M&B boss makes a surprise exit

By THIS IS MONEY
Updated: 11:48 EDT, 16 March 2011

Pub group Mitchells & Butlers is undergoing fresh upheaval as chief Adam Fowle steps down – hot on the heels of chairman John Lovering.

Soap opera: Fowle calls time on M&B job

Fowle resigned 'by mutual consent' two years into his job, while Lovering announced his departure in January after just a year.

The 1,600-strong pub firm also saw boardroom changes last year after billionaire activist investor Joe Lewis instigated a shareholder rebellion.

Shares in M&B fell 9.1p to 290.4p in trading today, although the company attempted to shore up confidence by saying performance was in line with board expectations.

Jeremy Blood, the former boss of brewing giant Scottish & Newcastle and non-executive director at M&B, will take over Fowle's role until a replacement is found.

New chairman Simon Burke praised Fowle's 'significant contribution' and said he left the company in a much stronger position than when he took over.

Nigel Parson, an analyst at Evolution Securities, said Fowle's resignation was a surprise and would prompt 'a blizzard of speculation'.

'Was he pushed? Did he jump? Are the hands of Joe Lewis and Elpida (John Magnier and JP McManus) at work? Why did he go so soon after the departure of chairman Lovering? Was there a fall-out with the board over strategy?

'The soap-opera that is Mitchells & Butlers continues to run and run.'

Fowle became chief executive in August 2009 after Tim Clarke stepped down following a £69m loss on a property joint venture.

Under his tenure, the group rolled out a strategy to focus on food sales, which have become more important to the pub sector since the introduction of the smoking ban.

He also ramped up investment in the group's six mid-market eateries, including Harvester, Crown Carveries and Sizzling Pub Co.

As part of this strategy, Fowle last year oversaw the sale of 333 drinks-led pubs and the acquisition of 20 Ha Ha Bar & Grill outlets. Food now accounts for around 47% of the company's sales and M&B estimates that around two-thirds of total sales relate to an eating occasion.

Sales grew 2.5% in the nine weeks to January 22, driven by a 5.5% jump in like-for-like food sales, whereas drink sales were up just 0.5%.

Elsewhere in the drinks industry, pub and brewing firms Marston's and Shepherd Neame reported upbeat figures.

Marston's said own-brewed beer volumes jumped 4% on a year ago in the 23 weeks to March 12, compared with a decline of around 7% for the wider UK ale market.

The firm makes Pedigree beer, which sponsors the England cricket team, and the brand received a publicity boost from this winter's Ashes triumph in Australia.

Sales of bottled ale leapt 16% across the portfolio, which also includes the brands Banks's and Jennings.

Marston's owns some 2,150 pubs, and it said the 500-strong managed division saw like-for-like sales grow by 2.4% as a result of continued strong food demand.

The Wolverhampton-based company added that underlying profit trends at its tenanted and leased pubs division continued to improve, with like-for-like profits up 0.1% against the 4% decline seen in the 2010 financial year.

Marston's said the turnaround reflected the success of new agreements which give tenant landlords more incentives to grow their business.

The firm's stock was down 0.1p at 93.05p today.

Meanwhile, family-controlled firm Shepherd Neame, which makes Spitfire and Bishops Finger, hailed a 1.6% rise in turnover to £61.7m in the half year to Christmas Day.

'We have achieved record turnover and record total beer volume against a background of adverse weather conditions and pressure on disposable income,' said chairman Mile Templeman.

However, pre-tax profits dropped 7% to £3.4m after margins came under pressure, and the Kent-based group cautioned over a further impact from a spike in costs of wheat and barley, as well as utility bills.

Like-for-like sales in its 44 managed pubs rose 3.6%, and this accelerated to a 'very encouraging' 11.4% hike in the first nine weeks of the second half.

Shepherd Neame's larger 315-strong tenanted estate reported a fall in average underlying earnings per pub of 0.6% in the half year.