M&B toasts its London pubs

PUBS group Mitchells & Butlers, which owns the Harvester, O'Neills and All Bar One brands, today reported strong sales at its food-led community pubs and central London boozers.

Chief executive Tim Clarke said a self-regulatory smoking ban that he and his fellow pub operators have agreed should be 'broadly neutral' in trading terms for the company.

'We will be attracting in as many non-smokers as we have existing smokers,' he said.

The company is one of a number of big groups that have agreed to have 80% of their pubs set aside for smoke-free areas by 2009.

Like-for-like sales in M&B's core residential-area pubs jumped 7% in the 19 weeks to 18 September while its High Street outlets' sales were up by 3.9%.

Tough conditions in regional city centres masked the strong showing in London, where there was a strong pick-up at the Nicholsons Victorian-style ale houses chain.

Dresdner's James Ainley reiterated his 'buy' recommendation on the stock after what he termed 'a very good performance', and said he is likely to upgrade his numbers by around 2%-3%.

'The largely freehold nature of the estate with a low exposure to the High Street and strong food offerings should protect the group from growing regulatory pressures such as a smoking ban and a clamp down on binge drinking,' he wrote in a note following the update.

ABN Amro were equally upbeat, and said they are looking for a £5m or 3% upgrade to pre-tax profits for 2004. ABN is reiterating its 'reduce' stance with a 225p price target.

Mitchells & Butlers shares were 5- 1/2p higher at 263p.