A Day in the Life:

Why is it that train announcers sound so happy when they’re telling you that there’s a delay?

I mean I don’t particularly want them to sound funereal but, on the other hand, they could at least sound a bit sorry about it.

And then, when they go on to say that Virgin, Southern Rail, Grand Central or whatever regrets the inconvenience caused, why do I have the mental picture of a bunch of guards, inspectors etc. smirking and digging each other in the ribs?

Maybe it’s just me. Maybe I’m a naturally suspicious person or perhaps I’m right & it would help if occasionally the announcers had to bow and scrape like your average humbled Japanese businessman does when he’s missed his targets?

Anyway, it’s set to be a glorious week. The pubs’ tills will have been ringing over the weekend and, if would-be punters can be persuaded to walk their dogs to the beer garden midweek, the next few days should be very good as well. This time last year, it was raining. On to the news:

The News:

RECENT WEBSITE ARTICLES:

• Note on recent trading – here

• Recent notes – here

• Ongoing tweets, older emails found – here

PUB, RESTAURANT & DRINKS PRODUCERS:

• Economy likely to be in a mess. See Finance & Markets below.

• Conviviality FY numbers, says sales +137% (on acquisitions) to £864.5m with adjusted EBITDA +135% at £30.2m

• Conviv. FY: Adjusted PBT +124% at £21.7m & diluted EPS +27% at 14.2p. Paying 9.5p dividend (2015: 8.3p)

• Conviv. FY: Says purchase of Matthew Clark is ‘transformational’ & adds that Bibendum (post y/e) integration is ahead of expectations. CEO Diana Hunter says ‘these strong results reflect the hard work of our employees, Franchisees and suppliers.’ She says ‘we look to the year ahead with a stronger and more resilient business able to thrive in uncertain economic times.’ Ms Hunter concludes ‘we continue to review the market within which we trade ensuring that we strengthen our position as the UK’s leading drinks and impulse wholesaler and distributor.’

• Wagamama has reported LfL sales increases of 13.1% in the year to end-April. Turnover rose 18.9% to £229.9m

o Institutional Shareholder Services (ISS) has warned there is a ‘material difference’ between the offers given to different shareholders in AB InBev’s £27bn takeover of SAB Miller. The influential shareholder advisory firm claimed that two of the largest investors involved with the mega brewery deal – tobacco firm Altria and Colombia’s Santa Domingo family – are being offered a different deal the rest of the shareholders involved following the fall in sterling.

o Deliveroo and Uber will soon be joined by Amazon in the London restaurant delivery space as the online giant gets ready to launch its Amazon Restaurants service. Amazon Restaurants is already available in cities in the US and allows customers to order food from partner restaurants for one-hour delivery.

o Castle Rock Brewery has acquired the freehold of the Cricketers Rest in Kimberley and is planning a major refurbishment of the premises. Castle Rock chairman Geoff Newton said: ‘We expect the site to be open for business towards the end of August.   We continue to look for further suitable acquisitions across the East Midlands.’

• MCA’s poll of 1,000 respondents in the days after the EU referendum indicates 22% of consumers expect to scale down spending on eating out. This fall in sentiment, compared to 9% of people who expect to increase their eating out spend, varied across age groups, with 34% of 18-34 year-olds planning to reduce spend compared to 16% of over 55s.

• Resolution Foundation suggests that Millennials may earn less than their predecessor generation, Generation X

• Curbs on junk food advertising are being sought during popular UK TV shows. Perhaps the problem goes deeper?

• Jack Daniels has become the biggest selling whisky drink in the UK, overtaking traditional Scottish manufacturers

• More than one in five pubs (21%) are in ‘significant distress’ compared to 17% a year ago according to Begbies Traynor’s latest Red Flag Alert research. The findings also show the number of pub closures increased 53% year-on-year in the second quarter, appearing to contradict Camra’s assertion that pub closures have fallen to 21 a week. The differences could be down to the fact that Begbies only reports Limited companies, excluding sole traders, and only has one record for each pub group even if they own multiple sites.

• Risk Capital-backed Laine Pub Company will open a full-scale brewery in Sussex as it ‘moves towards a more vertically integrated business’, writes MCA. 

• The pubs code is set to be debated in the Commons today before going to a select committee on Tuesday, and is likely to come into force Thursday.

• MCA’s Eating Out Report 2016 suggests the total UK market is currently worth £87bn and is estimated to grow at 2.3% this year, slightly slower than in 2015. Outlet growth is also predicted to slow from 1% to 0.8% due to difficulty in finding sites and weakening business confidence.

• Meatcure has postponed its crowdfunding campaign on Seedrs, attributing a drop in trading in part to Brexit uncertainty, writes Propel. The group told its investors: ‘We have seen a nationwide industry change with the current economic market being somewhat uncertain after Brexit, this along with the uncontrollable delays in opening our Bedford site superseded by the wider economic circumstance we’re not going to hit the numbers we predicted.’

• MCA writes that pub sector specialist Ted Kennedy has already received several approaches from investors in pub companies concerned by the potential impact of Brexit.

LEISURE TRAVEL & HOTELS:

• Online travel agent Lowcost Travel Group, which has 27,000 customers and 110,000 forward bookings, has ceased trading.

o European resorts are reportedly cutting prices to encourage UK travellers concerned over a drop in spending power abroad, writes The Telegraph.

• Thomas Cook CEO Peter Fankhauser has called on the UK government to bring stability for businesses and to prioritise the scrapping of Air Passenger Duty. Speaking at the travel brand’s 175th birthday party, Fankhauser said Thomas Cook is making ‘huge progress in all areas’ but added that the post-Brexit period has proven to be ‘the most challenging business environment’ he has ever experienced.

• The fallout of the recent failed military coup in Turkey will likely add to what is already a hostile macro environment for the travel industry. The coup resulted in 161 deaths, including many civilians, and follows on from the recent terrorist attack on Nice.

• Flights in and out of Istanbul’s Ataturk Airport were reported to have resumed on Saturday morning although services will be subject to cancellations and delays. The FCO recently commented: ‘The situation now appears quieter in Istanbul and the bridges across the Bosphorus are re-opening. Some flights are being diverted or cancelled,’ adding that UK visitors should ‘stay indoors, avoid public places and remain vigilant.’

FINANCE & MARKETS:

• Brexit on the Economy:

o Markit will publish a one-off ‘flash’ PMI on Thursday covering the period following the UK’s decision to exit the EU. It says ‘we believe that the Flash UK PMI release will provide valuable insight to businesses, governments, policymakers and investors seeking to assess the immediate economic impact of the referendum’.

o Flight of funds. Around $5bn in funds have been withdrawn from the UK post 23 June says Soc Gen & EPFR. It says, however, ‘the data should be viewed with caution and as only a partial estimate of the damage to the fund industry’.

o Resolution Foundation says young people earn less over their lifetimes if/when the UK leaves the EU

o EY Item club says UK faces a “severe loss of momentum” after the vote to leave the EU. It cuts 2017 forecast from 2.6% to 0.4%

o EY says impact of EU exit will last until at least 2018. Cuts 2018 forecast from 2.4% to 1.4%. Sees loss of wealth in 100s of billions. EY says vote will have “severe confidence effects on spending and business investment”. Eschewing research, Andrea Leadsom says we should ‘banish pessism’.

o EY Club says exports could rise next year but says ‘heightened uncertainty is likely to hold back business investment, while consumer spending will be restrained by a weaker jobs market and higher inflation’. It continues ‘longer-term, the UK may have to adjust to a permanent reduction in the size of the economy, compared to the trend that seemed possible prior to the vote. But amongst the gloom, the weaker pound provides one silver lining to exporters, particularly those selling to the US and emerging markets.’

o Separately Deliotte has found that 82% of CFOs surveyed expected now to cut capex next years. Capex is a lead indicator for jobs

o Deloitte says ‘perceptions of uncertainty have soared to levels last associated with the euro crisis five years ago.’

o B of England says a ‘sledgehammer’ may be needed to support the UK economy. Banishing pessimism may be insufficient. Andy Haldane says ‘maybe’ unemployment will rise next year

o B of England’s Gertjan Vlieghe says lower interest rates alone may be insufficient to stabilise the UK economy

• Brexit on the Leisure Sector:

o MCA’s poll of 1,000 respondents in the days after the EU referendum indicates 22% of consumers expect to scale down spending on eating out.

o Fleurets has reported that the property market was ‘growing quiet’ in the 12wks running up to the EU vote

o On a brighter note, Fleurets says ‘whilst the ramifications of the Brexit vote will create uncertainty and doubt for some, the overriding sentiment appears to be one of business as usual for operators and service providers to the sector.’ It adds ‘given the comparative weakness of sterling, the summer may even see record numbers of overseas visitors to the UK, with London likely to be a key destination, and therefore give a corresponding boost to spending in the leisure sector.’

• On a brighter note:

o The above is a fair reflection of the weight of comment. There have been no positive data on potential Brexit to date.

o On a positive note, Australia and South Korea have indicated that they will trade with the UK on a tariff-free basis. Given the weight of Korean imports into the UK, that is perhaps hardly surprising.

o Also, tourism could be positively impacted this summer. There is no data as yet.

• Other economic news

• Construction output fell by 2.1% in May suggesting that a slowdown was apparent in the run up to the 23 June vote

• World markets: UK mixed Friday but other European markets down. US down but Far East up in Monday trading

• Oil price up a little at around $47.85 per barrel

• The Rightmove home price index fell by 0.9% in July

YESTERDAY IN A NUTSHELL – SEE LIVE TWEETS ON WEBSITE:

• Some of our morning tweets: Mitchells & Butlers CEO, Phil Urban, tells MCA co is more likely to look at start-ups or small chains as potential acquisition targets

• Punch has teamed up with Just Eat in two trials that will see both the takeaway service deliver food to pubs across Yorks & Notts

• Whitbread shares beat the market yesterday leading some observers, once again, to suggest that a break up was on the cards

• VisitBritain in ‘anticipating a strong summer’ after the Pound’s post 23 June fall.

• The chairman of the Minoan Group has said Britain’s decision to leave the EU will increase the costs of travel and holidays

• US hotel industry posted poor y-o-y results for the week ending 9 July. See email. Sign up here http://www.langtoncapital.co.uk/

• B of England votes 8-1 to hold interest rates at 0.5%. It voted unanimously to hold QE at £375bn. Could cut in August

• The NIESR has said that ‘the Bank of England’s decision is disappointing.’ It says the Bank had teased & should provide direction

• New Chancellor Philip Hammond agrees to dumping of balanced budget pledges saying UK economy is ‘entering a new phase’

• Other Tweets:

• Sterling set for its best week since 2009 per currency traders. A look at the chart shows you where it has bounced from

• Retail surveys still pointing to no post-Brexit slump. John Lewis & BRC broadly positive. Warmer weather will have helped

• Just Eat carving out a niche at the bottom? Deliveroo a superior product? Perhaps I’m not the one to comment.

• Inbound tourism ‘should have good summer’ says VisitBritain. Let’s hope Euro visitors don’t need visas in the near future.

RETAIL NEWS WITH NICK BUBB:

o Saturday Press: Apart from the attempted “coup” in Turkey on Friday night, the main focus in the Saturday papers was on the silly claim in a speech by Andy Haldane, the Bank of England’s Chief Economist, that the monetary authorities should take a “sledgehammer” approach to stabilising the post-Brexit economy and that monetary policy should be eased next month, even though it is likely to be counter-productive at worst and ineffective at best. The other big story (as noted by the Times, for example) was the ludicrous claim by the beleaguered Philip Green that he “invested” £421m in BHS during the period of his ownership, in a last-ditch attempt to mollify Frank Field, the head of the Parliamentary inquiry into the collapse of BHS. The Telegraph also flagged that Philip Green has denied the allegation that he tried to stop a last-minute sale of BHS to
Mike Ashley and Sports Direct, whilst the Guardian highlighted that the administrators plan to close 20 of the worst BHS stores next Saturday and the FT noted that Philip Green is querying the use of BHS money to pay the legal costs of Dominic Chappell’s lawyers. The FT Review of the Week highlighted the management changes at Burberry last week and, in his FT column, the respected City commentator Neil Collins stuck the boot into the embattled Chairman of Burberry, John Peace, noting that his experience of being Chairman of 3 companies at the same time “has not been one of unalloyed success”.

o Sunday Press: The Sunday papers were a bit short of Retail stories and the Sunday Times was a Philip Green/BHS-free zone for once, although the Sunday Express stepped into the breach by highlighting that Mike Ashley’s bid for parts of BHS was rejected by the liquidators for being worth “practically zero”. Oliver Shah, the doughty Retail correspondent the Sunday Times, turned his guns on the embattled Christopher Bailey of Burberry, with a full-page article headlined “Fashion’s victim” arguing that “the creative whizz-kid” should never have been promoted to be CEO in the first place. The Midas column in the Mail on Sunday picked Marks & Spencer as one of the selections for its latest “Dogs of the FTSE” portfolio…and the Observer’s Review of the Week flagged that it had been “a good week” for Euan
Sutherland, CEO of SuperGroup, and “a bad week” for Jill McDonald, CEO of Halfords…

o Conviviality: The group, which now calls itself “the UK’s leading drinks and impulse wholesaler and distributor”, has announced its finals today, for y/e April, showing sales and adjusted EBITDA more than doubled, to £865m and £30m respectively and after a series of transformational acquisitions things look on track: “Conviviality Retail, Matthew Clark and Bibendum PLB have all traded well during the acquisition processes, and are in line with expectations”. And CEO Diana Hunter says, breathlessly, that “The experienced management team in place, coupled with the well invested and compelling businesses with market leading expertise and current trading in line with expectations, gives the Board confidence for the future”. Analysts meeting 9.30am.

o News Flow This Week: Thursday brings the Howden interims, the AO.com Q1 update and the ONS Retail Sales figures for June.