Langton Capital – 2015-12-08 – Daily Wrap: Cheaper holidays, Black Friday, Vianet, tenanted pubs, VAT Club & other:
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:
Cheap Euro cuts price of ski holidays:
• The latest Post Office Travel Money report has pointed to lower in-resort ski holidays this year.
• Getting there may still cost – though it should cost less given the fall in oil prices – but the PO reports good deals in Bulgaria (pegged to Euro), Slovenia (Euro), Italy (Euro) and Austria (Euro).
• The same should be true for summer destinations in Spain, Greece and France.
• Whilst such news may be outweighed by concerns re terrorism (Monarch reports today that consumers seem to be booking flights a little nearer to departure than usual) but it should boost underlying outbound holiday demand
• By the by, Air France KLM has today reported its belief that the Fri 13 attacks in Paris last month cost it around €50m in lost revenues. It says it was “significantly impacted” by the attacks. It adds, however, ‘current booking trends are in line with a progressive recovery including a very limited impact on volumes after the end of December 2015’.
Black Friday, good riddance?
• BRC would have it that sales last month were the soggiest in a November for four years
• Part at least of this must have been because Black Friday raised the bar in 2014 and then disappointed in 2015
• This morning Nick Bubb writes ‘given all the hype about how consumers were waiting for Black Friday deals, the outcome of -0.4% LFL for the November BRC-KPMG survey must be considered disappointing.’
• Black Friday does appear to have moved online with online non-food sales +11.8% this November
• However, disaggregating Black Friday from the underlying upward trend in online sales will be difficult if not impossible
• Overall, Langton at least is left with the feeling that Black Friday has distorted rather than increased the level of spending
• This is not particularly helpful and, if margins have been sacrificed in order to drive volumes, then this is doubly the case
Random information, hopefully not all of it useless:
• Vianet has announced that it is to sell the forecourt flow measurement business that it bought in 2010. It says ‘the disposal of VFS will enable Vianet to focus on the core businesses of Leisure and Vending Solutions and consolidate its financial resources.’ Companies should be allowed to change their minds but this kind of begs the question as to why the business was purchased in the first place.
• Admiral’s relative health (see earlier emails) suggests that there are signs of life to be seen across the pub industry. Bodes relatively well for the combed & improved estates owned by Punch and Enterprise
• JD Wetherspoon is reported to have withdrawn from the Jacques Borel VAT Club. It quotes chairman Tim Martin as saying ‘Jacques Borel has done an amazing job campaigning for a VAT cut over the past five years [but] I have decided that Wetherspoon can no longer support the VAT Club JB in its present form and believe there now needs to be an alliance of companies who believe, as I do, that a VAT cut is vital for the future of the hospitality sector.’
• Oil and commodity-heavy indices (i.e. FTSE100 rather than FTSE250) hit by sell-off in underlying oil & commodities concerned. Same old same old.
• Worth mentioning that oil v close to 7yr lows. Price touched $36.19 on 15 Dec 2008. If the oil price were to breach that level, it would be down to 11yr lows.
• Minor moves in £ vs both € and $. Little else to report re currencies. Seeing strong US$ ‘blamed’ for weak oil price was rather revealing (of the fact that nobody knows quite what to hang it on).
• No discernible change to the belief that the US Fed will announce an interest rate rise next Wednesday
• Travel stocks up yesterday on weak oil price. Rather juvenile in that stock markets are meant to discount commodity price movements but it is what it is.
• China imports down a little less than expected. Didn’t do much for commodity prices yesterday, seem to have developed a (downward) momentum all of their own.
We’re so 21st Century, this morning’s Tweets (diff. font size denotes importance):
1. Vianet reports H1 numbers, revenues +7.7% at £9.8m, basic EPS +18.2% at 3.5p. H1 dividend held at 1.7p.
a. Vianet reports lower profits from Vending Solutions but also lower losses from Vianet America + higher Fuel profits.
b. Alongside H1 numbers, Vianet this morning reports that it is to sell its Fuel Solutions business to Wayne Fueling for £3.5m
c. Vianet says ‘disposal of VFS will enable Vianet to focus on the core businesses…and consolidate its financial resources.’
d. Vianet disposal will increase focus on pubs, leisure. Fuel’s purchase had been intended to diversify income.
2. Enterprise Inns has announced that it is to discontinue its move to amend the terms on a number of its bonds.
3. Admiral Taverns CEO Kevin Georgel has revealed the group is considering new operating formats and may be in the market for more pubs
4. Sales of Fairtrade wines in the UK rose 9% in volume to over 10.8 million litres in 2014 and global sales reached almost 30m bottles.
5. Hotels, restaurants and bars (+8.5%) led rise in household spending in Nov per latest Visa Europe UK Consumer Spending Index data.
6. In-resort ski prices continue to fall, according to a Post Office Travel Money report, with Bansko in Bulgaria the cheapest ski resort in Europe
7. Monarch is expecting to return to profit in its first full year of trading since its acquisition by Greybull Capital
a. Monarch says that passengers are booking their trips later since the terror attacks in Paris and Sharm el-Shiekh.
8. BRC says UK retail sales grew at slowest Nov rate in 4yrs last month as Black Friday 14 raised the bar + 15 failed to lift volumes
9. Germany’s Reimann family is reported to have launched a $13.9bn bid to buy Keurig Green Mountain coffee
10. Oil prices fell 6% yesterday to hit 7yr lows of a little over $40 per barrel. Overproduction + strong $ said to be to blame.