Pub group Greene King blames falling customer confidence for a 1.25 slump in first quarter sales
- Credit: Archant
East Anglian pub group Greene King has blamed falling consumer confidence, rising costs and bad weather for a slump in first quarter sales.
The company booked a 1.2% fall in like for like sales in the 18 weeks to September 3, as it also pointed to increased competition from rivals.
“We remain cautious about the trading environment and expect the challenges of weaker consumer confidence, increased costs and increasing competition to persist over the near term,” Greene King said.
The firm added that over the course of the year, most of the sales decline can be attributed to value food, although more recently it saw “some softening across other segments”.
In June, Greene King outlined a raft of challenges affecting the pub and brewing industry over the next few years, which it said are set to “intensify” amid weakened consumer confidence caused by surging inflation.
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The group, whose headquarters are in Bury St Edmunds, has said it believed visits to the pub will remain an “affordable treat” despite cash-strapped consumers cutting back on spending elsewhere.
Greene King is also bracing for costs to rocket by around £60 million over the new financial year, but it has plans in place to offset up to £45 million of the rise.
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It also hopes the group’s bigger scale since taking over rival Spirit Pub Company for £774 million in 2015 will continue to help it withstand surging cost pressures.
Shares in Greene King tumbled 13% to 571.5p in morning trading as investors drank down the news.
Neil Wilson, senior market analyst, said: “Greene King results also signal weakness in consumer spending and confidence.
“June was hot and dry but since the second half of July the wet weather has kept boozers away from pub gardens. The lack of a major football tournament this year will also be a factor.
“Expect a return to year-on-year growth this time next year when the World Cup comes into play. But it’s yet another sign that the squeeze on consumer spending is hitting company profits.”