Langton Capital – 2016-05-10 – London market, Krispy Kreme, Campari, Brexit & other:
A Day in the Life:How come dogs are always on the wrong side of a door? You let them out, they want to come back in. You make the mistake of leaving the house without them and they’re pawing and scraping to get out, I mean what’s going on, can’t they simply make their minds up? Though I suppose, in a sense, they have done in that they want to be where you are unless they’re either busting for a pee or think they can smell a fox in the garden in which case the message quickly becomes ‘forget companionship, just open the door and get out of the way.’ Anyway, after the glorious sunshine that we’ve enjoyed over the last three days or so the pubs’ tills will have been ringing & long may it continue. Check our tweets during the day on here and let’s move on to the news: The News:PUB, RESTAURANT & DRINKS PRODUCER NEWS: • So is the fact that London hotel REVPAR growth has stalled (and is now falling) bad for all leisure operators? We argue not – here • Revolution Bars has announced that Chris Chambers is to join the group as CFO. Sean Curran will leave in Sept 16. Says Sean had ‘informed the Board of his intention to leave the Company to pursue other business interests’. Sean Curran has been CFO at Revolution for 13yrs. Chairman Keith Edelman reports ‘we welcome Chris to the Company and to the Board. He has broad experience of successfully growing businesses both within large organisations and on a standalone basis.’ He continues ‘Sean has been an integral member of our management team during his tenure with the business. We owe much gratitude to him for his significant contribution in that time and wish him well in his future endeavours.’ • Bakery and café chain Paul has reported turnover in the year to end-December 2015 of £28.7m, EBITDA +49%. LfL sales +6.3%. • Krispy Kreme is to be taken private at $21 per share by JAB Holdings, which is controlled by Germany’s Reimann family. • JAB adds Krispy Kreme to its recent Keurig Green Mountain acquisition in the US. Has JV in Europe with Douwe Egberts. Family has spent last 4yrs spending in the region of $30bn making coffee-related acquisitions. CEO of Krispy Kreme Tony Thompson reports ‘JAB’s experience and industry knowledge make them the ideal partner to help grow the iconic Krispy Kreme brand throughout the world. We remain focused on our long term strategy and continuing to offer our premium, high-quality doughnuts and sweet treats to consumers around the world.’ He adds ‘we look forward to working with JAB to continue bringing the joy that is Krispy Kreme to a growing number of customers.’ • Enterprise Inns yesterday bought back 51,435 of its own shares for cancellation at around 90p per share • Heartstone Inns sales +27% in the year to end-Dec to £8.2m. LfL sales +3.8% and pub level EBITDA up 33% to £1.36m reports Propel. CEO James Birch reports ‘we are delighted to announce such positive results and to have delivered further operational improvements during 2015. We look forward to continuing the expansion and development of the estate during 2016 and beyond.’ • Campari reports Q1 numbers, says sales flat in reported currency (at €327.4m) but up 7.2% organically. • Campari reports underlying EBITDA +18.8% at €66.8m but pre-tax profit down by 4.3% at €34.2m. CEO Bob Kunze-Concewitz reports ‘in the first quarter of 2016 we delivered very positive results across all organic operating performance indicators. These results reflect the consistent execution of our growth strategy which is delivering a continuous improvement of the sales mix by brand and market. In particular, the positive momentum on the high-margin global priority brands continued, driving their outperformance of the Group’s overall organic growth, as well as the operating margin accretion.’ He adds ‘moreover, we achieved a positive organic growth in all regions, particularly in the high margin developed markets, such as North America and Western Europe.’ • Campari acknowledges that its Q1 numbers benefited from an earlier Easter and early shipments to US. It says these ‘will gradually reverse in the next quarters.’ Campari concludes ‘the outlook shared at the beginning of the year remains unchanged. In particular, with reference to the macroeconomic environment, we expect that the volatility in some emerging markets and the recent devaluation of the Group’s key foreign currencies will continue during 2016. At the same time, we remain confident that the Group will deliver a positive and profitable performance driven, on the one hand, by the growth of high-margin global priority brands, particularly aperitifs, American whiskies and Jamaican rums and, on the other hand, by the positive performance of the Group’s core strategic markets.’ • A cooler growing season means the 2015 harvest for English and Welsh wines was slightly down on a record-breaking 2014, with a total of 5.06m bottles produced. • A report from Wine Intelligence shows that 18-35 year olds with above-average incomes are driving wine sales in the UK. While those in the 40’s and over are spending less on wine than they used to, millennials – dubbed ‘Generation Treaters’ in the report — are now responsible for almost a third of wine sales. The study found a number of emergent trends, including a shift away from shopping at supermarkets, and increasing use of websites and discount retailers. • Liverpool City Council has become the first local authority to ‘name and shame’ sugary soft drinks brands such as Tropicana and Lucozade. Large cut-outs of famous brands including Coca-Cola and Ribena are being placed in high footfall public areas such as children’s centres and doctors surgeries in order to educate people as to the drinks’ contents. • Thatchers has reported a sixth consecutive year of growth ahead of the market, with reported turnover up 9% to £65m and pre-tax profits up 7%. The family-owned cider maker recently invested £7.1m in its operations and launched two new ciders. • Az Valor, which owns 2.16% of Stock Spirits and represents funds holding another 1.11%, has come out in support of Western Gate’s proposals to the Polish drinks distributor. Western Gate head Luis Amaral has nominated two possible candidates to take up positions on Stock Spirit’s board as independent directors, a move which has so far received a lukewarm response from the group’s Buckinghamshire-based management. • JW Lees has brought in Nik Waring as its first Director of People. Waring will be in charge of helping colleagues ‘fulfil their true potential’. • Pizza Hut Delivery is planning a £40m expansion in the UK and Ireland over the next four years which will create around 3,000 jobs. The ambitious franchise-led programme will see Pizza Hut pose a sterner challenge to Domino’s Pizza, which currently has nearly double the former’s sites in the UK and Ireland (419 vs. 875). • Go Outdoors is in the ‘initial stages’ of discussing a sale of the retail group, which currently employs 2,500 people across 57 stores. • Bowling alley group All Star Lanes is looking to grow its business once again after several years of shrinking profits. The group has struggled to move beyond five sites but is now looking to add another 10 to 15 venues. LEISURE TRAVEL: • Around 1,000 Thomas Cook cabin staff are currently voting on whether or not to take strike action over the upcoming half term holiday. The dispute centres on rest-breaks with the union Unite saying ‘our members are deeply concerned about the impact these changes to rest breaks are having on inflight safety. Fatigue is a major contributory factor to accidents and slower response times when there is an incident.’ It adds ‘the primary purpose of cabin crew is the safety of passengers, but instead Thomas Cook seems intent on working them to the bone to extract as much money as possible out of passengers at the expense of safety.’ • Thomas Cook, meanwhile, reports ‘we would like to reassure our customers that nothing matters more to us than safety. It’s regrettable the union has chosen this path because the crew rest procedure, which includes monitoring all crew rest on all flights, was introduced with the agreement of the union.’ • Easyjet has reported H1 numbers to end-March headlined ‘resilient business model delivers robust performance’ • Easyjet H1: Total revenue £1.771bn with passenger numbers up to 31m. Says profit flat on ‘strong cost control’. • Easyjet: Group is ‘maintaining a strong balance sheet, targeting current credit rating’ & manages to increase H1 dividend to a 50% payout ratio. Re the outlook, group says ‘forward bookings in line with last year. easyJet is well placed to grow revenue and profit this financial year and deliver sustainable returns and growth for shareholders.’ OTHER LEISURE: • A steep drop in sales has pushed Taiwanese phonemaker HTC into a loss of 2.6bn Taiwanese dollars for the three months to March. Revenue slid 64% to 14.8bn Taiwanese dollars as the firm struggles against larger players such as Samsung and Apple. FINANCE & MARKETS: • Minneapolis Fed President Neel Kashkari has said that rate moves need to be cautious in the US, adds rate is “about right.” June hike thought to be still possible but somewhat unlikely. Kashkari said ‘to me, just looking at the raw data, it says we should be accommodative, and I think we have this other societal need that we should be accommodative, because if we can keep people from being lost permanently, boy that’s a real positive for society.’ He believes that the US should grow by around 2% this year. • Halifax data points to a further slowdown in UK house prices in April, as growth fell to 9.2% from 10.1% in the previous month. • Greece coming back into the headlights as Eurozone moves towards helping with a new deal, due by 24 May • Brexit betting shifts, poll by ICM shows 46% would vote to leave with as many as 11% still undecided. • IMF warns politicians need to have a plan to deal with volatility & uncertainty should the UK leave the EU in June. The IMF’s Enrica Detragiache reports ‘we don’t know what the new set of arrangements will be’. He adds ‘what we can probably say is that there will be some uncertainty if a Brexit will take place and that will need to be managed.’ • Frankfurt is said to be looking to pick up business should the UK leave the EU. In the UK, business support for the Bremain campaign is said to have slipped to around 54% of a sample of BCC members compared with around the 60% that wanted to stay in the February survey. Some 37% said that they would like to leave, up from 30% in February. • World markets: UK mixed yesterday & Europe higher. US up a little & Far East mostly higher in Tuesday trade. FTSE estimated to open around 29pts higher. • Oil price markedly weaker. Now trading at around $43.80 per barrel Retail Roundup from Nick Bubb:
BRC-KPMG Retail Sales
Today’s Press and News: Yester-tweet – Yesterday in a Nutshell: Live Tweets on Website:(SOME OF OUR) EARLY TWEETS: • Greggs updates on trading to week 18, says it has had ‘a good start to the year’ with total sales +5.7%, LfLs +3.7%. • Greggs to w18. Has completed 55 shop refits, opened 43 new shops & closed 21. Says its breakfasts + hot sandwiches driving growth • Greggs: Says ‘conditions on the High Street were softer in March before recovering in recent weeks’. Recovery sounds helpful. • Greggs: Says trading & numbers remain in line with expectations. • Thomas Cook cabin crew are voting on possible strike action during the May half-term school holiday • Brits looking to visit the US must have a bio-metric e-passport. As many as 3m UK residents may find themselves ineligible • Bank of England reported to be preparing for a rate cut if Britain leaves the EU. • The US economy added the fewest number of jobs in 7mths in April. Only around 160k workers joined the non-farm payroll • Fed’s William Dudley says that two rate rises this year are still possible. Says that would be a “reasonable expectation” • Both China exports & imports fell last month. Exports were 1.8% lower whilst imports were down by 10.9%. LATER TWEETS: • Don’t want to be a party pooper but stock multiples are once again near to recent highs. Has trading improved? Did we miss it? • Interesting point from Gregg’s was that trading had improved in April. Will watch out for confirmation from other sources • Some suggestions that ASDA may once again intensify price competition. Scare mongering or do discounters need another slap? • The Guardian says spending focusing on ‘experience economy’ (meals, online, holidays) rather than spending on more & more physical ‘stuff’ |
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