A Day in the Life:

Follow us on Twitter at either @langtoncapital or @brumbymark.

Find previous emails at http://www.langtoncapital.co.uk/daily-notes/ 

So do you think that sparkly, shiny shoes give the best possible impression?

Or do you consider slightly scuffed, even dirty shoes put you in a better light in that they suggest that you don’t want to spend time that you could be using to help clients shining your footwear and that you have a certain no-nonsense, let’s get on with it charm?

Well I don’t know so I’ve tended to adopt the ‘one of each’ policy which, whilst I’m not altogether convinced as to its efficacy, certainly does get noticed.

Anyway, it’s time for the news but if you would like to come off this email list please simply hit the unsubscribe button above.   Similarly, if you are getting it forwarded and would like to go on directly or if you would like to recommend it to one of your colleagues, please just hit the subscribe button and/or suggest that your colleague does too.

The News:

Pub, Restaurant & Drinks Producer News:

• Carlsberg consumer insights report says consumers are spending more out of home than ever before at c£145bn. It says pubs are the number one weekly activity, ahead of coffee shops and restaurants. It says visits are up 2%, 5% and 4% respectively. Some 66% of respondents stated ‘entertainment should be about learning new things as well as having fun’ with pub quizzes now particularly popular. Carlsberg said ‘as a brewer and drinks wholesaler the needs of our customers are at the heart of everything we do, and while the Great British pub prevails, our commitment is to ensure we’re providing insight to keep them one-step ahead.’ It adds ‘the on-trade environment is ever-changing and the variety of occasions and options available to consumers continues to grow, meaning we need to work with pubs nationwide to provide reasons to visit, and
return.’

• JD Wetherspoon reports information breach. Hackers have stolen some customer data including names, DoBs and email addresses. The co says ‘we received information on the afternoon of the 1st December that some customer data may have been stolen by a third party…an urgent investigation by cyber security specialists was instigated.’ It says information such as the customer name and the expiry date on credit cards were not compromised. CEO John Hutson has emailed customers saying ‘we recommend that you remain vigilant for any emails that you are not expecting, that specifically ask you for personal or financial information, or request you to click on links or download information.’

• Restaurant Group CFO Stephen Critoph has sold 100k shares in the co for a gross £675,000. He retains 189k shares

• Oak Taverns announces reopening following joint £500k refurb of Church Lane (formerly Blarney Stone) pub

• Coaching Inn Group has appointed Jill Matthews as Head of Ops in a move it says ‘signals ramp up for expansion plans’. Coaching Inn CFO Ed Walsh says ‘we have exceeded our growth targets this year, with profits doubling, turnover increasing to over £12 million and three more high quality coaching inns joining us’. He adds ‘we are targeting six more acquisitions next year, together with further investment across our existing estate. Jill’s appointment is vital to ensuring our teams continue to deliver a consistently high quality customer experience as we grow.’

• Mintel pubs report suggest pubs ‘remain popular’ with around a third of British adults eating in a pub more than once over a month

• Mintel pubs report: Two thirds of drinkers spend less than £20 per visit. Signs of trading up re eating out

• Tesco-owned Giraffe reports an increase in sales of 23.5% to £55m in year to end-Feb. Says losses rose from £147k to £4.1m

• Deliveroo has partnered with AB InBev to deliver beer in central London

• MOD Pizza appoints John Nelson, formerly ops director at Nando’s as its CEO reports M+C. The co says ‘we are thrilled to be welcoming John to the MOD Pizza family. His track record of developing culture-led companies will be of tremendous value to MOD Pizza as we build a strong infrastructure ahead of entering the UK market.’ In addition, Rob Murray, previously CFO at Dixons Carphone has been appointed UK FD. The group is currently considering sites in London and Milton Keynes

• Canadian coffee co Second Cup is reported set to expand in the UK. M+C reports it has secured 5 sites in London. Quotes co as saying ‘we are very excited about our growth plans for the UK and look forward to additional regions coming on stream in the coming months.’

• UK services growth hit a 4mth high in Nov per Markit. Says index hit 55.9 from 54.9 in Oct with any number > 50.0 implying growth. Markit said ‘a welcome upturn in service sector expansion helped counter slower growth in manufacturing and construction in November, suggesting the UK continues to enjoy the ‘Goldilocks’ scenario of solid economic growth and low inflation.’ He continues ‘the rate of job creation remained resiliently robust in November despite widespread difficulties finding suitable staff and worries about the introduction of the National Living Wage, in turn leading to reports of rising wages.’

Travel & Hotels:

• Acromas Bid Co, which is controlled by Charterhouse Capital, has sold down its holding in Saga from around 45% to c32%.

• Manchester Airport Group reported 5.7% increase in passenger numbers (to 29.7m) + 10.7% EBITDA increase to £202.5m in H1. Stansted grew passenger numbers by 1.2m and Manchester had its busiest month ever in August.

• HotStats reports hotel profits in Cardif should have risen by as much as 116.5% in Oct on back of Rugby World Cup. It says ‘all expectations were exceeded this month as the city hosted five games, including two high-profile quarter final matches and the electric atmosphere spilled out of the Millennium Stadium on to the streets of Cardiff with street theatre, music and the Rugby World Cup Fan Zone, visited by more than 150,000 people during the tournament.’ It says ‘the benefit of the influx in demand was not only reflected in the 68.2% increase in RevPAR (Revenue per Available Room), to £101.74, but TrevPAR (Total Revenue per Available Room) at hotels in the Welsh capital soared by +45.1% to £163.48.’

• UK serviced apartment sector could double in size over next 2yrs reports Association of Serviced Apartment Providers + Savills. The report says there is “concrete evidence” that Airbnb has helped raise the profile of alternative accommodation. Says sector currently has market share of only 3.1%. ASAP MD James Foice says ‘this is the breakthrough moment for the UK serviced apartment sector, a complete game-changer. This growth will position the serviced apartment sector as a mainstream accommodation choice, a key player within the hospitality industry as a whole. We will have the critical mass of stock to ensure the consumer will have the option of booking a serviced apartment wherever they choose to travel in the UK.’

• Staycity has announced 843 new apartments for 2016 in 5 new sites + Heathrow expansion. CEO Tom Walsh reports ‘this year has been a strong trading year for Staycity across our entire estate. We are on target for a 22% increase in turnover for 2015, up from €32m in 2014 to €39m in 2015. On the back of this performance we are forging ahead with our European expansion plans which will take us from 1,000 to 3,500 apartments over the next 24 months. Further sites will come on stream in 2017, with a number of new property deals yet to be announced.’

Other Leisure:

• Ladbrokes announces John Kelly has been appointed as Chairman after Peter Erskine stepped down on 3 December. Kelly comments ‘it is a great honour to take on the role of Chairman of Ladbrokes at such an exciting time in the Company’s history. We have an aggressive organic plan for growth under our new Chief Executive, Jim Mullen, and are working hard towards the proposed merger with Coral Group.’

Finance & Markets:

• ECB to add to stimulus measures, moves overnight deposit rate from minus 0.2% to minus 0.3% + will extend QE to March 2017.

• ECB is to buy back €60bn in bonds per month for a further 6mths. News leaves analysts underwhelmed + markets fell. Mr Draghi has been something of a tease over recent months with analysts suggesting that he has consistently over-promised and under-delivered.

• US Fed chair Janet Yellen has told Congress that US economy is near the point where it can manage an interest rate rise.

• World markets: UK + Europe sharply lower yesterday. US down and Far East down in Fri trade

• Oil price up sharply to around $44.10 from c$42 trough ahead of OPEC meeting in Vienna today

Retail Roundup from Nick Bubb:

Overall View: Well, although the irrepressible JD Sports seems to need no help from “the weather”, most Fashion retailers will be hoping for some frosty mornings to help sell some full-price outerwear before Christmas, but there is, alas, no real sign of a change from the current wet and mild weather conditions…so consumers waiting for more discount promotions probably won’t have to wait until Boxing Day…

JD Sports: To our amazement, a pre-Xmas profit upgrade from JD Sports hit the screens yesterday:  “Relatively strong trading has continued and…the Board expects that headline PBT for the year is likely to exceed current consensus market expectations of £125m by £10m”. The announcement was released in the middle of the afternoon, which usually is a sign of a company wanting to bury bad news, but in the case of good old JD Sports it appears the company could not wait to pass on the good news…and the share price had been notably firm in the morning, pushing over the £10 mark, despite the overall stockmarket gloom.

Weather Watch:
Despite the excellent trading enjoyed by JD Sports, trading for Fashion retailers again wasn’t easy last month, despite the soft comps caused by last year’s mild weather, but, although the likes of Philip Green have complained about the recent warm spell, memories about “the weather” are notoriously short-term, so we turned to the Retail weather consultants Planalytics for their regular monthly overview of how last month “should” have affected the High Street. And headline for November this year was “A mild and wet month”, although a cooling phase at the end of the month brought some help. As in the rest of Europe, November 2015 was a very mild month overall. Most cities were in the top 8 mildest of the past 55 years and overall it was the 4th mildest. November 2014 was the 14th warmest of the past half-century but November 2015
came in about 1 degree C warmer and it was significantly milder than “normal”. All in all, Planalytics said that the milder conditions in November were bad news for retailers and that “weather driven demand” for outerwear was 10% down than in 2014 in November, other things being equal.

Primark Watch: ABF will give a trading update on Primark at their AGM at 11am today.

BDO High Street Sales Tracker: this weekly High Street sales index of medium-sized Non-Food chains assembled by the accountants BDO is a useful guide to underlying Fashion store trading momentum, although it still excludes Online sales…Fashion LFL sales have continued to be poor in recent weeks, despite weak comps, and BDO has reported today that last week, w/e Nov 29th, saw disappointing High Street trading again, despite all the publicity about Black Friday deals, with overall Fashion store LFL sales dipping by 1.9% (albeit the same week last year saw Fashion LFL sales up by 3.7%). BDO blamed this on some retailers opting out of “Black Friday” promotions…Total store LFL sales were down by 1.6% (including some Lifestyle and Homewares retailers), but overall Non-Store/Online sales were strong, up by 20.6%.

Trade Press:
The main news story in Drapers magazine is that Online sales broke through the £1bn barrier for the first time on Black Friday, but the new Editor thunders in her column that “Retailers must solve their Online traffic jams”. Other stories in Drapers: Marks & Spencer has lost a long-running battle legal with its former landlord to reclaim a chunk of rent paid on offices in Paddington in 2011; Lewis Trust, the parent company of River Island, has bought a significant stake in the womenswear retailer Mint Velvet for an undisclosed sum; the footwear chain Office has been sold to the South African retailer Truworths for £256m by the private equity firm Silverfleet; the Australian retail group Cotton On is to enter the UK market in the spring with the launch of its accessories business Typo; Oasis is back in the black for the first time in three years (recording a
£5.5m profit after tax for y/e February vs a £0.6m loss in 2013/14), but Karen Millen made an operating loss of £9.7m for the same period (after property impairments, down from a profit of £1.9m the year before); George, Asda’s clothing and homewares brand, has been “refocused” to ensure all products are relevant for its customers, according to the new MD Nick Jones and Small Business Saturday is expected to generate more than £500m in sales for independent retailers this weekend, as it begins to gain traction with shoppers. Drapers also has a feature interview with the accessories brand Radley and photos from last week’s Drapers Awards.

News Flow Next Week: Things get busier next week, beginning with the BRC-KPMG Retail Sales for November on Tuesday morning. The House of Fraser Q3 is on Wednesday. Then Thursday brings the Sports Direct interims, the Darty interims, the Mulberry interims and the Ocado Q4 update. Nick Bubb – nicholas_bubb@hotmail.com

Thursday Wrap:

This was produced for distribution yesterday afternoon: 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:

Merlin Entertainment shares rise…

• We’ve been suggesting since mid-Sept (shares around 365p) that MERL looked oversold on the back of the Alton Towers accident and that the shares offered good value.

• Various market sages have suggested that you should 1) find a good company with legs and then 2) wait for an entry opportunity

• Sure, you’ll miss a few but we’ve thought for a while that Whitbread, SSP, MERL and a number of others fall into the above category. See comments below.

• 16 Sept – ‘the group does have significant roll out potential at both its Midway and LEGOLAND Theme Park divisions, and with three new Lego movies scheduled for release in 2016, 2017 and 2018, the LEGO brand could remain buoyant for some time. Execution risk is still there but momentum at the majority of the group’s operations seems to be strong.’

• 18 Sept – ‘many accommodation infill opportunities remain, ditto geographic infills in US + Asia in general…overall impression is of a co that has had a setback but which has underlying growth baked in for many years.’

• 21 Oct – China ‘JV looks like good news. Model is scalable, China is big and, for a company that looks set to continue delivering, 21x earnings doesn’t look like too high a price to pay.’

• So what’s not to like.

• Well in a ‘good’ company it’s often only the share price and, if that can be persuaded to come down from time to time, so much the better.

• So, having risen by 16% in a few weeks, is MERL a sell?

• Well, no. If we were chartists, which we’re not in the true sense of the word, then we’d say there may be resistance back on the way to 470p.

• However, and though we acknowledge that terrorism and travel-phobia could be a negative, with China and indeed the rest of the world to aim at, we couldn’t see the PER taking a serious hit in the foreseeable future.

SAB confirms Peroni, Grolsch & Meantime all for sale:

• The Battle of the Blands?

• You can almost hear the teeth being ground together.

• SAB has confirmed that, should its purchase by AB InBev conclude, the latter will sell a number of its prized brands.

• SAB CEO Alan Clark says ‘under SABMiller’s stewardship, Peroni and Grolsch have become world-renowned premium beer brands. Meantime has been a welcome addition to SABMiller and has a growing and loyal fan base. These beers are loved by consumers and we are very proud of them.’

• This appears heartfelt.

• The merger clearly is about volume. Quality, quirkiness etc. may be further down the list.

• This may present an opportunity for others – and not just for the would-be purchasers of the brands that find themselves being put up for sale.

• Indeed keeping the ‘for-sale’ brands on the rails over the next 6mths to 9mths could be quite a challenge.

• SAB knows this and says ‘until the change of control we will continue to invest in growing these great beers and supporting our talented people who brew, sell and manage them.’

Random information, hopefully not all of it useless:

• As at the time of writing (a.m. Thurs) the ECB hasn’t put rates down and the Fed hasn’t put rates up. By the time of reading, that may have changed.

• Interest rates & exchange rates. The fact that Sterling strengthened against the US$ yesterday whilst weakening against the Euro suggests that the upcoming interest rate moves highlighted above may have been more than discounted by the currency markets.

• Good day for leisure stocks in the market yesterday. MERL, DGE, GNK, GRG and ETI all in the top-10 risers of either the FTSE100 or the FTSE250.

• Millennium & Copthorne in the fallers. Not sure why.

• Tough markets. Challenging in the true sense. Healthy state of affairs as good companies should prosper. AG Barr has confirmed that trading remains challenging. It says it will hit numbers and comments ‘despite continued difficult market conditions we have maintained our market share’. Xmas is clearly critical & the co says ‘we anticipate the marketplace will remain highly competitive.’

• UK Syria attacks are not likely to boost holiday sales. A number of families may be getting out their atlases to have a quick skeg at the Eastern Med, see just where Syria is these days.

• Drink drive limit cut in Scotland anniversary tomorrow. PR battle going on. Trade associations say it’s killing pubs and others say it’s saving lives. There may be little point in saying the former as the war is lost. Though continued moaning could prompt favourable treatment elsewhere? Battle still to be fought in England, no imminent moves to cut the limit.