-for-like sales growth of 10.9 percent.

Deutsche Bank analyst Geof Collyer said the performance had been "very robust," adding that a decline in operating margin of less than 100 basis points over the period was 50-60 basis points better than his forecast.

Managed pubs have generally outperformed tenanted pubs across the industry throughout the consumer downturn, benefiting from greater flexibility for pricing and promotional activity.

Average earnings before interest, tax, depreciation and amortisation (EBITDA) at the group's 1,500 tenanted pubs, which accounted for just over a third of earnings last year, fell by 7.2 percent.

Shares in Greene King, which have outperformed the FTSE All Share Travel & Leisure Index by 20 percent since the start of the year, were up 4.1 percent to 500 pence at 10 a.m. British time, having earlier been as high as 504 pence.