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
Bourne Leisure, EI Group, EasyHotel, take privates etc.:
A DAY IN THE LIFE:
It’s Friday and it’s August.
There may be more ‘proper’ news out there than would normally be the case, given Brexit and all the rest but, with ‘out-of-office’ replies crowding the Langton inbox, it still does seem pretty quiet.
And that’s notwithstanding the fact that EI Group, EasyHotel, Millennium & Copthorne and Merlin are also all in a bid process and other companies are releasing RNS’s and dampening expectations as to calendar Q3 and Q4 trading.
All of which suggests that ‘busy’, like beauty, is in the eye of the beholder and it’s a relative rather than an absolute term.
Anyway, that’s an explanation rathter than an excuse as to why the email may be a little shorter than usual. On to the news:
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PRIVATE COMPANY RESULTS: Bourne Leisure Holdings Ltd reported FY numbers to 31 Dec 2018 to Companies House last week. As with Dishoom, the good numbers were lodged, with a clean and short statement, well ahead of time. 16 Aug 2018:
Other results to be covered include St Austell Brewery, Daniel Thwaites & JW Lees. See Premium Email.
GENERAL NEWS – PUBS & RESTAURANTS:
• The bakery chain, PAUL has reported its revenues up 9.5% during H1 2019. The group has stated that it has seen online sales increase 44% in the past year.
• EI Group has announced the Court Meeting and General Meeting to approve the scheme by which the company will be purchased by pub company Stonegate will both take place on the morning of 12 September.
• EIG says ‘the EIG Directors unanimously recommend that all Scheme Shareholders vote in favour of the Scheme at the Court Meeting and all EIG Shareholders vote in favour of the Special Resolution to be proposed at the General Meeting, as all EIG Directors who hold interests in EIG Shares have irrevocably undertaken to do in respect of their own beneficial holdings of EIG Shares.’
• Treasury Wine Estates has seen its profits before tax increased by 16% to AU$419.5m in the year to June 2019. Chief executive officer, Michael Clarke commented: ‘The results…are a direct result of the investments and structural change our team has made in our global business over the past five years. Sustainability is at the heart of everything we do at TWE, and we will continue to pursue opportunities to enhance the fundamentals of our business’.
• The London-based Benchmark Drinks has raised £750k in funding from HSBC UK. Paul Schaafsma, Benchmark Drinks’ managing director, said: ‘Having started exporting in our inaugural year, HSBC UK’s backing will further fuel our expansion plans’.
• BBC reports consumers are cutting back on spending due to Brexit uncertainty. The BRC & KPMG reported that consumer spending growth was at a record low last month. Large ticket items may be put on hold. Pubs and restaurants benefit from small-ticket spending and may be seen as an ‘affordable treat’. Holidays (along with furniture, cars, house moves etc.) comprise spending that can be deferred.
• Applebee’s in the US has partnered with DoorDash to offer delivery at a number of its locations.
• Molson Coors is to remove plastic packaging from its Carling and Coors Light brands in the UK. Plastic wrapping will be removed from its multipacks.
• The ONS has found sales in department stores have increased for the first time this year in July, up 0.2%. This is somewhat against the trend. If the nation’s department stores did not already exist, it is unlikely that anyone would build them – or at least not all of them.
• Asda has reported a fall in sales for Q1 2019, stating that a consumer confidence slump has taken its toll on demand for non-food lines.
• Chinese online giant Alibaba has beaten expectations for sales in its quarter to end-June. Revenues were some 42% higher year on year.
HOLIDAYS & LEISURE TRAVEL:
• EasyHotel has updated on the recommended cash offer that it has received from Bidco, effectively major shareholder ICAMAP and one of ICAMAP’s own shareholders, Ivanhoe Cambridge saying the ICAMAP has ‘unconditionally agreed to acquire 7,943,182 easyHotel Shares in aggregate at a price of 95 pence per easyHotel Share in cash on behalf of Bidco.’
• ICAMAP says ‘following completion of the Acquisition, ICAMAP's holding in easyHotel will increase from 38.65 per cent. to 44.09 per cent. of the issued easyHotel Shares.’
• The terms of the offer for the remaining shares ineEasyHotel are unchanged, namely 95p in cash per share. The Independent easyHotel Directors ‘intend to recommend unanimously that easyHotel Shareholders accept or procure acceptance of the Updated Offer, as the Independent easyHotel Directors who are interested in easyHotel Shares have irrevocably undertaken to do in respect of their own shareholdings.’
• UKHospitality has expressed surprise at the Highland Council’s consultation on tourist tax and has called on it to avoid any measures that would hinder Scotland’s hospitality industry. UKHospitality Executive Director for Scotland Willie Macleod said: ‘It is astonishing that the Highland Council is using public money to consult on a tourist tax, just before the Scottish Government is to launch a national consultation on the same issue’.
• NATS has seen its busiest ever day in UK airspace, handling 252,173 flights, an increase of 0.9% on the same month last year. Peter Liney, CEO of GRJ, commented: ‘This acquisition is the first step of many as we look to enhance our position as the world’s leading rail holiday company’.
• STR has reported that US hotels have seen occupancy decline 1.4% to 74.1% during the week of 4-10 August, while ADR rose 0.4% to $133.36 and RevPAR fell 1% to $98.88.
FINANCE & ECONOMICS:
• Sterling up a shade at $1.2089 and €1.0892. Oil down at $58.83. UK 10yr gilt yield unchanged at 0.41%. World markets lower in UK & Europe yesterday but higher in US. Far East up in Friday trade. The UK is set to open up by some 40pts.
• Brexit & politics:
o Huawei has said it is confident the UK will resist ‘politically motivated’ pressure from the US not to use its products. Reuters has cited some observers’ comments that the UK is likely to be drawn more into the orbit of the US following Brexit.
o Jeremy Corbyn has suggested that he should be installed as temporary PM ahead of a Brexit extension, second referendum and general election. Mr Corbyn may be unpalatable to Tory rebels. Labour veteran Harriet Harman has reportedly told allies she that she would be prepared to serve as caretaker Prime Minister to stop a No Deal Brexit.
o SNP leader Nicola Sturgeon has said ‘we will work with anyone and we’ll explore any option to stop Brexit.’
o Campaigners for a second referendum hereded a ‘flock’ (about four) sheep down Whitehall yesterday in a farming protests against a no-deal Brexit. The sheep were outnumbered by photographers many times over.
o Farmers for a People’s Vote suggests that up to 50% of farms would have to cease trading in the event of a no-deal Brexit.
START THE DAY WITH A SONG:
Yesterday’s song was Anarchy in the UK by the Sex Pistols. today who sang:
We're all sensitive people,
With so much to give
Understand me, sugar
RETAIL WITH NICK BUBB:
Ted Baker/Next: When we caught the headline of an announcement about Ted Baker and Next this morning, we half-thought that mighty Next must have made an agreed takeover bid for the struggling Ted Baker, but Next has never made a big takeover bid…and all it turned out to be was an agreement that Next will take over the Ted Baker kidswear licence from Debenhams next spring. Nevertheless, both CEO’s put their names to gushing tributes in the statement: Lindsay Page of Ted Baker said “Next is the outstanding partner to take Ted Baker forward in this category, which we believe will deliver significant growth in the coming years" and Simon Wolfson of Next said: “We have worked with Ted Baker for a number of years through Label and recognise the power of their brand".
Planet ONS Watch: We noted yesterday that, in the real world, as per the overall BRC-KPMG figures for July (the 4 weeks to July 27th), Retail Sales were pretty flat last month, given the impact of last year’s heatwave on supermarket trading, but “seasonally adjusted” life was OK on the High Street on that bizarre parallel world, the Planet ONS (aka the Office of National Statistics in sunny Newport), via yesterday’s official Retail Sales figures for July…As per usual, credulous City economists (who treat the dubious ONS figures as the gospel truth) swallowed the 0.2% rise in month-on-month seasonally adjusted sales volume, which was a tad better than expected, without digging any further. We focused, as usual, on the year-on-year non-seasonally adjusted sales value figures and the controversial split between Large and Small Businesses and the July +3.7% outcome (slightly down on the +4.0% in June) would have looked a bit worse but for the suspiciously high-looking sales for Small Businesses (up 6.3%, versus only +2.9% for Large Businesses). Unaccountably, the wretched ONS yet again did not think the contrast between Large and Small businesses worthy of any comment, but it did highlight the strong 22% growth in Non-Store retailing and Online Non-Food sales growth of 10.3% was better than in the BRC-KPMG survey (implying that mighty Amazon is still performing well). For an independent view of what Retail Sales were really like last month, we await the verdict of the Retail Sales experts, Retail Economics, early next week.
Asda Watch: We flagged yesterday that although on an Easter-adjusted basis the calendar Q1 sales outcome for Asda was up 0.5% LFL, Q2 would have been more difficult, given tougher comps. Oddly enough, the Asda PR team decided not to give an Easter-adjusted Q2 sales figure in yesterday’s update, but, on a line through the Q1 adjustment, we’d assume that the stated +0.5% LFL ex-fuel was really -1.1% on an underlying basis (to give -0.3% LFL overall in calendar H1). Still, that wasn’t bad, given the challenging industry background, albeit Walmart highlighted that the Q2 gross margin rate declined “due to the mix impact of stronger fuel sales, soft sales in higher-margin general merchandise categories, strategic price investments and markdowns” and that these pressures were only partially offset by strong operating cost control. The CEO Roger Burnley noted in the statement that “our Non-Food business has been challenged during the period, but we’re satisfied that our Food business has continued to perform well and our Online growth continues to outpace the market.”
News Flow Next Week: There is no company news scheduled for next week, ahead of the Bank Holiday weekend, but the latest monthly Kantar and Nielsen grocery sales figures are out on Tuesday morning.
BDO High Street Sales Tracker: We highlighted on Wednesday that the John Lewis sales figures for last week stabilised, against soft comps, but today’s BDO High Street Sales Tracker for medium-sized Non-Food chains continues to report suspiciously good progress, implying sampling problems after the collapse of chains like Karen Millen/Coast. In w/e Sunday Aug 11th, BDO Fashion sales were up by as much as 9.3% LFL (including Online), the thirteenth consecutive week of growth…And total BDO LFL sales (including Homewares and Lifestyle sales) were said to be up by 7.0% last week (up by 3.8% in Store sales and up by 25.9% in Online sales).
Trade Press (1): The front cover of Retail Week magazine today is a photo of the hapless new Chancellor in front of a boarded up shop, with the headline “Time to act, Chancellor”, flagging that “Retailers unite to demand rates reform from Javid”. RW also have features on “M&S' new store recipe” (“Fresh-look M&S food hall puts full range on show”) and “House of Horrors” (“Is Ashley's 'Harrods of the High Street' vision for House of Fraser any closer to reality?”). And in his column the Editor looks at the gloomy High Street outlook for the autumn and thunders “Don’t let Brexit steal retail’s Christmas”.
Trade Press (2): Drapers magazine today is the last edition published by the retiring Editor, Keely Stocker (who is off to Fat Face as Comms Director) and in her final column she notes that she has been at the magazine for 14 years and thunders that “My time at Drapers was a pleasure and a privilege”. In terms of News stories, Drapers highlight that fashion retailers like River Island, Jack Wills and Schuh are pushing landlords to cut their store rents, the “Flash Sale” website SecretSales has been sold to the newly launched Lifestyle Retail Group (LRG) for an undisclosed amount; Croydon independent fashion stores are in despair over the continued Westfield shopping centre delays and industry insiders think that the Debenhams’ new CEO is a ‘risky’ appointment. In terms of features in Drapers, Birkenstock’s CEO reveals how the “ugly” shoe trend, clever collaborations and new categories are introducing the comfort-focused brand to new customer segments. And Boohoo group’s new CEO John Lyttle explains how Karen Millen and Coast will fit into the young fashion etailer’s portfolio and highlights the synergies and savings that it hopes to make