Langton Capital – 2016-07-21 – Greene King Tracker, Remy Cointreau & other:
A Day in the Life:
Langton is currently sitting around in Manchester Airport. We’re reverting to Plan B re wealth creation in the wake of the Brexit vote. We’re heading to Vegas, intend to win large. Shortened email today (and for a little while). On to the news:
PUB, RESTAURANT & DRINKS PRODUCERS:
• GNK Tracker: Spend in June down but overall leisure spend will (or should) show ‘resilience…in uncertain times’
• Greene King Tracker: Looking forward to summer, says ‘just over half of those surveyed admit that they adapt their leisure habits from June to August in order to make the most of the British summer.’
• GNK Tracker: Young people to adapt spending over the summer, c77% of 18-24yrs group intend to eat & drink outdoors
• GNK Tracker: Suggests Rio Olympics ‘may provide a small boost to pub owners’. Will be on a lesser scale than the football
• GNK Tracker: Most popular Olympics ‘event’ likely to be the opening ceremony.
• GNK Tracker: Says British households spent 3% less on out-of-home leisure in June than they did a year ago. Is a 1% fall m-o-m
• GNK Tracker: Despite leisure drop, eating out spend was up in June (+4% y-o-y)
• GNK Tracker: Says impact of the Euro football was neutral overall. The Tracker says ‘any potentially substantial increase in leisure spending around the European Championships has not been felt across the leisure sector as a whole this month.’
• GNK Tracker: Rob Rees, Greene King group marketing director said ‘this month’s tracker has shown that pub goers want to make the most of the British summertime and the results give our industry a key understanding that outdoor spaces are coveted by the consumer. At Greene King, we seek to provide outside spaces, summer menus and full coverage of international sporting events to ensure that we can deliver the most quintessentially British summer atmosphere possible in our pubs.’ He concludes ‘looking at our monthly report on leisure spending, this month’s figures show the resilience of the leisure sector in uncertain times. Although overall spend is marginally down on this time last year, Eating Out continues its excellent recent performance, being 4% up on June 2015 and 3% up on last month.’
• Remy Q1 numbers miss target, cognac sales weaker in Europe & Asia. Sales unchanged in Q1 vs est. of +1.1%. Bloomberg comments ‘Remy Cointreau is increasingly relying on the U.S., the largest market for Remy Martin, as double-digit growth in the country is outpacing a slow recovery in China. There, the company is seeing improved trends for its cognac after a government crackdown on extravagant spending had dented demand for the spirit. While Remy Cointreau and Hennessy-owner LVMH have seen a sales rebound in China in recent quarters, Paris-based distiller Pernod Ricard, which owns Martell cognac, has forecast that the demand for international spirits such as cognac and scotch will shrink in the near-term.’
• Remy is still guiding towards an increase in operating profits for this year as a whole, despite a poor Q1
• Noel Darcy, formerly of the Big Easy and Mitchells & Butlers, has joined Drake & Morgan to oversee its integration of the newly-acquired 11-strong Corney & Barrow estate, writes MCA. The group said its strategy is to establish a ‘significant, multi-brand bar and restaurant portfolio across the UK.’
• Former Soho House commercial director Chris Miller has set up a new restaurant investment fund with Kofler & Kompanie called White Rabbit Fund. The fund will focus on early stage investments in the range of £200k to £2m in leisure concepts with zero to ten sites, which White Rabbit will then seek to help roll out nationally or internationally. Its first investment is the single-site Indian small plates and cocktails specialist Kricket.
• Enterprise Inns has appointed Richard Woodward as new Ops Director for the company’s Bermondsey Pub Co managed operation. Paul Harbottle reports ‘Richard has been a fantastic asset to our business since he joined two years ago and has been responsible for several innovations that have significantly enhanced our operations in the West Midlands. He was an obvious choice for the role as operations director for the Bermondsey Pub Company. We are delighted that he’s it.’
• Latest BRC Springboard footfall monitor has reported the fastest decline in footfall since early 2014 at down 2.8%. It says high streets were particularly hard-hit with a fall of 3.7%. Springboard reports ‘with such major political and economic news in June, it is unsurprising that there was drop in footfall of 2.8% across the UK in June, the poorest monthly result for more than two years and a marked worsening of performance since May when footfall rose slightly by 0.3%.’ It says ‘the results are shaped by a political and economic storm against a backdrop of rain downpours and generally inclement weather throughout the whole month.’
• Restaurant investor Richard Caring has told overseas staff that he will fight “tooth and nail” to protect their rights post the Brexit vote. He called the decision to leave the EU “absurd”.
LEISURE TRAVEL & HOTELS:
• STR reports the US hotel industry saw occupancy +0.3% in June with rates +3.5% and subsequent REVPAR +3.8%. It says ‘June RevPAR growth was the second highest monthly increase this year, and that is obviously a positive indicator for the rest of the summer.’ STR adds ‘June also helped round out the second quarter, which produced improved results from a soft first quarter.’
• YOTEL is dividing its business into two brands, YOTEL Airport and YOTEL City, as it looks to grow to 50 sites worldwide by 2020.
• Uber has been taken to an employment tribunal by two of its drivers who claim the taxi service is acting unlawfully by not offering holiday and sick pay.
• Cheapflight’s poll of its own users into airport facilities, services, and cleanliness has found that Newcastle Airport comes top and Luton is bottom.
• Central European carrier Wizz Air is halving its UK growth plans as a result of Brexit.
• Eurotunnel has lowered its 2016 profit forecast by 4.5% to €535m ($700m) as a result of the pound’s fall against the euro. Eurotunnel now assumes the pound will be 7% lower, impacting the group’s profit, although the group does not expect any significant impact on its activities in the short term.
FINANCE & MARKETS:
• ONS data show the UK unemployment rate has fallen to its lowest level since July 2005 of 4.9%, while the employment rate is at a record high of 74.4%. Earnings, not adjusted for inflation and excluding bonuses, rose by 2.2% year-on-year. The figures cover the period before the referendum.
• Brexit fallout:
o B of England reports ‘following the EU referendum, business uncertainty had risen markedly. Around a third saw a negative 12mth outcome
o Bank says it is pushing its agents to gather more information, feedback is that for business, the 23 June result was a shock. Confirms view that, whilst the political fallout was immediate, the economic impact of the Brexit vote (and the ultimate reality of a Brexit) could take some time to come through.
o Bank says for small ticket spending, it’s business as usual but big ticket could be impacted. It says ‘there were some reports of consumers becoming more hesitant around purchases of higher-value goods.’
o Bank sees concerns re labour availability and sees a hesitance across house-builders
o Bank says that credit conditions are a little tighter and adds ‘there were reports that demand for credit was easing alongside lower expectations for investment’
• Brexit. Property implications:
o Aviva and Standard Life are reported to be selling properties in order to meet redemptions from their property funds
YESTERDAY IN A NUTSHELL – SEE LIVE TWEETS ON WEBSITE:
• Some of our morning tweets: June Coffer Peach Tracker has LfL sales +1.8% with total sales including new openings up by 5.7%.
• Tracker: June numbers helped by better weather, shift in half-term holiday & football. Pubs outperformed casual diners.
• Tracker: Pub LfL sales were +2.0% for the month whilst restaurant sales were +1.4%. Pubs should have benefitted from football & sunshine
• Tracker: Peter Martin says ‘the sales growth in June essentially all came in the first week’. Little data yet for post Brexit vote trading
• Tracker: London performed less well that the provinces in June at +0.1% with the latter at +2.5%.
• Revolution FY update. Group opened four sites in year, says results ‘are expected to be in line with the Board’s expectations’.
• Deliveroo is expanding into alcohol delivery with a host of vendors following its successful trials with BrewDog, Majestic Wines & others
• Holidaymakers who booked with Lowcost Holidays are likely to receive compensation of just £7.50 each, its administrator has warned
• Hippodrome Casino saw losses close to double to £7.35m as revenue grew by 11.9% for the year to 31 December 2015.
• UK inflation picks up a little. June CPI rose by 0.5% per ONS compared with 0.3% in the year to May.
• The European Commission has suggested that the UK could slip into recession next year as a result of Brexit uncertainty
• IMF says UK Brexit vote has “thrown a spanner in the works” of its global growth forecast. Cuts 2017 UK estimate to 1.3% from 2.2%
• Later Tweets: Trading volumes low. Schools beginning to break up but, after the Brexit excitement, a chilling calm is perhaps to be expected
• Motor sales comment (Vertu). Currency could be manageable but post Brexit vote ‘new retail vehicle sales volumes have been behind last year’
• Vertu: New car sales down but after-sales OK. Sensible. Breakdowns still happen Brexit or no. It’s like comparing bread sales with furniture
• J Lewis not seeing a Brexit slump. Not surprising re food & clothing will be positively impacted by better y-o-y weather
• Peach Tracker themes. June not as good as it should have been, provinces > London & pubs > restaurants (helped by footie)
• B of England says ‘following the EU referendum, business uncertainty had risen markedly’. Flash Brexit PMI from Markit due tomorrow
• Post Brexit vote, Langton reverts to Plan B re wealth creation. Heads to Vegas tomorrow, intends to win large…
RETAIL NEWS WITH NICK BUBB:
• Yesterday’s Press and News: The Retailing news cupboard is pretty bare, although the Guardian highlights that the embattled fashion chain Store Twenty One is to close nearly 80 shops as part of a CVA rescue deal and the Scottish papers report, loyally, that Scottish Retail Sales fell badly last month. One bit of news that was out yesterday was that the German Online fashion giant Zalando raised its full-year profit forecast after posting strong Q2 results, but we can’t see that covered anywhere, except on websites. There’s again not much going on today, apart from the Vertu Motors update flagged above, but we note that Burberry have announced that they are starting a £100m share buyback programme today.
• News Flow This Week: Today brings the Howden interims, the AO.com Q1 update and the ONS Retail Sales figures for June.