Langton Capital – 2016-06-08 – Domino’s, spending habits, Coral, branding & other:
A Day in the Life:So here’s a question for you, if we’ve largely abandoned ties – I never did understand what they were all about – then when might it be acceptable to start wearing shorts to the office? Because it’s getting rather hot out there and I, for one, think that the world has earned the right to see my legs. On the other hand, the correct answer could be that it isn’t now and never will be acceptable as the shock and loss of respect (not to say nausea) associated with seeing the naked legs of the majority of us may have a permanent deleterious impact on output and things would never be the same again. And what would be next, slippers? Perhaps pyjamas underneath loosely fastened overcoats associated with stubbly chins and beery breath? But anyway, enough of that. I’ve never claimed to be a trend-setter but, if you do, I will. On to the news: The News:PUB, RESTAURANT & DRINKS PRODUCER NEWS: • Domino’s Pizza Group has announced the acquisition of an interest in Domino’s Iceland, Norway and Sweden • Domino’s. It has invested £24m in order to ‘acquire significant minority interests’ in the Scandinavian businesses. • Domino’s. It says there is an ‘agreed route to future majority ownership and control.’ It says that this is an ‘exciting opportunity in attractive growth markets to grow the Domino’s brand.’ • Domino’s will own 45% in Norway & Sweden and 49% in Iceland. Says it sees ‘fragmented competition, stable economies, low unemployment and high digital adoption.’ Domino’s adds ‘these markets offer attractive growth prospects for the Domino’s brand. The existing strong management teams will remain in place allowing us to combine their operating strength with our skills in franchising, marketing, e-commerce and supply chain. The combination of proven local management in addition to our expertise and financial strength means we are well positioned to take full advantage of the growth opportunity.’ • Domino’s CEO David Wild comments ‘we are delighted to be investing in these exciting markets, which hold great potential for the Group. Our skills in e-commerce, marketing and supply chain will complement the excellent local know-how of our partners in Iceland, Norway and Sweden and help to grow the Domino’s brand. This is a great deal for everyone concerned and we look forward to welcoming our new colleagues and customers.’ • Domino’s current trading. Says this ‘remains in line with market expectations.’ H1 numbers are 28 July. • Newly published research from Mintel shows ‘one in seven’ global spirit launches are now for craft gins and whiskies, up from 5% in 2011 to 15% in the first five months of 2016. Overall, craft spirit launches increased by 265% globally between 2011 and 2015, with the US at the centre of growth. Of the craft spirits launched since 2011, almost half have been released in the US and 42% in Europe. • Increasingly on-the-go consumers are opting for nutritional and performance drinks as a meal option, with 39% of Americans reportedly skipping breakfast and replacing it with a drink. Mintel research shows that 69% of consumers agreed nutritional and performance drinks are an effective source of nutrients, and the 79% of consumers agree that they are more convenient than whole foods such as fruits and nuts. • Monthly Barclaycard data shows a 3.6% rise in consumer spending in May, with pubs (15.2%) and restaurants (12.3%) seeing an increase in spending. • JDW yesterday bought back 70,871 of its own shares for cancellation at an average price of 700.4p per share. • Enterprise Inns yesterday bought back for cancellation 98k of its own shares at around 96p per share • Yildiz, owner of United Biscuits, is thought set to establish a consolidated business in the UK in order to challenge Mondelez. A partial IPO of the enlarged business is said to be possible. The company will be known as Pladis with Yildiz commenting ‘we have significant growth ambitions for Pladis, which will increase our speed to market and allow us to capitalise on our position as the fastest-growing biscuit and confectionery business in the world.’ • Amazon is reported to be set to increase the scale of its grocery delivery business, Amazon Fresh, in the UK • Mintel has reported that higher-earning Britons are spending more on holidays and dining as confidence grows’ • Mintel: Says Brits spending more as the caution associated with the recession, which is now 7yrs away, fades. It says sparkling wine sales are up 14%, spending on leisure travel in general is up by 6.5% and the leisure & entertainment market has increased in size by 3.7% to £30.2bn. Mintel says ‘whilst there has not been a big improvement in overall consumer confidence, better-off Britons are clearly pulling away from the rest. Higher earners feel more confident about their finances and show more willingness to spend across more indulgent categories, such as leisure, holidays and foodservice.’ • Comptoir Libanais is reported by Mergermarket to be set to IPO on the London Stock Market. The group currently has 15 sites, the majority in central London. • Millward Brown’s BrandZ rankings show tech stocks Amazon & Facebook on the up. Starbucks also up the rankings. Google pips Apple to no1. The rankings show that McDonald’s (no9, unchanged on last year) is the only F&B stock in the global top ten. Major fallers include the oil & gas companies. In a sign of things perhaps to come, there are now 15 Chinese brands in the top 100. Top UK brand is Vodafone. • Fuller’s has launched a new Click & Collect option on its online shop which provides free delivery of the customer’s drink to his or her nearest Fuller’s managed pub. Around 200 managed pubs are participating in the scheme, which will, according to Fuller’s Group Digital Manager John Skinner, make it ‘easier than ever to pick up those brands that aren’t readily available through more conventional channels’. • Serving wine in larger glasses may fool the brain into thinking it is drinking less and lead to people ordering more wine, according to a study by Cambridge University. Researchers observed the difference in sales in The Pint Shop over a 16-week period when alternating the sizes of wine glasses at the establishment at fortnightly intervals. The study found the volume of wine purchased daily was 9.4% higher when drinks were sold in larger 370ml glasses (compared to standard-sized 300ml glasses). LEISURE TRAVEL: • At least 11 people are dead and 36 injured following an explosion in the popular Beyazit Square area of Istanbul, Turkey. The UK Foreign Office has acknowledged the rise in terrorist attacks in Turkey, saying: ‘it’s increasingly likely that some attacks will also target western interests and tourists from western countries, particularly in the major cities’. • VisitEngland’s analysis of domestic trips over a three-year period from 2013 shows that 3.7 million visits were made to London, generating £1.2bn of spending. The North Yorkshire coast also proved popular, attracting on average 1.4 million trips per year over the period thanks to destinations such as Filey, Whitby, and the North York Moors National Park. Blackpool was third on VisitEngland’s Great Britain Tourism Survey list, with 1.1 million trips made during the period. • Grosvenor House could become the UK’s largest single hotel sale as part of a £1bn bid by the Saudi royal family which would value the hotel at £600m according to Property Week. • Boss of French railways hopes to settle dispute ahead of Friday’s Euro 2016 kick-off. No promises mind. OTHER LEISURE: • Ladbrokes reports H1 Coral numbers for 28wks to 9 April, says EBITDA was £124.6m, up 16%. • Coral: H1 retail EBITDA +1%, Eurobet +71%, Online +64%. Online revenues +35%. • Coral current trading (8wks to 5 June) ‘was ahead of last year, with a strong slots-led machines performance partially offset by OTC net revenue, which was behind last year due to weaker football margins at the end of the domestic season and softer horse racing stakes.’ Group adds ‘Eurobet Retail net revenue was broadly in line with last year, with an increase in sports stakes offset by poor Serie A football results.’ It says, however, that ‘gaming performance across Coral and Gala websites was impacted by technical instability during the implementation of the new LCCP “reality checks”.’ • Guy Hands, Terra Firma, is reported to have reopened a legal offensive vs Citigroup over his 2007 purchase of EMI. FINANCE & MARKETS: • The World Bank has slashed its 2016 global growth forecast to 2.4% from its previous estimate of 2.9%, citing low commodity prices and sluggish demand in developed economies. the World Bank kept China’s growth forecast unchanged at 6.7% this year, while Japan is expected to expand by 0.5%. The UK growth rate will be restricted to 2.0% this year and 2.1% in 2017 and in 2018, while the US economy is expected to grow 1.9% this year (down from its 2015 growth of 2.4%). Meanwhile, the Euro-zone is expected to grow at a modest 1.6% in 2016 and in 2017 before slipping to 1.5% in 2018. • The UK would face uncertain trade relations if it were to leave the European Union, according to World Trade Organization director general, Roberto Azevedo. WTO analysis of preferential trade arrangements suggests Britain could have to impose £9bn worth of additional tariffs on imports, raising the cost of living, while exporters could face an extra £5bn of tariffs on their sales abroad. • Economic growth in the Eurozone for the first quarter of 2016 has been revised up to 0.6%, supported by stronger household spending and business investment. The figure had previously been 0.5%. Growth in the last quarter of 2015 was also upgraded from 0.3% to 0.4%. • ECB Governing Council member Josef Makuch (Slovakia) has said Eurozone inflation could not hit targets (2%) until 2020. Mr Makuch says ‘it is a longer than medium-term question. It is difficult to estimate the horizon exactly, maybe around 2020, certainly it will be beyond the horizon of the prediction, meaning after 2018.’ Inflation is currently a shade below zero. • Japanese GDP increased at an annual rate of 1.9% in Q1 this year, revised up from a preliminary 1.7% • World markets: UK up yesterday, Europe also higher. US higher but Asia mostly down in Wednesday trade • Oil trading at 2016 highs, Brent Crude currently changing hands at around $51.50 per barrel • House price growth is likely to slow over the rest of this year, according to Halifax, while house price inflation in the year to May remained unchanged at 9.2%. The UK’s largest mortgage lender warned to expect a further slowdown in the coming months due to ‘affordability issues’. The average price of a house in the UK now stands at £213,472, according to Halifax data. Economics consultancy Capital Economics also recently announced house price inflation may have peaked. Retail Roundup from Nick Bubb:Sainsbury: Today’s Q1 is not as bad as feared, with LFL sales ex-fuel coming in at only -0.8%, rather than the -1.4% feared, on the back of the recent Kantar/Nielsen figures, but it is bang up to date (covering the 12 weeks to June 4th) and comes despite much reduced promotional participation. And CEO Mike Coupe remains confident about the core business, despite “challenging” market conditions, and plugs the success of Sainsbury’s Bank: “we are confident that our strategy to be a trusted multi-channel, multi-product and services retailer is delivering and will enable us to continue to outperform our major peers”. Conf call 8.30am. Boohoo: The Boohoo share price has had a strong run (fully justifying its selection as our “Tip of the Year”), but today’s Q1 does not disappoint, as Boohoo has had a terrific start to the year, despite strong comps, with sales up by 42% and with the UK doing just as well as Overseas! To be fair, the UK is flattered by the growth in third-party sales and gross margins have been brought down, but even so market share has clearly been increasing rapidly, which augurs well. Management remain conservative about the outlook for the rest of the year, by only increasing their guidance from c25% to 25%-30%, but the City will be nudging up its full-year profit forecasts regardless. Conf call 8am. Nick Bubb – nicholas_bubb@hotmail.com Yester-tweet – Yesterday in a Nutshell: Live Tweets on Website:Some of the early tweets: • Parkdean FY numbers. EBITDA +15.7% at £106.6m with synergy benefits expected to add to that number. • Parkdean says it ‘benefitted from growth across a number of diversified but complementary income streams’ • Parkdean CEO John Waterworth reports the group ‘enjoyed another strong year across the portfolio and the newly combined Group’ • Vianet says leisure business was ‘resilient’ with profits virtually unchanged at £4.12m (2015: £4.14m). • Vianet sees a ‘further fall in the number of installations and Statutory Code uncertainties.’ • Vianet says sees ‘adverse pressures in our beer flow monitoring operations, but with a noticeable slowing in the rate of UK pub closures’ • STR and Tourism Economics’ latest forecasts suggest that supply growth in the US hotel industry will match demand growth in 2017 • Circa 67% of parents would take kids out of school for a holiday in term-time per Holidaysafe poll • Yellen speech taken as dovish but little detail. Fed chair Janet Yellen yesterday struck an optimistic tone on the outlook in the US Later Tweets: • Soybean and sugar prices continue to hit new highs. Soybean meal +27% in last 12mths, sugar price +50% • Brexit polling dragging Pound this way & that. Will settle wherever it settles but, in medium term, could be disturbing spending decisions • Hard to plan re holidays – both for UK residents travelling overseas and for Euro residents visiting the UK. Still 3wks to go • US rate rise. Said to be a 2% chance of a June rate rise & 25% chance of one next month. • BRC says furniture spending down sharply. Car buying sluggish, says ‘mkt cooling in face of concerns re economic + political stability’ • Furniture spending down, cars sluggish, higher Stamp Duty impacting. What’s the outlook for house prices looking like?? • STR says US hotel supply & demand should be in balance next year. Remarkable given supply decisions are made 3-5yrs in advance of demand |
|