Langton Capital – 2016-07-15 – Innovation & acquisition in on-trade, staycations & other:
A Day in the Life:
So I’ve never been particularly good at maths.
Arithmetic, yes. I’m on top of 19% of £65 in an instant but, as soon as you start waving Greek letters at me I’m lost and I don’t suppose that I’m alone.
And that leads me to believe that, though many of the mathmo pointy heads out there have brains the size of planets – whether they can tie their own shoe laces or not is another matter – many of them do not and, as they know they’ll have the like of me running for the door as soon as they introduce a sigma or a gamma or take something to the fourth root, they just can’t help doing so.
I suppose doctors do something similar. Their chosen mots-de-confusion may be in Latin rather than Greek but the principle’s the same. In fact, along with many professionals including myself and my colleagues, why they don’t just say ‘we’ll wait and see’, I don’t know. On to the news.
RECENT WEBSITE ARTICLES:
• Note on recent trading – here
• Recent notes – here
• Ongoing tweets, older emails found – here
PUB, RESTAURANT & DRINKS PRODUCERS:
• Mitchells & Butlers CEO, Phil Urban, has told MCA that the pub group is more likely to look at start-ups or small chains as potential acquisition targets.
• Brigid Simmonds has called BT’s intention to raise prices from 1 September ‘disappointing’.
• North West-based operator Seafood Pub Company has got £18m of funding from Penta Capital in exchange for a majority stake in the business. The money will be used to help the eight-strong outfit expand to 20 sites over the next three to five years, with the ninth and tenth units more or less secured.
• Punch has teamed up with Just Eat in two trials that will see both the takeaway service deliver food to pubs across Yorkshire and Nottinghamshire and allow takeaways from the pubs themselves.
• Wine exports from Australia grew 11% in value in the year to June 2016 to $2.11bn thanks to increasing sales of premium bottled wines to China and North America.
• The 14-strong Honest Burgers has secured a new site in Marylebone, London as part of the chain’s aim to open five to seven sites this year, writes MCA.
• Rupert Clevely-led Hippo Inns is ready to launch two new pubs in London in the coming weeks, taking its total to six sites.
LEISURE TRAVEL & HOTELS:
• Whitbread shares beat the market yesterday leading some observers, once again, to suggest that a break up was on the cards
• Langton. Reason-finding is endemic within the broking community as well as in the Press. Prices may go up because oil is rising and they may go down because oil is rising. And sometimes, there isn’t a reason. The Whitbread story – though at some point it may be true – should be seen in this context. It’s shares have been very weak. They were maybe due a bounce.
• VisitBritain in ‘anticipating a strong summer’ after the Pound’s post 23 June fall. In Q1 this year, the ONS reports that visitor numbers from the US, Australia, Spain, Germany and the United Arab Emirates (UAE) all grew. VisitBritain says it could be a ‘great summer’.
• Air, hotel, ground, and meetings and events prices are expected to see ‘marginal’ increases in 2017, according to the 2017 Global Travel Price Outlook. The report identified six key risks in the coming year: emerging market performance, financial market turbulence, geopolitical risks, Brexit, fluctuating oil prices and changing US interest rates.
• Chris Grayling has been appointed as the new transport secretary by prime minister Theresa May, where he will be expected to reach a decision on the expansion of either Heathrow or Gatwick. The decision was due to be made this summer but has been pushed back to the autumn.
• The chairman of the Minoan Group has said Britain’s decision to leave the EU will increase the costs of travel and holidays and will have a ‘significant impact’ on its businesses.
• The US hotel industry posted disappointing year-on-year results for the week ending 9 July, during which occupancy fell markedly by 6.4% to 67.4%. An increase in average daily rate by 1.3% to $121.11 softened the blow slightly although not enough to stop revenue per available room falling 5.2% to $81.59.
• Pokémon Go, which some anticipate becoming the first $4bn-a-year smartphone game, has been blamed for a series of accidents. The game is already thought to be on track to smash the $1.5bn-$2bn annual sales records of Candy Crush and Clash of Clans, but there have also been reports of people getting into car accidents and forming unwanted crowds while playing it.
• Shares in Nintendo have surged by nearly 90% since the game was launched in the US and Australia eight days ago, despite only receiving a part of total revenues via its 33% stake in the Pokémon Company and an estimated 5-10% interest in game developer Niantic.
FINANCE & MARKETS:
• B of England votes 8-1 to hold interest rates at 0.5%. It voted unanimously to hold QE at £375bn.
• Bank suggests rates could fall in August. It says ‘in the absence of a further worsening in the trade-off between supporting growth and returning inflation to target on a sustainable basis, most members of the Committee expect monetary policy to be loosened in August.’ It adds ‘the precise size and nature of any stimulatory measures will be determined during the August forecast and Inflation Report.’
• Sterling down 6% since last Bank of England Committee meeting says Bank.
• The NIESR has said that ‘the Bank of England’s decision is disappointing.’ It says the Bank had teased & should provide direction. The NIESR says ‘whatever the economic merits or demerits of cutting interest rates at this juncture, the lack of clear direction is more likely to add to economic uncertainty and therefore be detrimental to demand and the economy’.
• New Chancellor Philip Hammond agrees to dumping of balanced budget pledges saying UK economy is ‘entering a new phase’. In light of the vote to leave the EU, the UK economy will be judged by “a different set of parameters”
• World markets: UK mixed yesterday, Europe higher. US up and Far East better in Friday trade. The US was hitting new highs.
• Oil price slipping this morning but up over 24hrs at around $47.20.
YESTERDAY IN A NUTSHELL – SEE LIVE TWEETS ON WEBSITE:
• Some of our morning tweets: Fulham Shore FY: Headline operating profit £3.3m vs £0.8m, debt £3.3m (2015: Cash £3.0m).
• Fulham Shore FY: During year opened 7 Franco Manca restaurants, 1 Greek & 1 Bukowski with 5 FMs opened since year end.
• Fulham Shore FY: Group has introduced an online takeaway ordering platform for Franco Manca. Will trial with Deliveroo.
• Fulham Shore FY: Says ‘we intend to expand Franco Manca nationally, as and when we identify suitable locations.’
• Spending in pubs and restaurants fell towards the end of June – a point of the year that more typically sees double digit growth
• Dart Group has reported a 109% rise in underlying operating profit to £105m for the year to 31 March
• YUM Brands has reported Q2 sales of $3bn and has raised its estimate for the full year. It expects a 14% increase in profits
• CAMRA figures suggest the rate of pub closures has slowed from 27 a week to 21 a week in the last six months
• Premier Inn is to pull out of India & S/E Asia via a “phased withdrawal”. It has 3 hotels in India, 2 in Indonesia & 1 in Thailand
• Brexit & terrorism are 2 biggest concerns for UK travellers w. 10% of GfK respondents saying they’re more likely to consider all-inclusive
• Tour operators are expected to push up prices next year, assuming a weak lates market this summer impacts unhedged travel agents
RETAIL NEWS WITH NICK BUBB:
• Today’s Press and News: The MPC’s surprise decision to hold interest rates is the main Business story, with much mocking of Bank of England Governor Mark Carney’s reaffirmed status as an “unreliable boyfriend” in the Editorial columns, although a cut is expected next month: “Brexit bazooka primed after Bank holds rates” is the headline in the Times, whilst the FT front page headline is “Hammond and Carney ploy way to save economy from recession”. With SuperGroup, Mothercare, B&M and Halfords in focus on the retail beat yesterday, there is plenty of Retail news for the papers to get their teeth into and Lombard column in the FT pens an amusing piece about how Supergroup is becoming the new Next. The Telegraph flags that John Lewis has revealed that it is set to open six concessions in the Australian department store Myer, but
• News Flow Next Week: Next week kicks off on Monday with the BRC-Springboard Footfall Monitor for June, the Conviviality interims and the British Land Q1 update. Thursday then brings the Howden interims and the ONS Retail Sales figures for June.
• John Lewis Partnership Sales Watch: There was no still sign of a post-Brexit slump at the great Retail bellwether John Lewis last week (w/e July 9th), with gross sales up by 4.7% on last year (up c2.5% on a LFL basis), but “trade was boosted by the continuing Clearance offers and strong sales of warm weather products”. Over the last 23 weeks John Lewis sales are now running up by 5.2% (just under 4% up LFL), with Electricals up by 8.7%. The warmer weather should have helped John Lewis’s sister company, Waitrose, which saw gross sales 2.0% up (broadly flat LFL) last week, but “sales were driven by a weekend of sporting spectacle”. Waitrose sales over the last 23 weeks are now up by 2.3% gross (a tad down LFL).
• BDO High Street Sales Tracker: The BDO High Street Sales Tracker for small/medium-sized Non-Food chains for w/e July 10th was a bit better than usual, with overall Store LFL sales up by 1.2%, boosted by strong Homewares and Lifestyle sales. And Online sales were up by 23.6% in total…
• Trade Press: The front cover of Retail Week magazine steers clear of politics and features a photo of the new Dobbies Garden Centre boss John Cleland, with the headline “Keeping business blooming at Dobbies”. RW also has articles about the Apprenticeship Levy and the implications of the terror attacks in Bangladesh. In terms of news stories, RW focus on the news that Dobbies has appointed the former Somerfield and Maplin boss John Cleland as its CEO with immediate effect following its recent sale to private equity, Lakeland has named its first CEO from outside the Rayner family after appointing BP UK Retail director Catherine Nunn as its new boss and Consumer Confidence has plummeted sharply following the Brexit vote (according to GFK). The Editor’s column is headlined “Brexit heat is now burning the retail workforce”, noting that the cosmetics retailer