I would like to say how much I enjoy the e-mails from Langton Capital on a daily basis. I use the newsletter as an ideal way of keeping me up to date with what is going on financially in the drinks industry.
Tenanted pub company
EAT, US Restaurants, Dr Pepper, etc:
A DAY IN THE LIFE:
We somewhat heretically yesterday suggested that department stores may be on the wrong side of history.
I mean don’t get us wrong. There are some fantastic, somewhat anachronistic stores such as Barnitt’s in York or that one in Harpenden that closed down to make way for the Pizza Express, but the days of the genre may be numbered, and the High Street as a whole may have a degree of serious reinventing to be getting on with.
Because you wouldn’t fill a newly-built High Street with phone shops, CD & DVD stores, book shops, shoe shops, toy shops, video game shops or electrical stores yet these are precisely the stores that heavily populate the UK’s existing 5,410 High Streets.
There’s a shift to F&B going on, of course. And that is leading to over-capacity issues across the casual diners but there are only so many better burger outlets that the UK needs and High Streets will arguably have to become more experiential, encourage more artisanal outlets and provide more residential housing.
Anyway, that’s an exhausting thought and, as a large proportion of Langton is off to Stamford Bridge this evening to watch the Mighty Hull City despatch Chelsea, we’d better move straight on to the news:
PUB, RESTAURANT & DRINK PRODUCERS:
• Nestlé revenues have increased 2.4% in 2017 on an organic basis, with the results raising speculation that the group may be looking to sell its 23% stake in French cosmetics business L’Oreal.
• Hunky Dory Pubs, the managed expert joint venture between Oakman Inn’s Peter Borg-Neal and Ei Group, has reported sales of £3m in its first year.
• EAT has announced an EBITDA rise of 19% to £4.3m in the year to 29 June 2017, with LfL sales up 4.9%. Revenue for the group declined to £99.2m from £101.1m. The group stated: ‘Tight cash management delivered an improvement in net cash flow before financing of £4.4m compared with 2016 and we closed the year with £5.2m of cash. We have opened our first two stores with the Compass Group, one of our key new partners. We will also open our first international store in Madrid airport with Group Ibersol, followed by a new flagship store in Liverpool Street station in conjunction with our long-standing partner, The Restaurant Group’.
• Research from Technomic depicts a continued slowdown in the US for its top 500 restaurant chains, with cumulative 2017 sales growth at 3.2%, down from 3.8% in the prior year. Net unit growth also fell 1.1%, compared to 1.8% in 2016. ‘Chains today are facing increasingly challenging business conditions, with most publicly held chains seeing mixed same-store sales results in 2017,’ said Joe Pawlak, Technomic managing principal.
• Meanwhile, NPD Group’s 2017 fall census indicates that the number of U.S. restaurants fell 2%, to 647,288 units, from the previous year. The unit count for independent restaurants dropped 3%, while the unit count for chains remained flat. The total restaurant count reached a peak in the fall of 2015, when 662,315 restaurants were tallied, but has fallen in the two years since.
• Ei Group is to move its Craft Union managed model into London for the first time, the MCA has reported. The group aim to have 270 Craft Union sites trading by September.
• Deep Blue restaurants has announced its expansion plans of eight new sites to its 21 strong portfolio following the group’s debt reduction, propel has reported. The group reduced its debt from c £4.4m to £0.2m by converting loan notes to new shares in October 2017.
• Dr Pepper Snapple Group has recorded net sales up 3.8% to $6.69bn, with net income climbing 27% to $1.08bn. These strong results come ahead of a takeover by Keurig Green Mountain, which agreed to acquire the group in January.
• Molson Coors’ full-year net income has jumped by 379% to $1.4bn thanks to a strong performance in Europe, where volumes rose by 10.4% in its final quarter.
• Brooklyn craft brewery Sixpoint is bringing its beers to the UK after signing a distribution deal with importer Heathwick.
• London-based brewer Hop Stuff has raised over £720,000 from 926 investors on Crowdcube -- nearly double its target.
• Boxpark and developer Quintain have gained planning permission from the London Borough of Brent for their newly proposed Wembley project, Propel has reported. The new Boxpark will host 27 independent food and beverage operators, 20,000 square feet of dedicated events space and a 300 - capacity venue.
• Street food and crazy golf group, Swingers, will open its second London site next month at the former BHS store off Oxford Street.
• From the 14th of February the healthy food and juice chain, Crussh, will offer a 25p discount for those bringing in reusable coffee cups.
HOLIDAYS & LEISURE TRAVEL:
• Marriott International has posted strong Q4 figures, with worldwide comparable constant dollar RevPAR up 4.6% and adjusted net income totaling $415m (+24%).
• Hilton Worldwide reports $1.26bn net income for the year with EBITDA up 11% to $1.96bn and 51,600 rooms added over the course of the year. Q4 EBITDA was up 10% to $498m.
• Platinum Equity is set to acquire Wyndham Worldwide’s European vacation rental business for around $1.3bn. Wyndham’s European vacation rental business features more than 110,000 properties in over 600 destinations across more than 25 countries.
• ALMR reports UK hotel occupancy of 71.6% in December, down 0.1% after benefiting from increased tourist numbers. Visit Britain forecasts that overseas visits to the UK will continue to grow in 2018, reaching 41.7 million visits, an increase of 4.4% on 2017; and £26.9 billion in visitor spending, an increase of 6.8% on 2017.
• STR reports US hotel occupancy down -0.2% to 59.5%, ADR up 2.8% to $125.09 and RevPAR up 2.6% to $74.48 for the week 4-10 February.
• Uber reduced losses by 25% in its third quarter whilst growing gross revenues by 85% to $37bn under new CEO Dara Khosrowshahi. The positive results have increased speculation of a potential IPO.
• Three licensees in Scotland have been ordered to pay £10,000 to Sky after showing Sky Sports programming illegally at their premises.
• Langton is between offices. There is some light at the end of the tunnel but, for the moment, please communicate via email. MIFID II is now in operation.
START THE DAY WITH A SONG:
Yesterday’s song was ‘Paranoid Android’ by Radiohead. But today who sang:
The taste of love is sweet,
When hearts like ours meet.
I fell for you like a child,
Oh, but the fire went wild
RETAIL NEWS WITH NICK BUBB:
• Planet ONS Watch: In the “real world”, January (the 4 weeks to Jan 27th) was another reasonable month on the High Street overall for the big retailers, as per the recent BRC-KPMG Retail Sales survey, with Food sales buoyed enough by high food price inflation to offset weak Non-Food sales. But we will find out at 9.30am this morning what life was like last month on that strange parallel world, the Planet ONS, as per the Office of National Statistics Retail Sales figures for January…Our friends at Capital Economics have pencilled in a 0.5% month-on-month recovery in seasonally adjusted sales volume (a bit better than the +0.3% City consensus), to push the year-on-year growth rate up to 2.5%. We will obviously be ignoring these silly seasonally adjusted volume figures and focusing on the year-on-year, non-seasonally adjusted value figures and the suspiciously good-looking ONS figures for “Small Businesses” in Non-Food…
• BDO High Street Sales Tracker: We flagged on Wednesday that John Lewis picked up a bit last week, after a quiet start to February, despite continuing weak Home sales. But today’s BDO High Street Sales Tracker for small/medium-sized Non-Food chains for last week, w/e Sunday Feb 11th, flags that things remained uninspiring, with Fashion Store LFL sales down by 0.4%, despite a very soft comp of -6.9% last year. Including Homewares and Lifestyle chains, total Store LFL sales were also down, by 1.3% (vs -6.5% a year ago). However, overall Online sales were up by 18.7% (versus +20.2% a year ago), with Online Fashion sales 22.5% up.
• Today’s Press and News: The profit warning from Laura Ashley gets plenty of coverage in today’s papers, given the fashion model photo opportunities, eg for the Telegraph, and there are quite a few headlines about the embattled business is switching focus from Fashion/Furniture to Hotels. But Lombard column in the FT asks “What is the point of Laura Ashley?” and thunders that “Malaysian shareholder MUI should take it private and put shareholders out of their misery”. The other big Retail story is that the influential shareholder advisory body ISS has come out against the Tesco deal withBooker, on the basis that Tesco is getting it “on the cheap”, ahead of the shareholder vote on Feb 28th. There are also lots of reports about the news from London Fashion Week that Burberry is targeting the youth market with a tie-up with Farfetch, as noted by the Times for example. The times also flags that Lidl opened its 700th UK store yesterday, and that the Co-op is also expanding rapidly, with 100 new stores this year.
• Trade Press (1): The front cover of Retail Week magazine today is headlined “Wage War”, to flag up the main feature on how “the shopfloor versus warehouse pay dispute has sent shockwaves coursing through the retail sector”. RW also have features on the most innovative fulfilment initiatives from around the world and how JD.com, the Chinese ecommerce powerhouse, is expanding into Europe. RWalso has a column on How to measure success in the multichannel age, which quotes our trenchant view that “all retailers should do what the likes of Bonmarché and Dunelm do and split sales between stores and Online”. The main News stories are that Debenhams is poised to axe around 320 store management positions (as it seeks to deliver £10m in cost savings) and that Tesco is understood to be plotting a new discount chain to rival Aldi and Lidl, a move which has divided City opinion. In his column the Editor takes the side of the sceptics on the latter story, arguing that “A Tesco value fascia would be a distraction” and thundering that “Tesco could do without risking confusion in customers’ minds about whether they’re mugs for spending at the core chain”.
• Trade Press (2): In Drapers magazine today, the Editor thunders in her column that “The digital journey is now business critical”, highlighting the weakness of Online sales at New Look and flagging up the launch of the Drapers Digital Awards 2018 shortlist. The main focus in Drapers is on Lingerie, with a feature interview with Miriam Lahage, “the personable Bostonian” who joined the N Brown owned Figleaves business as CEO last May. Next week is a special Footwear issue and ahead of that Drapers flags that Clarks has opened the first standalone store for its Originals sub-brand, in London’s Soho (the store has been designed to look like an independent boutique). Drapers also visit East London’s 62 acre Silvertown site (a mile from Westfield Stratford), which developers plan to turn into the capital’s leading creative hub for disruptive brands and retailers.