Leisure Wrap & Other:

So the trading day is grinding to a close. We’re another day older but are we any wiser? After a day of intensive head-scratching, pen flipping and gossip, we have been considering the following. As always, contact us if you’d like further details:

Current pub trading (all licensed leisure retailers etc.):

• The latest Coffer Peach Tracker confirms a number of recent trends.

• Restaurants are performing more strongly than pubs but, in London, LfL sales are under a little pressure due to new capacity. This is less of an issue in the Provinces where branded chains have considerable traction.

• Pubs inside the M25 are still performing well and wet sales are strong. This will be partially as a result of better weather.

• The gap between total sales growth and LfL sales does still highlight the fact that there is a lot of new capacity still going on.

• We would caution here that new entrants are often (or at least sometimes) more of a problem for incumbent operators & for market stats as a whole than they are for themselves.

• If branded restaurants outside the M25 are seeing growth of as much as 12.3% against July last year (including new openings) we have to conclude that something is definitely going right.

• If anything, the better performance of restaurants is even more impressive considering that good weather, such as that seen in early July, tends to favour wet led pubs rather than eating houses per se.

Are these the good times?

• The Peach Tracker numbers are good (above) and we have average earnings increasing by 2.4% to boot.

• This is well ahead of (virtually zero) inflation suggesting that many consumers will have more money to spend going forward.

• True unemployment blipped up a little over the last quarter.

• And true there is still a lot of spending on large ticket items but, overall, we tend to agree with J Sainsbury’s observation/prediction that spending should shift back towards ‘affordable treats’ before the end of the calendar year.

TUI, Thomas Cook & leisure travel (re major tour operators):

• TUI has managed to reassure the market that tragic issues in Tunisia and farcical issues in Greece do not spell the end of leisure travel.

• TUI’s shares are up 7% or so and rival Thomas Cook’s shares are up by around 3%.

• We would suggest that, after recent weakness, both moves are justified but consider that, if anything, the upward move in the price of Thomas Cook is a little churlish.

• The group is now conservatively run and has its JV with Fosun to help it drive business going forward.

• On a current year (partially recovered) PER of 14.5x and a 2016 multiple of less than 10x earnings, we believe that Thomas Cook’s shares offer good value.

Random information, hopefully not all of it useless (re most leisure operators etc.):

• Oil price up a shade, nothing that you’d notice.

• US burger chains turning to alternatives other than beef given the rise in the latter’s price. Innovation still alive & well.

• Greece: So Mr Veroufakis is sniping from the side-lines. Well it was always likely that he would see his removal as just cause for him to criticise and, as it will be some time before the situation is clear, he is hardly risking his reputation, such as it is, by saying that it will be difficult to make any deal re Greece stick.

• Has Waitrose’s halo slipped? See Nick Bubb comments in earlier email.

• Interestingly, Cineworld has not mentioned the weather. Admittedly in its risk warning it does concede that ‘unusual weather patterns such as unseasonably warm summers or extreme snowfalls in winter can impact attendances at cinemas and, particularly where this coincides with a major film release could have a significant effect on revenues’ but it does not refer to the hot weather in early-July as being of any cause for concern.

We’re so 21st Century, this morning’s Tweets (diff. font size denotes importance):

1. Coffer Peach Tracker has LfL sales +1.1% in July, says has seen ‘strongest trading in branded restaurants outside M25’

a. Tracker: Says ‘expanding casual dining brands are increasingly competing with pubs for out-of-home consumer spending’

b. Tracker: Restaurants > pubs (former +4.3%), Provinces > London (in restaurants), drink sales > food sales (in pubs, esp. London).

c. Tracker: Total sales in July, which include new openings, were +4.8%. Restaurants were +9.2% + restaurants outside M25 +12.3%

d. Tracker: London pubs > provincial units. LfL sales at former +1.4% with drink led pubs actually performing more strongly.

2. Coca-Cola HBC reports H1 numbers, says ‘underlying volume growth gained momentum in the second quarter’

a. Coca Cola HBC: Group says the ‘developing segment turnaround continued, with all markets contributing to the 6.2% volume growth’

3. Technomic says rising beef costs are driving innovation re burgers with non-beef proteins now commonly used.

4. New Imbiba Partnership vehicle Wright + Bell is reported by M+C to have secured site at South Place in City for pre-Xmas opening

5. A report from Aviva Investors has highlighted the importance of casual dining chains to boosting high streets and shopping centres.

6. TUI updates on Q3 trading. Group says first off ‘the quarter was marked by the tragic events in Tunisia at the end of June.’

a. TUI Q3: Sees ‘strong growth in underlying EBITA which reflects continued delivery of our strategy and resilience of our business model.’

b. TUI Q3: Q3 sales +6% at €5.1bn. EBITA +13% at €185m. Year to date sales +7% and EBITA +56%

c. TUI Q3: Group says it is ‘86 % sold to date for Summer 2015, in line with prior year, with bookings + average selling prices up 2%’

7. Cineworld H1 numbers: Revenues +22.5% at £329.1m, PBT +236.7% at £46.8m, adjusted EPS +45% at 11.6p + H1 dividend +31.6% at 5p.

a. Cineworld H1: Seen UK + Ireland revenue growth of 11.0% on 26 v 26 same week pro forma basis.

8. Expedia has reported an increase in overseas searches for UK hotels. Lucky visitors face 4dys of tube disruption the week after next

9. Ousted Greek finance minister Yanis Varoufakis has said latest Greek bailout deal “is not going to work”

10. Eurozone industrial production falls 0.4% in June v May. Suggests quarterly GDP estimate of 0.4% could be optimistic

11. ONS reports average earnings rose 2.4% in the year to Q ended June (down from 3.2% in 3mths to end-May).