Mitchells & Butlers lifted by summer trade

By Dan Lalor

LONDON (Reuters) - British pubs operator Mitchells & Butlers reported a small pick-up in trade over the early summer, driven by food, and announced a new three-year facility to cover its short-term borrowing, boosting its shares.

The owner of the Harvester and All Bar One chains said that on the basis of trading in its first 42 weeks, full-year earnings before exceptional items should meet its expectations.

M&B shares, which had fallen over 80 percent from their peak at 909 pence in May 2007, rose 3.5 percent to a seven-week high at 271.75 pence by 9:30 a.m. on Friday.

Cazenove analyst Tim Barrett said while the extension of M&B's short-term credit facility was more important, "the stability in like-for-like sales is also notable".

M&B, which now gets two thirds of its business from diners, said like-for-like sales rose 1.1 percent in the 10 weeks to July 19, up from 0.8 percent growth in the prior 32 weeks.

"Market conditions continue to be characterised by robust demand for good value pub food and associated sales of drinks while on-trade beer market volumes have continued to fall by about 10 percent over the past quarter," the company said.

Latest retail sales data showed May's big rise was reversed in June, to leave growth in the latest three months just 0.6 percent higher year-on-year, pleasing economists who were worried official data was out of kilter with anecdotal evidence.

M&B's latest increase was driven by a 5.1 percent rise in food sales, with drinks down 0.2 percent.