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
Richoux, CAKE, Domino’s, US restaurant supply, Whitbread & other:
A DAY IN THE LIFE:
We’ll keep it brief, but we probably haven’t spoken about the Mighty Hull City enough recently as the team has taken 18pts from the last available 18 in the league and has moved from just above the relegation slots to not a million miles from the playoffs.
And that’s not the sort of performance that your average beleaguered Tigers’ fan is used to. The victories included defeating league leaders Leeds, and slotting six past strugglers Bolton.
Anyway, that’s hopefully that hasn’t jinxed Saturday’s match against Aston Villa. On to the news:
PUBS & RESTAURANTS:
• Patisserie Holdings has stated that Non-Executive Director and Deputy Chairman, Lee Ginsberg has resigned from his position to focus on other commitments. Director James Horler resigned earlier this week.
• CAKE’s bank facilities expire today. The company is working towards an extension. KPMG has been recruited to explore ‘all options’.
• Richoux Group has announced that it is to cancel its admission of Ordinary Shares to trading on AIM. The group will be re-registered as a private limited company. The company says the move is conditional on shareholder approval. The last day of dealings is expected to be 14 Feb.
• Fleurets has reported a flurry of UK leisure property sales during Q4 2018, with 22 pubs let to Marston’s and owned by NewRiver being sold to a private equity investor.
• The MCA has reported that PizzaExpress will launch a spin-off all-dining Pizza brand, ZA, next month.
• A YouGov poll has found that 24% of British drinkers are keen to cut back on alcohol, with as many as 31% of those aged between 18-24 years old.
• Notes: Music & Coffee Ltd has reported numbers for the year to end-June 2018 to Companies’ House saying that accumulated losses for the period increased by £380k. The company now has negative shareholders’ funds of £987k.
• Domino’s Pizza aims to grow by nearly 60% in the next six years, adding 9,700 new stores to its current 15,300 stores globally. The company projects $25bn in global annual sales by 2025 with domestic and international sales to grow by between 3% and 6%.
• In the US, Kona Grill CEO Marcus Jundt warns labour and competition headwinds have set the over-capitalised restaurant industry up for a ‘potential bloodbath’. Jundt said ‘I think Wall Street has overcapitalized the business in general. And I think there will be a shakeout. I think returns will go down overall, because there is too much money that has gone into this business in the last, say, eight years.’
• Coca-Cola has announced the launch of a new alcohol-free sparkling drinks line called Bar Nøne. Creators of the brand commented: ‘Bar None was born out of a conversation among a few close friends and co-workers in the office. We were the ones who found ourselves at work dinners, house parties and Sunday Fundays wishing there was something a bit more interesting to drink when we didn’t feel like boozin’ it up’.
• China’s imports of wine have decreased in value for the first time since 2015 due to an economic slowdown in the country, according to data from Chinese media outlet Winelta.
• The Inn Collection Group has opened a new £4m Northumberland inn, called The Amble Inn. The ICG operations manager Paul Brown said: ‘The Amble Inn fills a long-standing gap for year-round, affordable accommodation of this type as well as providing people with a fantastic new environment to eat and drink in’.
HOLIDAYS & LEISURE TRAVEL:
• Whitbread yesterday bought back £4.3m of its shares at £47.17. The company, which updates on Q3 trading next week, has said that it will initially buy back some £500m of its shares.
• GfK reports holiday bookings for the current winter up 2% yoy in the week to 12 January, but down 3% for summer 2019. However, the package market for summer 2019 remains 7% up for the season to date after a strong first week of January.
• Iata warns the proposed guidance from the EU Commission in the event of ‘no deal’ calls for the current level of flights between the UK and the EU to be maintained, but does not allow for an increase in flight numbers in 2019.
• Chris Grayling, transport secretary, wrote to the Association of Independent Tour Operators reassuring that flights between the UK and EU will be maintained after Brexit.
• STR reports US occupancy fell by 5.9% in the week to 12 Jan with ADR down 2.3%. REVPAR was 8% down.
• Japan welcome 30m international tourists for the first time last year. Visitor numbers were up by 8.7%.
• New York saw record visitor numbers at 65.2m last year, with 51.6m being domestic and 13.5m international. The UK was the top overseas market at 1.24m.
• LA reports visitor numbers up 3% yoy in 2018 to 50m, with 42.5m domestic visitors and 7.5m international visitors. Direct spending in the local economy by the visitors is estimated at $24bn.
• Chicago reports visitor numbers up 4.3% yoy to more than 57.6m in 2018, with domestic visitors up 4.4% and international visitors up 2.9%.
• Jam City, an LA-based mobile gaming studio, has secured $145m in new funding from JPMorgan Chase Bank, Bank of America, Merrill Lynch and others to pursue a roll-up strategy in the industry.
• GVC announces Ladbrokes and Coral betting shops will become a ‘relatively small part’ of operations as ‘UK retail is in terminal decline’. CEO Kenny Alexander told the Telegraph ‘It’s all about digital. And thankfully our digital business is going gangbusters.’
• Netflix added 8.8m members in Q4 2018, bringing its total to more than 139m with Netflix-originals now representing the ‘vast majority’ of its most popular shows. Netflix claims TV viewers in the US spend around 10% of their time on Netflix.
• Germany is considering blocking Huawei from its next generation 5G network, according to reports.
FINANCE & ECONOMICS:
• Sterling up, oil up, UK 10yr gilt yield up 3bps at 1.34%. UK likely to open up about 30pts.
• Brexit etc.:
o Mrs May ‘talking to people’. Will announce Plan B on Monday. Another vote likely on 29th.
o More than 170 busiiness leaders have lent their names to the campaign for a People’s Vote now that more details regarding Brexit are available.
o US and UK political systems cuttently in gridlock.
PRIOR DAY LATER TWEETS:
• Later tweets: Patisserie Holdings on the brink (again): Profitability materially below the already-drastically-reduced numbers suggested on 12 Oct
• CAKE bank facilities as currently negotiated end tomorrow. Group going for an extension. KPMG appointed for ‘all options’
• October bailout was not for ‘good-co’. It was for ‘total co’ including the bad bits. Could investors have thrown good money after bad?
• RICS says outlook for volume of house sales minus 28, a 20yr low. Outlook for prices lower in S/E but up elsewhere
START THE DAY WITH A SONG:
Yesterday’s song was 1979 by The Smashing Pumpkins. Today, who sang:
A shot rang out,
Across the land
The horse, he kept running
The rider was dead
RETAIL NEWS WITH NICK BUBB:
Signet: The big American jeweller Signet announced its Christmas trading update yesterday lunchtime, covering the 9 weeks ended January 5th (the “Holiday Season”). And US sales were a bit disappointing (down 0.7% LFL), but the main shortfall came in the good old UK, where the mid-market chain H Samuel fell 5.9% LFL and the more upmarket chain Ernest Jones fell by 9.0% (to give a UK average of down 7.3% in LFL sales). The only good news about the poor UK jewellery performance was that the UK now accounts for less than 10% of group sales…
Planet ONS Watch: Despite the late boost to Christmas trading, the overall outcome for the BRC-KPMG Retail Sales figures for December (the 5 weeks to Dec 29th) was pretty subdued, but we will find out at 9.30am what “seasonally adjusted” life was like last month on the High Street on that strange parallel world, the Planet ONS (aka the Office of National Statistics), via their official Retail Sales figures…City economists generally expect a 0.8% fall in month-on-month seasonally adjusted sales volume, although Capital Economics have pencilled in a 1.8% fall in December (to give year-on-year volume growth of 2.5%), for what it’s worth. We will be focusing, as usual, on the year-on-year non-seasonally adjusted sales value figures and the key split between Large Businesses and Small Businesses (as the ONS persistently thinks, despite all evidence to the contrary, that the latter are outperforming)…
BDO High Street Sales Tracker: We flagged on Wednesday that sales at John Lewis were still quite decent last week, as Clearance continued, and today’s BDO High Street Sales Tracker for medium-sized Non-Food chains for last week, w/e Sunday Jan 13th, is also quite good, with BDO Fashion sales up by 2.8% LFL last week (including Online), despite strong comps. Total BDO LFL sales (including Homewares and Lifestyle sales) were up by 2.0% last week (down 3.1% in Store sales and up by 17.0% Online), helped by the cooler weather.
News Flow Next Week: It may seem like there’s no big news left to tell about Christmas trading, but next week is still busy. It kicks off on Monday with an Ocado briefing on the apparently dull subject of IFRS 15 (on revenue recognition). Tuesday then brings the Dixons Carphone update. Then Wednesday brings the Joules interims, the Burberry Q3, the Pets at Home Q3 and the WH Smith AGM update. Thursday is a quiet day, but on Friday we get the CBI Distributive Trades survey for “January”.