Mitchells & Butlers (M&B) has reported like-for-like sales (lfls) on a reported basis up 1.2% in the 51 weeks to 22 September, with the final eight weeks seeing growth of 0.8%.

Total sales have increased by 0.5% in the year to date impacted by the disposals in the prior year.

Aligning dates to account for the impact of the 53rd week last year, lfls were up 2.2% for the final eight weeks.

The company said the period had seen a more normalised split between drink and food sales following a period of very strong drink growth over the summer.

M&B said cost headwinds remained largely unchanged and, as previously advised, are expected to lead to margins being lower than last year.

Seven new sites have been opened and 232 conversions and remodels completed in the financial year to date.

Chief executive Phil Urban said: “We are pleased to have seen like-for-like sales growth improve to 2.2% following the period of sustained hot weather and the World Cup over the summer. We are building momentum as a result of our focus on our strategic priorities and are seeing encouraging results from the second wave of transformation activity. Work continues to mitigate the cost headwinds impacting the industry and we remain confident of delivering full year results in line with the Board’s expectations.”

Peel Hunt’s Douglas Jack said: ”M&B appears to have resumed its sales outperformance vs the sector in recent weeks, with LFL sales rising by 2.2% over the eight weeks to 22 September and by 1.2% over the full year. With total sales rising by 0.5% (similar to H1), and no change in profit guidance, this implies a slight increase in EBIT margins in H2. We are holding our forecasts, on which basis we believe the shares are undervalued, on just 7.7x EV/EBITDA.”

Mark Brumby, of Langton Capital, said: ”M&B has not given detail but it has implied that, though its food-led businesses had been negatively impacted by the July hot weather and the World Cup, sales have now ‘normalised’.

• Trading is in line with expectations.

• This is reassuring but, as the group reports, cost headwinds remain a problem and margins will be lower this year than they were last.

• In recent years, M&B has expended a great deal on capital spending. The returns here will have shored up the overall numbers which, in the absence of capex, would have been worse.

• However, the market is competitive and M&B is getting stuck in both in terms of discounting and in evolving its offer in line with changing consumer tastes.

• The group has a large estate and all changes will take time to come through. Competitors will not stand still. Smaller operators will be more nimble but other, larger players, are facing much the same challenges as M&B.

• Trading is tough. Discounting is getting worse and costs are rising. M&B may have turned the corner but it may be doing so just as the market becomes somewhat more challenging. There is no real guidance as to the dividend or indeed whether there will be a dividend this year at all.

• However, the group is optically cheap and, though operating is not easy, it is pulling what levers it can.”