Investment: Northern stays in high spirits

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The Independent Online
RUNNING a good disco is about ambience. People come back if they have a good time and the way to make sure that they have a good time is by paying attention to detail.

That, anyway, is the philosophy of Northern Leisure, which runs 59 assorted clubs dotted around the UK. Contrary to recent gloomy statements elsewhere, its AGM statement yesterday was surprisingly upbeat.

Total sales in the first eight weeks of this year to August 1999 were up 34.5 per cent. While most of that was from clubs that hadn't opened in the corresponding period, like-for-like sales were "modestly ahead", recovering strongly from a 10 per cent fall in July.

The tone also contrasts strongly with another disco operator reporting yesterday. Rank's entertainment division saw profits dive by a quarter in three months to September, with discos having a particularly hard time.

"Discos get lost in the bureaucracy of running a giant corporation," reckoned one analyst trying to explain the divergence.

One area where Northern has matched Rank, however, is share price performance. After abortive bid talks in April pushed the price up to more than 250p, it now languishes at 102p.

At that price, if it meets brokers profit expectations for the full year of pounds 19.5m, the forward multiple is a lowly 9.

Like Rank, that puts it comfortably seated in the recovery lounge. But if it's down to a choice between a business that knows exactly what's it's doing and one that's a possible bid or break-up target, it's no contest. Choose Northern anytime.