UK pub firm M&B says Christmas sales up but margins down

LONDON, Jan 29 (Reuters) - British pubs and restaurants group Mitchells & Butlers (LSE: MAB.L - news) said increased demand from hungry customers helped it post a rise in sales over the Christmas period, although margins continued to be hurt by its competitive pricing stance.

The company, whose pubs include Harvester and Toby Carvery, said group underlying sales for the first 17 weeks of its fiscal year to Jan. 24 rose 1.7 percent, albeit a slight slowdown from growth of 2.4 percent over the first eight weeks of the quarter.

Food sales, worth half of group revenue, were well ahead of drinks sales in the period, growing 2.8 percent with over 200,000 meals sold on Christmas Day. Sales over the two week Christmas and New Year period were particularly strong.

M&B said margins continued to be weaker than last year, however, as it invests in building food volumes with lower prices in what is a promotion heavy sector, and integrates the Orchid pubs business it bought in 2014.

Rivals Wetherspoon and Marston's both reported sales growth over the Christmas period earlier this month, while sales at Greene King (LSE: GNK.L - news) were flat.

Shares (Berlin: DI6.BE - news) in M&B closed at 422 pence on Wednesday, up 17 percent over the past three months, valuing the business at 1.75 billion pounds ($2.65 billion).

($1 = 0.6604 pounds) (Reporting by Neil Maidment; Editing by Kate Holton)