Langton Capital – 2016-03-29 – Loch Fyne, Fevertree, Starwood Hotels & other:
A Day in the Life:
Langton is away from the office this week. There will be no Daily Wrap and A Day in the Life will be back on Monday.
PUB, RESTAURANT & DRINKS PRODUCER NEWS:
• The Sunday Times has reported that Greene King is exploring plans to sell off its Loch Fyne restaurants for around £100m. The group bought the company for less than £70m in 2007.
• AG Barr FY numbers. Sales £258.6m vs £260.9m, adjusted PBT +7% at £42.6m, total dividend 13.33p, up 10%.
• AG Barr. Says has ‘maintained market share of total soft drinks in a challenging UK market’ with international volumes +40%. Roger White, CEO, reports ‘we have delivered a creditable financial performance in difficult market conditions over the past 12 months through continued tight cost control, rigorous cash management, executional improvement and further investment in our brands, assets and people.’ He says ‘we delivered a significant change programme across the year which has further strengthened our operational and process capability, providing a robust and flexible platform to underpin our long-term success.’ Mr White concludes ‘we have, over many years, invested in our strong and flexible operating model and believe we are well placed to continue to deliver consistent long-term shareholder value.’
• Fevertree co-founders Tim Warrillow and Charles Rolls have netted £18m via the sale of shares in the company.
• BrewDog is looking to take the spirits world by storm with the upcoming launch of its Lone Wolf Distillery next month. The brewer will focus on vodka first, before moving on to gin, whisky, and other spirits.
• Liverpool City Council has rejected plans for a late night license relating to premises that can sell alcohol between midnight and 6am, writes Poppleston Allen.
• Over four out of five Wine and Spirit Trade Association members (81%) believe that leaving the EU would create an uncertain trading environment. Meanwhile, 91% of members think Britain’s inclusion in the European single market has benefitted the industry and 78% are concerned that a ‘Brexit’ might restrict access to the common market.
• The ALMR is urging the government to credit the role pubs and bars play in UK society in its upcoming White Paper on culture.
• Four out of five British brewers are excited for the year ahead and expect turnover to increase, according to a poll by the Society of Independent Brewers Association. The organisation’s MD Mike Benner said: ‘More and more drinkers are discovering the huge range of fantastic beer brewed by Britain’s independent craft brewers. SIBA’s members brewed 532 million pints in 2015 and this demand for quality, locally brewed beer has helped our membership grow to 850 brewers, [which is] approximately 60% of all breweries in Britain.’
• Ridgeview’s sparkling wines are proving a hit abroad, with 30% of the company’s sales now made in export markets. The Sussex-based operator’s sparkling wines are now on sale in 12 different countries, and CEO Tamara Roberts attributed the ‘huge increase’ in exports to the growing standing of British wine.
• Alcohol Concern is calling for minimum unit pricing for alcohol after a supermarket survey found that the recommend 14 units a week can be bought for c£2.
• Tesco is selling Champagne at the below-cost price of £7.46 over Easter from 23 March to 3 April.
• Chinese investment company Anbang has raised its offer for Starwood Hotels to $14bn, topping Marriott’s move
• The number of international visitors travelling to the UK in January grew by 6% year-on-year, with 2.5 million international visitors spending £1.28bn.
• VisitBritain director Patricia Yates commented: ‘These record-breaking figures highlight the increasing year-round importance of inbound tourism to the UK economy. Tourism remains one of our fastest growing export industries but also one of the most globally competitive which is why we continue to showcase, through our international marketing campaigns, just why Britain should top people’s list as a must-go now destination.’
• US hotel industry occupancy rose 1.9% to 70.5% during the week of 13-19 March. Average daily rate was up 4.2% to $127.72 and revenue per available room rose 6.2% to $90.04.
• The European hotel industry also saw growth across its key performance indicators (occupancy up 1.5% to 63.1%; ADR up 3.7% to €102.98; RevPAR up 5.2% to €65.01).
• Rail fares have increased 54% in ten years – more than double the rate of inflation – while customer satisfaction has improved just 7% over the same period.
• Batman v Superman: Dawn of Justice has taken $424m (£300m) at the box office worldwide in its first five days despite mixed reviews. That is the fourth highest ever global total, the sixth-highest US opening weekend, and a record for a March debut.
FINANCE & MARKETS:
• The US economy expanded at an annualised rate of 1.4% in Q4 2015, up from an initial US Commerce Department estimate of 0.7%. An improving labour market and greater consumer spending are credited with the upgrade.
• Chancellor George Osborne said on Thursday the government is likely to give the Bank of England powers to regulate mortgages used by landlords to buy homes. The BoE has said growth in the buy-to-let mortgage market poses a potential risk to financial stability but it wants to assess the impact of tax changes on the sector before taking any action.
• World markets: UK & Europe down on Thursday but US better yesterday. Far east mostly down in Tuesday trading
• Oil down a little at around $40.00 per barrel
Retail Roundup from Nick Bubb:
Next Share Buyback Watch: We had expected the notoriously shrewd “Mr Share Buyback Man” to leap up from his desk at Next HQ on Thursday after seeing the share price plunge and order his brokers to “Buy, buy, buy”. But no such announcement was forthcoming, implying that either he had sloped early on holiday for the Easter break or that Next wanted to keep their powder dry and let the market settle down a bit, as the year is yet young. However, at the meeting Simon Wolfson said that although Next is not planning to spend more than £110m on share buybacks this year, they were not ruling it out, if the conditions were right. As the share buyback limit hasn’t changed from £69.62, we would be surprised if Next don’t move into the market this week, if the shares stay as low as around £56.50, for fear of losing face…
Monday Press: On the Bank Holiday yesterday, the papers were a bit thin, but the Telegraph highlighted that John Timpson, the veteran and maverick Chairman of the shoe repair firm Timpson, has backed a British exit from the EU in the forthcoming referendum, saying that it would be a risk worth taking…whilst the FT had a feature on the rise of Online second-hand car dealers.
Today’s Press and News: After the Bank Holiday yesterday, news is again a bit thin, with the headlines taken by the impact of “Storm Katie” on the South of England and a gloomy survey of the outlook for the City of London: encapsulated by the CityAM front page headline “Perfect Storm”.
Grocer Watch: The widely followed Grocer “33” weekly supermarket pricing survey in Saturday’s magazine was won by Asda again: the £65.26 Asda basket of Easter-focused items was £3.60 cheaper than nearest rival Morrisons, despite charging 50p more for Hot-cross buns! Needless to say, the Waitrose basket of £85.87 was way off the pace, although that was skewed by charging £17.58 for a leg of lamb (vs £8.80 in Asda and Morrisons, £11 in Tesco and £22 in Sainsbury)…The separate Grocer “Mystery Shopper” weekly survey on Store Service and Availability was won by Morrisons, as its 30,000 sq ft supermarket in Portsmouth topped the rankings, albeit with a relatively modest score of 76 out of 100 (Waitrose store came bottom again, as their Horley store in Surrey, near Gatwick, got a score of just 55, getting only 4 out 20 for stock availability).
Planet ONS Watch:
News Flow This Week: The big two events coming up on the horizon are the Marks & Spencer Q4 update on April 7th and the Tesco finals on April 13th, but this week is quiet, after Easter, with just the monthly GFK Consumer Confidence survey on Thursday morning to look forward to. Nick Bubb – email@example.com
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:
A TOUGHER 2016?
• Adnams earlier today said that, whilst 2015 had benefited from a somewhat better economic environment, it was expecting this to be less helpful in 2016.
• The group reported ‘the economic mood for much of 2015 was reasonably buoyant, though it is clear that consumer spending patterns continue to evolve quickly, and it has been very important for us to keep our finger on the pulse of the market and our eye on future trends.’
• It says, whilst 2015 was buoyant, ‘sentiment at the start of 2016 has been less so.’ It blames Brexit fears and a general economic slowdown’.
• Elsewhere today, retailer Next has reported ‘the year ahead may well be the toughest we have faced since 2008.”
• Re 2016, Next continues by saying ‘it may well feel like walking up the down escalator, with a great deal of effort required to stand still.’
• CEO Simon Wolfson says ‘it will not be the first time we have felt this way, and our experience is that the effort put into improving the business in tough times can pay handsome rewards when conditions improve’.
• Sounds like hard work but, if Mr Wolfson is correct, then good operators, those remaining relevant to their markets and serving product that appeals to customer at a price they are willing to pay, could yet succeed in what does look like being a tougher environment.
EVOLUTION. SERVICE, PRODUCTS, YOU NAME IT:
• Today we report that Google is bringing its Android Pay mobile payment service to the UK.
• In this it will be competing with Apple.
• Cash may, at some point go the same way as cheques.
• A number of operators, perhaps seeking publicity, have said that certain units will no longer accept cash.
• It may be some time before this spreads to the mainstream but, it we can learn anything from the recent past, it is that change can happen quickly and that operators that fail to stay in touch will find themselves soon at a competitive disadvantage.
• Elsewhere, the ALMR’s Future Shock report concludes that young people between the ages of 19 and 24 are increasingly choosing food over alcohol.
• Vertical drinking just isn’t what it was.
• Just ask Eclectic, Deltic or any other operator servicing the youth market.
• Though selling food remains an attractive option – though even here, sharing platters, other products in the ‘grazing’ market, soft drinks, coffee and ethically-sourced products may be in the process of squeezing out pie and mash.
• The ALMR reports ‘young people are increasingly planning their social lives around eating-out, turning away from drink and towards food. On average, under-25s are eating out between 5-6 times per month…The boom in eating-out, particularly in casual dining outlets, has seen a renaissance of our high streets driven by younger consumers. This is not only helping to drive growth in our local economies, but help contribute to healthier consumption and changing attitudes towards alcohol.’
COMMODITY & INPUT PRICES:
• Oil price down on glut fears. Only a dollar, though, which suggests that sometimes more credence than is justified is sometimes given to the ‘reason’ for the fall.
• Gold stable.
RANDOM INFORMATION, HOPEFULLY NOT ALL OF IT USELESS:
• Crowd-funding. Pact Coffee pulled its fund-raise & is now sacking staff. Smacks of ‘growth-via-retrenchment’. Often a somewhat confused strategy.
• Bull market taking a day off, prices currently lower.
• Currencies. Sterling down against both Euro and Dollar. Brexit fears doing the damage. Probably not too much of an impact at present but, it this persists, it will impact inflationary expectations.
• Sterling & Brexit. Cost of hedging against further Sterling weakness has apparently increased as odds on a Brexit have shortened.
• Bank of England suggesting that risks of exceeding 2% inflation target more than one year out have increased. Pointing currently to labour costs and a suggested further tightening of the labour market but weak Sterling will also ultimately have an impact.