Langton Capital – 2016-06-13 – Shepherd Neame, Euro-2016, new openings & other:
A Day in the Life:
So, having struggled to justify a visit to the pub to watch England fail to hold on to what would have been a deserved win on Saturday, I was obliged to watch the football in the kitchen.
Because, whilst I accept that it means I was nearer to the fridge and the kettle, I don’t think the fact that ‘other’ members of the family were watching the last hour of CBBC in the living room was sufficient to justify turfing me out.
So I had to watch it whilst alternately sitting on a hard chair and pacing around the room although I suppose now, having had four boys (kind of left home) and one girl (still very much with us at age ten), I now know what it’s like to be outnumbered by members of the opposite s-ex and to have the TV schedules tweaked accordingly.
Still, on the basis that possession is nine tenths of the law, perhaps I should have taken up residence earlier. That and put a lock on the door. On to the news:
RECENT WEBSITE ARTICLES:
• Euro 2016 & leisure; see here
• Market getting tougher? See here
• Main features London hotels, slowing markets, Restaurant Group etc. Link to index page – here
• Ongoing tweets, older emails found – here
PUB, RESTAURANT & DRINKS PRODUCER NEWS:
• Shepherd Neame saw life-for-like managed sales rise 4.6% in the 49 weeks to 4 June and anticipates results for the year to 25 June to be in line with expectations.
• Sheps announces purchase of eight freehold pubs from Enterprise Inns in Kent, Surrey, and Sussex. It says ‘these assets are all high quality pubs in line with our strategy to acquire sites with unique character in landmark or high profile locations, to invest in them to drive footfall and to develop the offer to enhance the customer experience.’ The group will also move five of its tenanted pubs to its managed division.
• Shepherd Neame reports managed house sales +4.6% in year to date wityh LfL EBITDA at tenanted houses +2.4% at week 48. CEO Jonathan Neame reports ‘we are delighted to end another successful year with these excellent opportunities to enhance the quality and profile of our pub estate and to bring new skills in to the team.’ He adds ‘we look forward to working with our new partners and see exciting investment opportunities to help build each of their businesses further.’
• The Wilson Drinks Report has suggested that drinks retailers should generate £200m in extra sales if England reach the finals. After having been held to a draw by Russia on Saturday, the point may be moot. Wales on Thursday
• WDR says ‘WDR analysis of the FIFA World Cup in 2014 showed that off trade retail sales increased by £56m in the first 3 weeks of the tournament, when England were still involved. As soon as England failed to qualify, sales dropped significantly.’ This accords with earlier Langton comments that sales in other leisure outlets – including travel agents – rebound strongly when the football takes a back seat.
• WDR says it ‘estimates that off trade drinks retailers are likely to see increases in sales of beer, wines and spirits of at least £100 million, even if England put in a disappointing performance.’ Tim Wilson, Managing Director of WDR, comments ‘on paper, England are the more likely British team to make it to the final. The magic combination for drinks retailers in both the off trade and on trade channels are big football tournaments in Europe, extended England participation and predictable sunny weather, like we saw in UEFA Euro 1996.’ He adds ‘however, we could be facing a double whammy on 24th June : all 3 British teams out of UEFA Euro 2016 and the UK voting for Brexit. It begs the question : which is more likely – England making it to the final or the UK voting for Brexit?’
• American-style casual dining chain TGI Fridays has fallen to a £12.45m pre-tax loss after a number of one-off bills, including an £11.9m acquisition charge and £10.7m of interest. The Electra Partners-owned group reported growing sales, up 11% to £193.5m, but cited the increasing popularity of takeaway and delivery services such as Deliveroo and Just Eat and is wary of a general consumer downturn.
• TGI Fridays has 72 sites in the UK, and ‘expects the core estate to perform strongly in 2016 and beyond with further growth from new sites’. A further eight openings are targeted for this year, although growth in delivery is also set to grow, with Uber and Amazon both announcing that they might trial services.
• Levant Restaurants is readying itself for a £40m flotation so that the Lebanese chain can expand across Britain and move into the Middle East. The Times writes that the 15-strong group, which had a turnover of £17.7m last year, has 11 Comptoirs, two Shawa street food outlets and two individual eateries, Levant and Kenza, and aspires to reach 50 units in five years’ time.
• Levant. The AIM listing, which is being handled by Cenkos, will see its shares start trading on June 21. The company is selling £16m of shares following strong institutional demand, half of it new funding for expansion and the rest share sales by existing shareholders. The Kaye family will invest £4.7m to subscribe for 10% of the shares at flotation, and Jonathan Kaye, the former Prezzo chief executive, will join the board as a non-executive director.
• Indian authorities are reported to have seized properties worth about $210m belonging to tycoon Vijay Mallya. Mr Mallya built India’s largest beer and spirits business. The Indian enforcement agency has filed criminal charges. He has been charged with being a ‘wilful defaulter’ on some of his debts.
• Sports Direct boss Mike Ashley has written to BHS administrators saying that he has an interest in taking over some of the stores
• JD Wetherspoon is set to open eight pubs and a hotel in the next six weeks as part of its goal to open 15 sites this year. The busy period will see openings in a number of areas, including Edinburgh and Kent, while a second new hotel will open in the autumn.
• What with the Queen’s 90th birthday and the kick off of Euro 2016, the BBPA says it is the perfect time to celebrate with a pint at the pub. Figures forecasted an extra 17 million extra pints to be consumed by beer drinkers over the weekend, during which a number of international football matches were aired and unique ales Marston’s and Shepherd Neame et al. celebrating the Queen’s birthday were available to be enjoyed.
• Brasserie Blanc has told BigHospitality it aims to double in size from its current 17 sites in the next three years and is looking for sites in the North of England. The news follows a £3.5m, 20-month rebranding of the French-style chain as it seeks to update and connect with younger diners. Managing director Rory Mathinusen said the makeover has resulted in an 8% uplift in trade from customers aged 25-29 and a 7% LfL increase.
• Campaigners are urging the government to make an urgent statement on when the pubs code will be enacted after its delay last month. A Parliamentary Save the Pub Group meeting saw vice chair Louise Haigh MP and chair Greg Mulholland MP call on the Department for Business Innovation and Skills (BIS) to set a new date. Campaigners have attempted to pressure the likes of Punch, Enterprise, Greene King, and Marston’s to honour the original date of May 26, but the pub groups have yet to commit.
• Fuller’s has joined forces with Amstel in a joint ‘spin the wheel’ promotion that entitles customers to a voucher for a free Amstel whenever the team they land on is playing. Langton got Albania.
• New World Trading Company has confirmed its target of creating a pipeline of six new sites a year but will continue to invest in its existing estate. Private equity firm Graphite Capital, which also backs Hawksmoor, recently acquired NWTC from Living Ventures, Hill Capital and LDC for £50m.
LEISURE TRAVEL & HOTELS:
• EasyJet put more than nine million seats on sale last Friday for more than 59,000 flights across its network between 6 February and 25 March, 2017. One-way fares started at £29.99 per person for routes such as Gatwick-Belfast and Luton-Copenhagen and families travelling with children under five will be allowed to bring two items onto flights for free.
• Guy Hands is reported to have withdrawn his case against Citigroup over the 2007 buyout of EMI.
FINANCE & MARKETS:
• The London market closed at a three-week low on Friday after financial and mining stocks fell, with analysts citing the upcoming EU referendum as the main driver of turbulence.
• World markets: As reported, UK & Europe down on Friday & US also lower. Far East mostly lower in Monday trading
• Oil price continues to weaken, albeit from a level at which it had doubled from its lows. Trading today near $50.20 per barrel
• The pound came under renewed selling pressure late on Friday as market volatility intensified and some surveys show the British campaign to leave the EU gaining a lead.
London Trading in 60 Seconds…
London trading has been great. It might be getting a little less so.
• LfL sales have been chugging along at 4%, 5%, 6%…
• Whilst extremely positive, capacity has been increasing, new units have been going on
• New entrants (vibrant, innovative, relevant) are opening units apace
• Occupancy costs have risen sharply; a lead-indicator, they may be a little off the top
• Hotels have slowed – albeit from record high occupancy, REVPAR levels.
• Partly a supply problem, they are still servicing an increased number of visitors
• Sterling weakness should have been a positive
• But MERL & some shops have suggested numbers aren’t what they might have been
Fuller’s comments today:
• Group reports ‘another excellent year…’
• But FY15 is over & comments re current trading hint at a slowdown
• Managed LfLs +5.6% in H1, +5.3% by wk43 and +4.8% for the FY. To wk10, they are +2.7%
• H1 Tenanted profits were +3% but +2% at FY. To wk10, they are down 2%
• Beer volumes were +1% at H1 but minus 1% for the FY. To wk10, they are down 5%.
• Before leaping to conclusions we should acknowledge:
1. April was poor across the industry but May was better.
2. Wk10 comps included Easter last year but not this
3. The weather can swing numbers +/- 20% LfL on a day-to-day basis
4. The group updates analysts at 11am.
• London is not ‘over’ but growth may have, at the very least, slowed
• YNGA & FSTA are obvious players but GNK/MAB are more London-heavy than is MARS
Retail Roundup from Nick Bubb:
Grocer Watch: The widely followed Grocer “33” weekly supermarket pricing survey in Saturday’s magazine saw Lidl chalk up another victory in its latest guest slot, but the price differential of its £49.76 basket over Asda closed from 14% to 8%…Tesco’s £56.55 basket wasn’t as close to Asda as in recent weeks, whilst Morrisons and Sainsbury’s were even further off the pace, with Waitrose coming in a distant 6th, with a £68.41 basket…There was better news for Waitrose, for a change, in the separate Grocer “Mystery Shopper” weekly survey on Store Service and Availability, as its 24,000 sq ft supermarket in Newton Mearns in Glasgow, easily topped the rankings, with a solid score of 82 out of 100.
Saturday Press about BHS and Philip Green:
Other Saturday Press:
Sunday Press on BHS and Philip Green:
Other Sunday Press:
Today’s Press and News:
Yester-tweet – Yesterday in a Nutshell: Live Tweets on Website:
Some of the early tweets:
• Fuller’s. Good numbers but LfLs slowing & beer negative to end-March. Numbers slowed further in current period.
• FSTA FY: FY LfL sales increase of 4.8% in Managed Pubs & Hotels. Tenancies ‘solid’, LfL profits +2%. Beer volumes down 1% & profits level
• FSTA FY: Current trading (1st 10wks) managed LfL sales +2.7%, tenanted LfL profits down 2% and beer volumes down 5%
• Has London slowed? See Fuller’s numbers. Looks like a ‘yes’. Group hosts analysts’ meeting at 11am & will be questioned further
• Tesco sells Giraffe to Boparan Restaurants for an undisclosed sum. CEO Dave Lewis says no longer a core area for focus.
• Spirits producer Remy Cointreau yesterday reported FY net profits up by more than 10%, driven largely by higher cognac sales
• MCA writes that Hawksmoor owner Graphite Capital has acquired 14-strong New World Trading Company, which includes The Botanist, for £50m.
• The earlier May bank holiday and a later half term contributed to a 0.8% fall to 6.2 million in the number of passengers at Heathrow in May
• The return on 10yr UK gilts (and on German bunds) has fallen to record lows. 10yr UK yields are now below 1.25%.
• ££ down vs dollar & Euro. It is what it is ahead of Brexit vote but, for what it’s worth, it makes taking overseas holidays more expensive
• Perceived wisdom: There Is No Inflation Out There. But there is, isn’t there? Oil doubled, sugar +78%, OJ +38%, soybean +28% etc.
• Input prices. How come hog prices +9%, cattle prices down 34%? Esp. when inputs’ inputs, like corn, are sharply higher?
• Gilt yields hitting all-time lows. Will push up pension fund ‘deficits’. Illusory though, who would fund 25-40yr liabilities at 1.25%?
• Draghi is mentioning supply side. At last. No use just printing money, you have to be able to do something constructive with it…
• Fuller’s & poss. London slowdown. See 60-seconds flash-note. Nothing definitive but trading in the capital hasn’t improved further, has it?