Langton Capital – 2016-04-22 – Revolution, Starbucks, JD Wetherspoon & other:
A Day in the Life:
So as perhaps could have been predicted, Windows 10 is starting to irritate me – this largely because it’s trying to be too helpful.
It tries to predict what I’m going to do, it fills things in for me and, understandably, it’s tried to root out Google wherever it’s found it on my system & replaced it with the MS version of the same thing.
Which is time wasting and all the rest and, if I’d wanted MS Explorer (or whatever it’s called now) to replace Chrome and something called One Drive or Sky Drive or whatever to replace Dropbox, then I’d have done it myself months ago.
And I’ve yet to find the button that I seem to be pressing from time to time that takes a screenshot and saves it to my One Drive. And when I do, I’ll stop pressing it because I rarely want screenshots, I didn’t want One Drive in the first place and, even if I did, I doubt that I’d have wanted to fill it with random screenshots of half-finished spreadsheets and tales of woe regarding Windows 10 in any case.
Anyway, it’s Friday. On to the news:
PUB, RESTAURANT & DRINKS PRODUCER NEWS:
• Revolution Bars has updated on its new site opening programme saying it is preparing to open its first 3 new bars in 2016. It says ‘the first two of the new openings are already on site in Albert Dock in Liverpool, a designated World Heritage site, with the second opening planned in Stafford. A third site has been secured in central Reading.’ CEO Mark McQuater reports ‘I am delighted to report our expansion plans are progressing. We are encouraged with the performance of the three new Revolución de Cuba bars opened in the first half in Milton Keynes, Leeds and Nottingham. With two more bars scheduled to open prior to the year end and the first of our 2017 financial year new sites secured in Reading for later in 2016, our new site pipeline is strong and we remain confident of meeting our strategic growth targets.’
• Mintel’s latest leisure tracker shows that more than half of Brits went to pubs for a meal and for drinks (53% and 49% respectively) in January. It remained a weak month compared to other parts of the year, however, with pub dining down 5% on October.
• JDW has announced that it yesterday bought back another 70k of its own shares for cancellation at an average price of 690.5p
• Enterprise Inns yesterday bought back 110k shares at around 93p
• Starbucks reports Q2 numbers, says LfLs +7% in US and +6% globally. Reveunes up 9% to $5bn, 5% transaction growth
• Starbucks Q2. Sees EPS +18% to a record 39c per share. Revenue in China +18%. Operating margin at a record 17.3%
• Starbucks Q2. The company opened 350 net new stores globally, bringing total stores to 23,921 worldwide
• Starbucks Q2. Says it ‘served nearly 16m more customer occasions from its global comp store base’.
• Starbucks Q2. Chairman & CEO Howard Schultz reports ‘Starbucks record Q2 financial and operating performance – including a stunning 18% increase in revenues and a 5% increase in transactions in China – underscores the strength of the Starbucks brand and the resiliency of our global retail and CPG businesses.’ He goes on to say ‘loyalty, technology and innovation are continuing to fuel our digital flywheel and propel our business forward all around the world.’
• Starbucks CFO Scott Maw reports ‘Starbucks Q2 represented another quarter of solid growth, with the highest revenues of any non-holiday quarter in our history and excellent financial, operating and profit performance.’ He concludes ‘the record-setting performance we delivered in the first half of fiscal 2016 ideally positions us to benefit from the investments we are making in our partners, in our stores and in ground-breaking innovation, and to continue delivering world class returns to our shareholders into the future.’
• Luke Johnson has been appointed non-executive chairman of the Equistone-backed Gaucho chain and its sister chain CAU, writes MCA. Johnson said: ‘I see a great future for Gaucho and its new sibling CAU, both here and abroad, which is why I have invested a substantial sum in backing the business.’
• French spirits maker Pernod Ricard’s third quarter sales were held back by challenging conditions in China as the group brought in €1.855bn. The owner of Mumm champagne, Absolut vodka and Martell cognac kept its forecast for underlying operating profit growth of 1-3% in the full year to June 30.
• MOD pizza will make its debut in the UK in June in Leeds, with a 4,000 sq ft site at the Cardigan Fields leisure park.
• The BBPA has written to Energy Secretary Amber Rudd outlining its concerns over the potential impact of upcoming policy changes. Changes announced in the Budget could amount to £900 per pub.
• ONS figures show retail sales volumes fell 1.3% in March compared with February.
• Acromas Bid Co has sold 352m shares in Saga c32% of shares in issue) at 195p per share
• The US hotel industry saw mixed results for the week ending 16 April, with occupancy down 1.8% to 67.5%, average daily rate up 1.6% to $123.22, and RevPar down -0.2% to $83.16.
• Research by ACTE and hotel specialist HRS has found that travel buyers are spending too much time negotiating with hotel companies and not enough on providing quality service. The survey of more than 300 buyers concluded that travel managers spent the ‘majority’ of their time in supplier negotiations, resulting in a reduced focus on travellers’ needs.
• Newcastle airport is being targeted for growth next summer by Thomson and First Choice with new flights to Florida set to run fortnightly.
• AccorHotels notes that November’s terrorist attacks in Paris has affected business, with revenue in the country down 1.6% and occupancy down 0.5%. The group says the first three months of the year have remained ‘challenging’.
• Eurotunnel’s Le Shuttle enjoyed its best first quarter for 15 years, as passenger numbers rose 8% year-on-year to more than 500,000.
• Heathrow has reported a rise in both passenger numbers and profit during the first three months of the year. A total of 16.8 million people used the airport during the first quarter, up 2.6% and helping to drive pre-tax profit up 21.2% to £23m.
• Microsoft missed analysts’ quarterly sales targets as the trend away from personal computers continues to make a dent in the group’s core business. Net income slipped from $4.99bn to $3.76bn and operating profit at its Azure cloud business fell 14% despite a 3.3% increase in revenue to $6.1bn. Shares fell 4% in after-hours trading.
• Alphabet has posted a 17% rise in quarterly revenue to $20.6bn on the back of strong mobile advertising sales, although shares fell on the figures. Net income came in at $4.2bn, versus $3.5bn a year ago.
FINANCE & MARKETS:
• HM Government borrowed more in the year to end-March than planned. Spent some £74bn more than it earned. It had planned to spend around £72.2bn more. The outturn is, nonetheless, down from c£92bn in year before.
• ECB keeps interest rates unchanged. In March, it had cut the main interest rate from 0.05% to 0% and said it would increase its bond buying programme from €60bn to €80bn per month.
• Jump in borrowing ascribed to move by landlords to beat stamp duty increase. Gross mortgage lending +59% y-o-y in March to £25.7bn per CML.
• World markets: UK & Europe down yesterday, US also lower. Far East mostly down in Friday trade
• Oil price down a little from the c$46 per barrel that it hit yesterday. Presently trading at a shade under $45.
Pubs & Restaurants, Tougher Trading in 60 Seconds…
• Recession fears eased & London market is +17% from February lows.
• Yes, 17% – but evidence of a slowdown is mounting
• Yesterday saw UK unemployment up (a little) & average wage growth down (a little)
• B of England is eyeballing the situation & the ECB is scrabbling for numbers lower than zero
UK bars & restaurants in context:
• This morning’s Coffer Peach Tracker shows 0.6% LfL growth in March after 0.0% in Feb
• March 2016 included Easter & numbers, conceivably, should have been better
• Restaurants have outperformed pubs (expected over Easter but evident in Feb, too)
• London was slower than the provinces in March (but better in Feb)
• New capacity is an issue. Total sales were +3.2% in Feb and +4.9% in March
• Costs are also problematic. NLW impacts cost & London features ‘spiralling high rents’
What does it mean?
• UK Pub & Restaurant PLC is having a tougher time of it – at least at the LfL level
• But investors don’t buy/sell the whole sector, they can select specific stocks
• Here new entrants are a major feature. Contrast Franco Manca with Frankie & Benny’s
• Yes, trading is more challenging – but there are still some winners out there
• As stock selectors perhaps we have a vested interest – but stock selection remains critical