A Day in the Life:

Langton, currently ensconced in the US, spent yesterday looking at canyons, Indian ruins and volcano craters in the North Arizona hills. Sound boring? Well here’s the thing; it’s not. Added to which we managed to be in bed when all of the crazy-busy reports came out yesterday morning.

Anyway, a shortened email – with perhaps some delayed news – will be going out for a little while. On to the news:

The News:

PUB, RESTAURANT & DRINKS PRODUCERS:

• Compass updated on Q3 trading yesterday saying that it ‘continues to have a good year, with organic revenue growth of 5.6% for the nine months to 30 June 2016.’ The group adds ‘our focus on growth is driving strong levels of new business wins and retention remains good across all regions. Organic revenue grew by 5.2% in the third quarter reflecting strong net new business in North America, good growth in Europe, and a challenging environment in Rest of World.’

• Just Eat underlying EBITDA rose 107% to £53.4m on the back of a 59% increase in revenues to £171.6m for the six months to 30 June. The figures make for an 81% jump in adjusted earnings per share to 5.6p. The group’s like-for-like orders rose 40% and the service is pursuing several operational initiatives, including acquisitions in overseas markets and expansion onto Xbox and Apple TV platforms.

• In light of its first half results, Just Eat is increasing its full-year forecasts from £358m to £368m (£7m of uplift from strong trading and £3m from foreign currency exchange rates) and bumping its underlying EBITDA forecast up from £102-104m to £106m-108m.

• Domino’s Pizza Group’s UK like-for-like system sales rose 10.9% in the 26 weeks to 26 June with total system sales increasing 175 to £494.5m. The pizza brand now has eleven successive quarters of double digit LfL growth under its belt. Underlying basic EPS increased 22.8% to 19.9p in the period, during which the group opened a record 31 stores and acquired minority interests in Domino’s Iceland, Norway, and Sweden.

• Fuller’s has appointed Simon Dodd as managing director of The Fuller’s Beer Company with effect from 1 August 2016.

• American themed sports bar The Dugout on Borough Hill Street has been named the best sports pub in London in MatchPint’s inaugural pub awards.

• Diageo’s profits fell 6% to £2.24bn for the year ended 30 June amid currency volatility, although two acquisitions drove net sales growth of 2.8%. A strong performance in the US and growth in Europe means that the drinks giant’s 2017 growth plans remain on track, according to its chief executive.

• Following the EU referendum, Diageo said it ‘is working closely with government and industry bodies to ensure its views are reflected in the transition process’, adding: ‘Diageo welcomes the formation of a specialist international trade department, as it is important for Diageo that the UK continues to benefit from open access to the EU as well as favourable international trade agreements.’

• Majestic Wines boss Rowan Gormley has waived his share bonus and is having it redistributed among the retailer’s staff, increasing the overall pot to a potential £7m.

• JD Wetherspoon has defended its practice of upping pint prices at pubs near football grounds on matchdays, adding that the changes are legal and have never been hidden from customers.

LEISURE TRAVEL & HOTELS:

• Thomas Cook has reported Q3 numbers saying that its Q3 performance was in line with Q2 expectations. It has reported ‘group revenue of £1,850 million, down 8%, reflecting impact of Turkey and Brussels’. The group has earned a gross margin of 21.3%, up 70bps and ‘consistent with shift into differentiated product’.

• Thomas Cook Q3 underlying profit of £2m, down from £22m last year. It says that Summer 2016 bookings to destinations excluding Turkey are up by 8% – but total bookings are down by 5% overall due to continued weak demand for Turkey

• Re the outlook, TCG says ‘based on recent trading, and recognising a degree of uncertainty given the current disruptive market conditions, we now expect full-year underlying EBIT to be around £300 million, including foreign exchange translation benefits of £32 million’. CEO Peter Fankhauser reports ‘our financial result in the third quarter was in line with our expectations when we last reported in May, following the impact of the attack on Brussels airport in March and continued weak customer demand for Turkey, which has affected Airlines Germany in particular.’ He continues ‘since the half year, we’ve taken action to further reduce our capacity to Turkey and increased sales of holidays to other areas, including the Western Mediterranean and long-haul destinations such as the USA. Growth to smaller destinations such as Bulgaria and Cuba is also
strong.’ Mr Fankhauser concludes ‘I am confident that our focus on strengthening our holiday offering, transforming our customer service, and bringing our businesses closer together, is laying strong foundations for future growth.’

• US hotel market was mixed in the week to 23 June. Occupancy was down 1.1% but room rates were +4.1% and REVPAR was +2.9%

• The number of hotel room nights sold in H2 of 2016 is forecast to jump 30% year-on-year as a result of Brexit, according to Tourico Holidays. The travel brokerage firm said while source markets like China and Germany only account for a small amount of inbound UK travel bookings, both markets have increased their average daily reservations to the UK by over 100% since the vote to leave the EU.

• AccorHotels has posted a slump in revenue from hotels in France following a series of terrorist attacks and strikes in the country. Revenue in France was down by 2.6% in the first half of the year, with revenue per available room in Paris showing a ‘very pronounced’ drop of 12% year-on-year. Overall revenue in the first six months of the year fell by 4.7% to below €2.5bn.

OTHER LEISURE:

• Merlin reported H1 numbers yesterday saying that it had turned in a ‘resilient trading performance despite challenging market conditions.’ Group revenue grew by 5.3%, ‘reflecting a strong contribution from new accommodation and attractions and a positive translational impact from non-Sterling earnings, partially offset by a slight decline in like for like revenue.’

• Merlin CEO Nick Varney reports ‘Merlin has delivered a resilient performance in the first half that reflects the benefit of our diversified portfolio and strong New Business Development programme.’ He concludes ‘despite this difficult current trading environment, we remain confident about the medium and long term prospects for Merlin in both our existing estate and around our 2020 milestones.’ Regarding the outlook, Merlin says ‘recent trading would suggest continuation of the trends experienced year to date, with further recovery within the Resort Theme Park estate and continued growth within LEGOLAND Parks. The Midway trading performance is expected to remain subdued reflecting our cautious view on any near term improvement in the London market. With over 70% of our profits generated outside of the UK, our reported results, if current exchange rates
prevail, should benefit from a positive translational impact.’ The group concludes ‘we are confident in the delivery of significant year on year profit growth, and anticipate full year earnings per share in line with current expectations.’

• Pinewood Group has reported that it has reached agreement with Venus Grafton on the key terms of a possible cash offer for Pinewood. Terms are 563.2p per share.

• Cineworld has announced the acquisition of five cinemas from Cinema Holdings Limited, to whom it is selling Cineworld Haymarket. The Directors believe that the Transaction will be marginally earnings enhancing for Cineworld within the current financial year and will provide high single digit earnings growth in 2017.

• Groupon has beaten expectations in reporting revenues of $756m, but has failed to achieve a profit due to investment and restructuring costs.

FINANCE & MARKETS:

• PM Theresa May has said that Britain wants a bespoke model for its future ties with the European Union. She has said that the relationship must address British voters’ concerns over immigration. Ms May added ‘we should be driven by what is in the best interests of the UK and what is going to work for the European Union, not by the models that already exist. We need to find a solution that addresses the concerns of the British people about free movement while getting the best possible deal on trade in goods and services.’

• A Reuters survey has suggested that global property & added to cash holdings whilst cutting equity allocations post the 23 June Brexit vote

• CBRE has cut its profit guidance after Brexit vote

• Henderson has reported a fall in H1 profits with £2bn of outflows

• Schroders has reported net inflows. However, funds incoming fell from £8.8bn last year to £0.7bn in H1 this year

• Nationwide has reported that the Brexit effect on the housing market may take months to become clear. Property prices rose by 0.5% in July vs June to stand +5.2% on a year earlier

• The SMMT has said that UK car production jumped more than 10% year-on-year in June. However, the industry body has warned that future growth could be hit if the UK does not maintain access to the single market. The EU has suggested that this will not be possible unless the UK opens its borders to migrants

• Manufacturing lobby group EEF and BDO have suggested that confidence among manufacturers has slumped since the UK’s vote to leave the European Union on 23 June. Manufacturers should have been expected to benefit from a lower Pound. EEF reports ‘the Brexit vote has put the manufacturing sector’s recovery in jeopardy.’

• The Insolvency Service has reported that the number of people declared insolvent is running up c20% on last year in Q2

• The IEA has told The Times that there has been a lot of emotional reaction to the result of the 23 June referendum. It says that talking down the UK could become self-reinforcing damaging Britain’s already troubled regions.

RETAIL NEWS WITH NICK BUBB:

• Trade Press: The striking front cover photo of Drapers magazine today flags that Drapers have a feature on Casualwear Spring 2017 ranges. In terms of feature articles, Drapers highlight that UK “flash Sales” websites have had a good summer because of the impact of the bad weather on High Street fashion retailers and they also look ahead to see how Fashion chains are preparing for “Black Friday” on Nov 25th. In terms of news stories, Drapers focus on the recent Sports Direct and BHS reports by MPs, but they also note that the recent hot weather coincided unhelpfully with the arrival of autumn ranges on the High Street…and also flag the recent results filed by Hobbs (sales down but profits up, because of more full-price retailing) and by White Stuff (growing nicely thanks to Overseas and Online).

• News Flow Next Week: As we move into August, the big event next week is the Q2 update from Next and their influential CEO Simon Wolfson, but the MPC interest rate announcement on Thursday at mid-day is going to be almost equally interesting. And the Travis Perkins interims on Tuesday will also provide a valuable barometer on the outlook for the building and construction trade. We also get the Greggs interims on Tuesday.