Langton Capital – 2017-01-10 – Just Eat, Nichols, Morrison’s, Majestic Wine & other:
Just Eat, Nichols, Morrison’s, Majestic Wine & other:A DAY IN THE LIFE: Alongside struggling with world peace, driving the global economy and sorting out the religious divide, I’ve sometimes wondered why people ask the question ‘are you deaf?’ because, unless the person in question can lip-read (or the question is written down), the answer should only really be ‘no’. It’s akin to a teacher asking ‘is anybody not here?’ I mean I know that a kid’s friend might reply on behalf of a missing child but that’s unlikely and the whole thing is perhaps a waste of breath. Anyway, those are issues that I feel happy and perhaps able to deal with whilst world peace etc. are maybe best left to the ‘experts’. On to the news: PUB, RESTAURANT & DRINKS PRODUCERS: • Just Eat has updated on FY trading saying that LfL order growth was 42% with a 36% LfL increase • Just Eat says UK orders +31% in 2016. CEO David Buttress reports ‘Just Eat’s reported order growth puts us in a strong position to deliver full year results in line with our previous financial guidance. We enter 2017 with continuing confidence in the business.’ • Nichols updates on FY trading, says revenue +7.3% to £117.3m with growth coming from both UK & International business activities. • Nichols reports UK sales +6.9%. Says ‘this increase has been driven by sales of the Vimto brand, which were 5% ahead’. • Nichols says UK ‘performance is significantly ahead of the UK soft drinks market which grew by 0.8% in the year to 3 Dec’. Group concludes ‘in summary, the Board is pleased with the 2016 Group sales performance and expects full year profit and earnings per share to be ahead of the prior year and in line with expectations.’ • Majestic Wine updates on Xmas, says ‘group sales up 15.3% – on track to be in line with full year expectations’. The group says ‘Group sales for the 10 week Christmas trading period ending 2 January 2017 increased by 15.3% versus the same period in the prior year.’ LfL sales were +7.5% on the back of 7.3% growth last year. CEO Rowan Gormley reports ‘delivering strong like for likes in a tough market is a tribute to the hard work that our people put in – right across the business.’ He says ‘our transformation plan is working and we remain on track to achieve our £500m sales goal. We said that we would be better prepared for Christmas than ever – and the numbers show that we did what we said we would do.’ • Majestic alludes to price pressure, says ‘at this stage we are not predicting a change to long term margin expectations, but we need to retain flexibility to compete in a competitive market.’ • Morrison’s has reported in 9wks to 1 Jan LfL sales ex-fuel were +2.9% (up 4.7% including fuel), our strongest performance for 7yrs’. MRW says total sales were +2% ex-fuel. • MRW CEO David Potts says ‘this Christmas we made further improvements to the customer shopping trip. We stocked more of what our customers wanted to buy, more tills were open more often, and product availability improved as over half of sales went through our new ordering system. Both like-for-like and total sales grew, which was very encouraging.’ He says ‘as previously guided, we expect 2016/17 year-end net debt to be around £1.2bn. We now expect 2016/17 Underlying profit before tax to be ahead of consensus, in the range £330m to £340m.’ • Tesco is to make 1,000 people redundant as a part of a restructuring of its distribution network • JD Wetherspoon Friday bought back 40,800 shares at an average price of 880p • Property Week has suggested that yesterday’s tube strike could have caused a 9% drop in footfall for central London shops, restaurants & bars. • Luke Johnson anticipates that ‘2017 will be a tougher year because of costs’ for the c£70bn eating-and-drinking-out industry after 25 years of ‘steady’ growth. Johnson told City AM that customer spending could ‘slow sharply’ and cited the new national living wage, rates revaluation (especially in London), and imported inflation of ingredients as the ‘big issues’ facing the sector. • Millennials – anyone born in the 1980’s or 1990’s – could become the first generation in recent history to be worse off than their parents. Baby boomers, people born between 1945 and 1965, will on average earn £740,000 during their lives, according to the Resolution Foundation, while generation X (aged between 35 and 50) are projected to earn 21% more than that – £835,000 on average. The figure for millennials, however, is lower – they’re forecast to earn £825,000 over their working lives. • BRC-KPMG research suggests a ‘bumper’ Christmas and strong finish to 2016 for retailers, with like-for-like sales up 1% year-on-year. Food sales were the major contributor to growth but non-food sales were sluggish. • A new study in the journal Adaptive Human Behaviour and Physiology shows that moderate, casual drinking with friends may be linked to overall health benefits. Professor Robin Dunbar, of the University of Oxford’s Experimental Psychology department, said: ‘This study showed that frequenting a local pub can directly affect peoples’ social network size and how engaged they are with their local community, which in turn can affect how satisfied they feel in life.’ • McDonald’s has agreed to sell a majority stake in its business in China and Hong Kong to a consortium of groups in a deal valued at $2.1bn. • Steve Moody, MD at Fells, has disputed the idea that port sales in the UK are in decline and says the sector is ‘dynamic and value-generating’. While the WSTA said on 20 December that Port had seen sales drop from 8 million litres in 2005 to 5 million litres in 2015, Moody said that the UK Port market had ‘in reality been remarkably robust over the last 15 years and grew from 998,553 nine-litre cases in 2000 to 1,012,239 cases in 2015’, according to the official Port Wine Institute figures. • The Tim Bacon Foundation has been set up to echo the operator’s ‘legendary generosity of spirit’ and support charities in the fight against cancer. • KFC could be teaming up with Chinese beer company Tsingtao to distribute beer in its stores in China. • Meantime Brewery has posted revenues of £26.5m in the 15 months to 31st March and a 27% rise in sales to £21.2m on a pro-rata 12-month basis. • A third of Britons believe more PE at school and clearer food labelling will be the most effective programme to tackle the obesity crisis, according to a new ComRes poll. • Aldi has reported record Christmas trading after a 15% rise in December sales following strong demand for its premium product range. Matt Walton, analyst at Verdict Research, said: ‘Early indications are that the value players were Christmas 2016’s big winners, with shoppers already bracing themselves for the challenging economic conditions ahead.’ • Supermarket carrier bag litter in Scotland has increased 38% since February 2014 despite the introduction of a carrier bag charge in October 2014. LEISURE TRAVEL & HOTELS: • IAG has reported that group traffic in December (revenue per passenger KM) rose by 3.9% vs last year • London City airport reported record passenger numbers with 4.5m carryings for 2016. London City said ‘with 52% of all passengers travelling for business, the 5 per cent year-on-year growth demonstrates that the appetite for business travel to and from London remains strong despite the unpredictable political climate, as we prepare to expand the airport in 2017 to meet increasing demand.’ • Dozens of flights have been cancelled and ferry services halted as freezing and snow conditions hit Greece, Italy and Turkey. • UK hotels will continue to attract overseas investment post-Brexit, predicts Savills. OTHER LEISURE: • Everyman Media Group’s trading for the busy 52 weeks to 29 December 2016 has ‘been above market expectations’. Four new venues were opened in the year, while six openings and two refurbishments from 2015 started to mature. The most recent opening has been in Chelmsford in December (5 screens) and the Company’s 20th location – meaning the group has now doubled its estate over the past two years. Contracts have now been exchanged on a five screen venue in Edinburgh, bringing its total committed pipeline back to six. The group expects to open its Kings Cross and Stratford-upon-Avon sites this year and believes positive trading momentum will continue.
• William Hill yesterday said trading in 2016 was ‘encouraging’ but added that December’s football & racing results went the wrong way. It reported ‘in the nine weeks since the trading statement on 14 November 2016, wagering trends continued in line with those previously reported. However, gross win margins were below expectations, in large part due to unfavourable football and horseracing results impacting the sector during December.’ It says that ‘as a result, the Group’s full-year operating profit1 for 2016 was c£260m, at the bottom end of our guided £260-280m range.’ Interim CEO Philip Bowcock reports ‘importantly, the improvements we saw in wagering in Online and Australia in the second half have continued in recent weeks. However, all four divisions saw customer-friendly results at the back end of the year, which translated into profits being c£20m below our prior • Yahoo CEO Marissa Mayer is to leave the company after its purchase by Verizon has been completed FINANCE & MARKETS: • Eurozone unemployment held steady at 9.8% in November • World markets: UK markets hit another high yesterday on US$ earners. Europe & Us were down & Far East mostly lower in Tues trade • Brent down over last 24hrs to around $55.15 per barrel • Sterling lower yesterday on PM’s comments re hard Brexit. Worth just $1.2162. Down against Euro at 115.0c • UK 10yr gilt yields down to 1.34%. US 30yr treasury yields down 3bps at 2.97%. • Mrs May has said a clean break between the UK and the EU’s single market is not inevitable. This in defence of the falling Pound. • Mrs Merkel has said a clean break between the UK and the EU’s single market is inevitable. Spot the difference. • Mrs May was quoted on Sunday as saying the UK would not be able to keep ‘bits’ of its membership. • Mrs May clarified ‘I don’t accept the terms hard and soft Brexit.’ She has said rather that she will seek a Red, White & Blue Brexit. The PM said she aims to ‘get an ambitious, good, best possible deal for the United Kingdom in terms of … trading with and operating within the single European market.’ • German Chancellor Angela Merkel said yesterday that access to the single market would only be possible to any or all countries (including the UK) if the other four freedoms, including the freedom of movement, were accepted by the UK. • The Halifax has reported that house prices rose by 6.5% in calendar 2016. This is up from 6.0% in Nov & 5.2% Oct. TODAY IN A NUTSHELL – TWEET VERSION & YESTERDAY’S LATER COMMENTS: • Just Eat has updated on FY trading saying that LfL order growth was 42% with a 36% LfL increase • Nichols updates on FY trading, says revenue +7.3% to £117.3m with growth coming from both UK & International business activities. • Nichols says UK ‘performance is significantly ahead of the UK soft drinks market which grew by 0.8% in the year to 3 Dec’. • Majestic Wine updates on Xmas, says ‘group sales up 15.3% – on track to be in line with full year expectations’. • Morrison’s has reported in 9wks to 1 Jan LfL sales ex-fuel were +2.9% (up 4.7% including fuel), our strongest performance for 7yrs’. • Tesco is to make 1,000 people redundant as a part of a restructuring of its distribution network • Property Week has suggested that yesterday’s tube strike could have caused a 9% drop in footfall for central London shops, restaurants & bars. • Luke Johnson anticipates that ‘2017 will be a tougher year because of costs’ for the c£70bn eating-and-drinking-out industry • Millennials – anyone born in the 1980’s or 1990’s – could become the first generation in recent history to be worse off than their parents • Dozens of flights have been cancelled and ferry services halted as freezing and snow conditions hit Greece, Italy and Turkey. • Everyman Media Group’s trading for the busy 52 weeks to 29 December 2016 has ‘been above market expectations’. • William Hill yesterday said trading in 2016 was ‘encouraging’ but added that December’s football & racing results went the wrong way. • Sterling lower yesterday on PM’s comments re hard Brexit. Worth just $1.2162. Down against Euro at 115.0c • Mrs May has said a clean break between UK & EU single market is not inevitable. Mrs Merkel says it is • Later tweets: PM May says will leave the single market to control immigration. Sterling falls sharply. Buys only $1.215, new post 23 June low • FTSE100 US$ earners going better on weaker pound. Inflationary outlook somewhat less good if commodities/imports cost more • Markets modestly optimistic re domestic grocers. ASDA may get thrown under the bus but others not so bad viz the discounters • Global econ. risks swing to upside? UK PMIs look good, China GDP nearly 7%, Eurozone most optimistic for years. Interest rate rises likely • Daily email for free on www.langtoncapital.co.uk Original & still the best. Now incl. tweets. News, views & analysis. Sign up & no strings RETAIL NEWS WITH NICK BUBB:
• BRC-KPMG Retail Sales for December (5 weeks to Dec 31st): Overall LFL sales were up by 1.0% (up 1.7% gross), which was much as we expected, but the breakdown of the figures was revealing. In terms of phasing, it was clearly the final Christmas week that worked miracles, with the BRC’s Helen Dickinson saying “…the week itself was a bumper one and exceeded expectations. It delivered the majority of sales growth for the month”. It is hard to get at the precise Food/Non-Food sales split for the month, buried as it is in a 3-month moving average, but Food LFL sales growth was notably strong (“the best growth for the Food category since July 2013”) and must have been over 2% up, which implies that overall Non-Food LFL sales were surprisingly flat. Clothing sales were “solid enough”, but Footwear sales were down, and so were Furniture and Electricals (albeit the former was impacted by the • Morrisons: On a line through the BRC-KPMG Food sales survey for December, the latest Kantar/Nielsen grocery market data at 8am (for the key 4 weeks to Dec 31st/Jan 1st) will show good growth, which will put the better than expected 2.9% LFL sales growth at Morrisons (for the 9 weeks to Jan 1st) into context. Operational basics were much improved and CEO Dave Potts’ comment that “…We stocked more of what our customers wanted to buy” is an early contender for the Lucy Kellaway Award in the FT for Clear Speaking! And the City will be pleased to see that underlying PBT for the year is expected to be a bit ahead of consensus, in the range £330m to £340m. There will be an analyst’s conference call at 8.30 am. • Majestic Wine: The supermarkets have squeezed out specialists like Majestic Wine in the past, but not this Christmas and the 7.5% Retail LFL sales growth for the 10 weeks to Jan 2nd is impressive, despite some gross margin pressure. CEO Rowan Gormley says “…we remain on track to achieve our £500m sales goal. We said that we would be better prepared for Christmas than ever – and the numbers show that we did what we said we would do. At this stage we are not predicting a change to long term margin expectations, but we need to retain flexibility to compete in a competitive market”.
• Boohoo: It is less than 4 weeks since, on Dec 14th, after enjoying excellent Black Friday trading, mighty Boohoo (our 2016 Tip of the Year) upgraded their full-year revenue growth guidance to between 38% and 42% (against previous guidance of between 30% and 35%), but Christmas was so strong that Boohoo have upgraded their full-year sales growth guidance yet again today, to between 43% and 45%! Headline sales growth in the 4 months to Dec 31st was a heady 55% (52% at constant currency), with the USA delivering standout growth of 230% (188% at constant currency). The UK growth of 31% was in line with previous quarters, adjusting for the new wholesale business (which has now annualised). Despite 260bps gross margin investment, operating leverage will drive further upgrades to full year EBITDA forecasts in the City today and the share price (c143p) may well set yet another record at the • News Flow This Week: The pace of company updates is picking up significantly this week, with “Super Thursday” still to come…Tomorrow morning brings the Sainsbury update, the Shoe Zone finals, the Ted Baker update, the Joules update and hopefully the JD Sports update, plus the Signet Xmas update out in the US. And then…“Super Thursday” brings the Marks & Spencer Q3, the Tesco Q3, the SuperGroup interims and Q2, the Mothercare Q3, the Debenhams AGM update, the Booker Q3, the Dunelm Q2, the Moss Bros update, the ASOS update and the AO.com update, as well as a McColl’s update, the ABF (Primark) update and the John Lewis Partnership Xmas overview…Phew! And Friday brings the Xmas update from GameStop out in the US. • Super Thursday Watch: As just mentioned, “Super Thursday” is a nightmare for retail analysts with a dozen Christmas trading announcements all coming out at once at 7am and then multiple conference calls to fit in…Perhaps unwisely, SuperGroup have decided to hold their interim results meeting that morning as well, at 9.30am, although we fear that it will be thinly attended…Wisely, Marks & Spencer and Debenhams have already announced their call timings, with M&S going for 8.15am and Debenhams for 8.45am. It remains to be seen how Tesco, ASOS and AO.com will fit themselves in, to name but a few… |
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