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:

Greene King Tracker:

• The words are relatively upbeat but the Tracker is only pointing to a £1 increase in spending in August year on year to £222.47.

• The headline comment ‘this positive set of results reflect significantly increased levels of consumer confidence as the UK recovery becomes firmly established’ seem to jar a little with the fairly modest findings.

• GNK suggests that the finding that ‘over half the sample have no intention of saving for their Christmas splurge’ is good news – and it maybe is.

• It requires a little confidence to go into Christmas with no ear-marked reserves. GNK says ‘this is a big departure from the dark days of the downturn when Christmas cutbacks were the norm’.

• Overall, the picture that we have is of steady but unspectacular growth. Fortunately, with inflation at 0%, any increase in nominal spend translates point for point into a real spend increase and, coming out of the worst downturn in 70yrs or so, every little helps.

It’s more than just semantics…

• But, when you look at it, we’re not ‘just coming out of recession’ at all, are we?

• UK GDP fell for five quarters to and including Q2 2009.

• It then fell in Q2 and Q4 2012 but, because these were not sequential, we can’t say that this was another recession or even, really, a double dip.

• Hence, if we say the recession ended in Q3 2009, we have to concede that we’ve been in recovery for six years and, in the pre-Thatcher era, that was about the length of time between cycles. Just saying…

Holiday market:

• Greene King suggests that ‘growth in holidaying abroad this year will have likely meant, for family households in particular, a need to make compromises when at home to offset the impact on household finances’.

• It says ‘in August, family households reduced spending on Other Leisure by £17 (12%) year-on-year, suggesting that when looking to offset spending on expensive family holidays, these households cut spending on these activities both prior to, and following, trips away.’

• The flip side is that the overseas holiday companies, TCG, TUI, DTG, will have sold out well in August.

• We hear from TCG tomorrow and from TUI on 30 Sept.

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

• Market regaining a little of its poise. As of this morning, the FTSE100 was down 9.6% on the year but down 16.4% from its May peak. That’s bad enough but it feels worse, doesn’t it?

• If corporate profit growth comes into question, ratings will to. It’s part of the reason why spikes down are often more acute than spikes up. You get a double-whammy; estimates come down & so do the ratings that investors are willing to pay.

• Yesterday was a ‘risk off’ kinda day. Miners etc. down, food producers, household goods stocks up.

• Commodities: All flat out cheap except perhaps cocoa and, to a lesser extent, corn & wheat, which are both showing some signs of life.

• Carnival says that it has just had its strongest quarter ever. Diageo says that it should achieve ‘mid-single digits’ organic growth from FY17.

• US interest rates, the betting now’s on a December rise.

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

1. GNK Tracker points to spending growth. Says growth in earnings a major driver + confidence on the up

a. GNK: Spending in Aug ‘crept upward year-on-year’. Says spend on Eating Out ‘led the charge’. Says Xmas looking good.

b. GNK: Ave. Brit household spent £222 on out of home leisure in Aug, up £1 or 1% on last year, up £17 (8%) m-o-m.

c. GNK: ‘Year-on-year, Eating Out saw greatest growth in spend’. Was +£8 (9%). Drinking out down £1 (2%).

d. GNK re Xmas: Says feels good; visibility limited + consumers not yet saving for Xmas but what indicators there are, are > last year

e. GNK: Cautious re some elements of economy. UK OK at moment but ‘Britain is not immune to the economic woes of its trading partners’

f. GNK: Regionally, London + S/E leisure spend +£2, rest of Britain £0. Says has seen ‘growth in holidaying abroad this year’.

2. Shepherd Neame FY numbers: Operating profit rose 5.1% to £14.1m as LfL managed pub and hotel sales increased 6.1%

a. Shepherd Neame FY: The group has proposed a 3.1% increase in its final dividend to 21.4p on the back of its encouraging performance

b. S Neame FY: CEO says ‘has been a successful year for the Company with positive evolution of our strategy and a strong financial performance.’

3. Rugby, friend or foe (Tues Wrap below). Good for wet led, poor for food-led pubs. Shouldn’t change strategy but will show thru in numbers

a. Tenanted houses should perform relatively well over Rugby World Cup. Tend to be wet-led, often suburban

4. Diageo updates at AGM, says ‘year has started well and performance is in line with our expectations.’ It says ‘volume has grown mid-single digit’

a. DGE AGM. ‘For the balance of the first half we face a tougher comparison against the phasing of shipments last year’

b. DGE cautious on currency + says ‘from F17 we expect to deliver mid-single digit organic top line growth on a sustained basis’

5. Richoux H1: Reports sales +0.3% at £6.7m, adj. EBITDA +1.1% at £0.8m, has 19 restaurants trading, £4.4m cash

6. Carnival Q3 (to end-Aug) numbers: Is ‘the company’s strongest quarterly non-GAAP performance on record’.

a. Carnival Q3: Constant dollar net revenue yields +4.3% beating June guidance of ‘up 2% to 3%’. EPS 175c v 158c in 2014.

b. CCL – outlook: ‘At this time, cumulative advance bookings for H1 2016 are well ahead of last year at lower constant dollar prices’.

c. CCL re full year. Says FY net revenue yields on a constant currency basis should be +4% v last year. FY EPS s/be c38c v 27c last year

7. Global hotel prices could rise by 2.5% in 2016 although there will be significant regional variations, according to Carlson Wagonlit Travel

8. The US Federal Reserve could increase interest rates in December, according to economists polled by Reuters

a. IMF’s Christine Lagarde has said that ‘achieving world development goals [is] more difficult than in the past’.

b. China factory activity down for 7th consecutive month in Sept. PMI hit 47 v 47.3 in Aug. Any number <50 implies contraction

c. World markets: UK sharply down yesterday on miners’ falls. Europe down on Volkswagen etc., US down and Asia lower Weds

d. Government borrowing was higher than expected in August, rising £1.4bn from a year earlier to £12.1bn according to the ONS

e. Asian Development Bank lowers forecasts for Asia’s developing economies from 6.3% to 5.8% this year and from 6.3% to 6% in 2016

9. Langton Looks At ….. Deliveroo. See email for detail