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Mitchells & Butlers stock down on cost pressures

Pub group Mitchells & Butlers, which owns All Bar One and the Toby Carvery chain, has said increasing costs will weigh on incoming earnings for the current year.

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It also said that the high rates of inflation are showing signs of abating, but this offset was nowhere near enough to counter the negative effects from the remaining high costs of fuel and staff, which will see a more than 9% rise in the national minimum wage from April 2024.

(AI Video Transcript)

Mitchells & Butlers

Mitchells & Butlers, a popular British pub chain, has faced a tough year due to rising costs. However, they believe that these pressures are starting to ease. Unfortunately, the company's profits have declined because of various negative factors impacting their business. The share price of Mitchells & Butlers has shown some improvement from its lowest point in October 2022, with a significant increase of 152 percent to recent highs. However, after the announcement of their full-year numbers, the stock has dropped by almost 9 percent in just an hour and a half of trading.

Pressures related to inflation

Looking forward, Mitchells & Butlers, expects the pressures related to inflation to decrease significantly this year. However, they are worried about the impact of the national living wage, which will increase by 9.8 percent and cover all employees above the age of 21 starting in April next year. This wage increase is likely to affect the company's profits. Furthermore, the high prices of energy for food and heating in pubs pose significant challenges in terms of costs. Due to these factors, the company has warned about their earnings outlook for the next year.

Mitchells & Butlers' share price

Despite the recent decline in share price, it's important to note that the stock is still considerably higher compared to the previous year. Therefore, the current decrease can be seen as a minor adjustment. However, the announcement of the full-year results has had a significant impact, leading to a nearly 9 percent drop in the value of the stock. In summary, Mitchells & Butlers, a well-known pub chain in the UK, has faced a challenging year with rising costs impacting their profits. Although the stock has shown improvement overall, it has recently experienced a decline following the announcement of their full-year results. The company expects some relief from inflation-related pressures but remains concerned about the impact of the national living wage and high energy prices on their bottom line.

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