BRITISH PUBS and restaurants group Mitchells & Butlers reported slowing sales growth and deteriorating margins, prompting brokers to downgrade earnings forecasts and sending its shares lower yesterday.

M&B, whose chains include Toby Carvery and Harvester, said sales at outlets open more than a year rose 2.8 per cent in the nine weeks to July, benefiting from weaker comparatives as the 2010 period had been affected by customers staying at home to watch the soccer World Cup.

Without that benefit growth would have been just 1 per cent, it said, representing a sharp slowdown from growth of 3.3 per cent in the 33 weeks to May 14th.

“Economic pressures continue and consumer expenditure in our market has weakened in the last couple of months, with the short-term outlook remaining uncertain,” M&B said.

The group is backed by Irish racehorse magnates John Magnier and JP McManus who hold a 20 per cent, while former Superquinn chief executive Simon Burke stepped down as chairman earlier in July, having only taken up the role in February. MB has now gone through six chairman in the last two years.

British consumer confidence slipped in June as a boost from the royal wedding and a run of sunny May bank holidays gave way to harsher economic realities.

M&B, whose brands include All Bar One and the Sizzling Pub Co, said its operating margins were expected to be slightly below last year as a result of rising input cost pressure and having more special offers on food and drink.

Acting chief executive Jeremy Blood said he expected forecasts for full-year operating profit to fall 3 per cent. “The operating profit consensus is around £302 million. I would have thought it will come down 3 per cent.”

Shares in M&B, which have lost nearly 20 per cent of their value since May, closed down 8.5p at 282.4p in London yesterday.

Liberum Capital analyst Patrick Coffey said the performance was disappointing but in line with updates from rivals Greene King and JD Wetherspoon, who have also reported slowing sales growth.