Pub spending could have been better, London hotels etc.

A DAY IN THE LIFE:

So with most of the flowers now on their way out after the summer, we decided to let the ducks out in the garden and, as they immediately ate anything colourful and then waddled around contentedly, they seem to be having the time of their lives.

Indeed, despite the fact that these things migrate and can fly thousands of miles as a matter of course, the 100yds or so that they made it from the duck pond was the furthest that any of them had travelled in their lives and, judging by the volume of quacking and general chuntering, they were a bit worried that they might get lost.

Well our local vicious wildlife doesn’t seem to have killed any and the ducks themselves have hoovered up much of the fallen fruit and seem to be cropping the grass so, in the absence of fox sightings today, we’ll give it another go. On to the news:

RECENT WEBSITE ARTICLES:

• August Tracker could/should have been better – here

• Summer weather – here  

• Over-expansion issues – here

• Email, tweets etc. – here

COFFER PEACH TRACKER: COULD HAVE BEEN (MUCH) BETTER…

• Tracker headline ‘Britain enjoys summer by still eating & drinking out’ doesn’t tell full story:

o Says LfL sales +0.6% & frames this as a success

o But CPI is +0.6% so above implies no growth

o NLW, NMW etc. mean labour costs +5% & inflation re F&B in the pipeline

o And c5.6% increase in unit numbers could be a problem

• A very mixed picture:

o London pubs & restaurants +2.9%, provinces minus 0.1%

o Pubs in total +1.2%, casual dining outlets minus 0.4%

o Story diverges for London riverside pubs vs Stoke, Crewe or Scunthorpe me-too restaurants

• And the weather, please, it made a major difference:

o Notwithstanding GNK’s cautionary comments last week, August weather was good

o We go into detail here; August 2016 was warmer, drier & sunnier than August 2015

o Some pubs were +40%, +50% or more over the August Bank Holiday weekend

o This all fed into the mix to give a blended, rather anaemic +0.6% overall

o Hardly heart-stopping, there must have been some major losers out there

• Speaking of which…:

o A glance at the Coffer Peach Tracker will provide a list of contributors

o There are some tired, over-expanded, entitled & some would say lazy brands out there

o High margins are perhaps only a good thing if they are 100% defensible

o We prefer (some) new entrants

o But fully accept investors can’t get £10m, £100m of £1bn into a host of smaller companies

o And therein lies a major opportunity, doesn’t it…?

PUB, RESTAURANT & DRINKS PRODUCERS:

• Horizons’ Menu Trends report suggests that eating out operators are keeping the cost of main courses low but boosting consumer spend by increasing the price of starters and desserts. The price of snacks has risen by 60%, according to the bi-annual survey, which tracks the trends and changes on the menus of 121 restaurants, pubs, quick service outlets and hotels. Pubs increased their main courses prices slightly this year (1.4%) with the average price of a main course now at £9.81, while restaurant main courses prices fell 1.2% year-on-year to £11.15. Quick service outlets charged 2.5% less for a main course, with a new average price of £5.87.

• The ALMR is urging councils to work with bars and pubs to prevent alcohol-related harm after the news that a minimum unit price for alcohol will not be permitted in Wales. CEO Kate Swann said: ‘If councils in Wales are concerned about any perceived health harms related to alcohol consumption, they would be best placed to avoid any measures that promote the responsible consumption of alcohol in a supervised environment and do more to promote it in favour of unrestricted off-trade alcohol.’

• Just Eat customers can now talk to a chatbot on Facebook Messenger that provides takeaway tips as part of the group’s £40m rebrand and technology upgrade to its UK business. The rebrand will also see drivers sport a new logo.

• Research from the University of Gothernberg, Sweden, suggests people are more likely to give up alcohol if they go cold turkey rather than cut down gradually.

• Melitta Professional Coffee Solutions has partnered with Automatic Retailing in the distribution of its new range of coffee blends later this year.

• JD Wetherspoon’s large breakfast option is one of the unhealthiest breakfasts on the high street, according to a study of 11 brands on Treated.com. The meal clocked in at 1531 kcal, compared to Harvester’s ultimate breakfast bap (1,307 kcal) and Wimpy’s all day breakfast (900 kcal).

• JD Wetherspoon bought back 170k of its own shares at an average price of 912p on Wednesday

• JDW went on to buy 455k shares on Thursday at an average price of 899p.

• Oakman Inns & Restaurants is sending a cheque for £20,744 to The Italian Red Cross to support their relief efforts in Amatrice and the surrounding areas.

• UK retail sales fared better in August than expected, with volumes down just 0.2% and an underlying pattern of ‘solid growth’, according to the ONS. The sales increase for July was also revised higher from 1.4% to 1.9% – the best performance for the month in 14 years.

LEISURE TRAVEL & HOTELS:

• London hotels see two-way pull. Inbound tourism numbers up on the back of a weaker pound but demand < supply per STR.

• Smith Travel Research suggests that there has been more capacity added in London than has been recently justified by demand. It shows, as a result, occupancy declining across the capital. Its most recent numbers show rates also falling with the inevitable result that REVPAR is also lower.

• London tourist volume unlikely to fully compensate for what would otherwise have been a more notable supply > demand problem.

• Travel wholesaler Tourico Holidays has posted a 22% increase in worldwide activity bookings over the past twelve months. The growth comes on the back of the addition of 1,416 new activities to its global inventory over the period, with plans to continue adding in heavy-growth markets such as Asia, Canada, and come Arabic speaking countries going forwards.

• Monarch boss Andrew Swaffield told an ITT dinner this week that British aviation should plan for the ‘worst case scenario’ of life outside the European Common Aviation Area.

• Global hotel rates are expected to jump as high as 5% next year, according to travel consultancy Advito’s 2017 industry forecast. The report suggests that, while room rates will climb, air fares are expected to remain flat driven by low fuel costs to offset increase in air demand.

• STR’s August 2016 Pipeline Report shows 150,530 rooms in 1,055 projects under contract in Europe, up 15.7% year-on-year.

• The US hotel industry posted mixed results during the week ending 10 September as occupancy fell 1.4% to 62.8%. Average daily rate was pushed up by 1.8% to $118.58, making for revenue per available room of $74.45, up 0.3%. Meanwhile, 542,419 rooms in 4,460 projects were counted as under contract in the United States in August, up 23.3% year-on-year.

OTHER LEISURE:

• Numis announced yesterday that it was to place 15m ordinary shares (12% of the company) in Gym Group via an accelerated book-build. The broker adds ‘the remainder of the Company’s shares held by the Sellers [Phoenix and Bridges] following the Placing will be subject to a lock-up which ends 90 days after completion of the Placing (subject to waiver by the Joint Bookrunners and to certain customary exceptions).’

• This morning, Numis reports that the vendors have sold the intended 15m shares at 210p per share. The broker adds ‘following the Placing, Phoenix will continue to hold approximately 20.4% of the issued share capital of the Company, Bridges will continue to hold approximately 10.1% of the issued share capital of the Company and Paul Gilbert will continue to hold 0.7% of the issued share capital of the Company.’ It confirms that the Company will not receive any proceeds from the Placing.’

FINANCE & MARKETS:

• B of England leaves rates at new low of 0.25%. As expected, the Bank did nothing yesterday. It may cut again pre-year end. The Bank comments ‘a number of indicators of near-term economic activity have been somewhat stronger than expected.’

• Jean Claude Juncker has denied that he has an alcohol problem that could be affecting his judgement re crucial issues such as Britain’s role within the EU. The Telegraph has quoted a source as saying that the man drinks “cognac for breakfast”. Mr Juncker said that his occasionally unsteady walk and balance problems were down to a historic car accident.

• World markets: UK & Europe higher yesterday, US also up. Far East markets mostly higher in Friday trading

• Brent Crude trading around $46.35 per barrel

• Consumer CPI in the Eurozone rose by 0.8% y-o-y in August, in line with expectations.

YESTERDAY IN A NUTSHELL – SELECTION OF TWEETS, LIVE TWEETS ON WEBSITE:

• Coffer Peach Tracker suggests ‘Britain enjoys the summer by still eating and drinking out’. Says ‘overall LfL sales were +0.6% on Aug 15.

• Tracker says good weather saw pubs (+1.2%) out-performing restaurants (down 0.4%) during August.

• Tracker: UK ‘not giving up on going out to eat and drink in wake of Brexit vote.’ Mixed though, London & pubs up, provinces & diners down

• Analysis from CBRE suggests retailers in 11 out of 14 UK cities will see their average rateable values decrease in 2017 review

• London-based healthy food delivery start-up Pronto is closing down after running out of money, according to Times & blogs

• Q2 LFL sales ex-fuel/ex-VAT grew by 2% at Morrison’s, the third consecutive positive quarter.

• London STR data for Aug reinforces trend of supply (+2.6%) outstripping demand (+1.8%). Occ. Minus 0.8%, rate down 1.1%, REVPAR down 1.9%

• Budget UK fitness chain Pure Gym Group is floating on the London Stock Exchange in a deal to raise a potential £190m

• UK unemployment fell slightly to 1.63m in the 3mth period to July. Rate of unemployment now 4.9% vs 5.5% a year ago.

• Mortgage lending fell by 13% m-o-m (and 12% y-o-y)  in July per the Council of Mortgage Lenders.

• Other tweets: European markets had their 5th down-day yesterday. Current higher but feeling a little fragile.

• Value trumps growth? See comments today from Morrison’s (shares +9%) and Crawshaw (shares down 40%).

• Waitrose writes down value of properties, looks like the ‘race for space’ really could be over. Hesitant good news all around

• John Lewis says Brexit vote had no impact to date. NXT dismisses ‘July bounce’ however & says trading ‘remained challenging & volatile’

• MRW says margins higher. Total sales down 0.4%, PBT +11%. Sure, costs been cut but price war? Really? Good for producers e.g. Premier Foods?

• Tracker stats look, well, not brilliant. Given weather comps, should have done better? Puts downbeat GNK s/ment last week in context

• London hotels, anatomy of a collapse? Oversupply meets slacker demand. Tourism blurs the issue but occupancy & rates now both falling

RETAIL NEWS WITH NICK BUBB:

• Trade Press (1): The front cover photo of Retail Week magazine today is of the hip-looking UK MD of H&M, Carlos Duarte, with the headline “Styling H&M for UK success” flagging a feature on how H&M is “gunning for growth in retail’s toughest market”. RW also has features on how Lakeland is “setting sail for new markets”, how Sports Direct’s Mike Ashley “locked horns with investors” last week and how BRC boss Helen Dickinson is focused on “getting retailers’ good news heard”. In terms of news stories, RW focuses on the shock departure of Lidl UK boss Ronny Gottschlich and the less surprising departure of Laura Wade-Gery from M&S. And in his column the Editor thunders that “In today’s challenging times, many retailers can learn from how Dixons Carphone and JD Sports are going from
success to success”. 

• Trade Press (2): The main focus of Drapers magazine today is on the recent Drapers Independents Awards 2016 (the Winchester-based Hambledon was crowned “Independent Retailer of the Year”). In terms of news stories, Drapers flags that smaller, regional shopping centres will play a key role in building Primark’s brand in the US (according to the ABF FD John Bason) and that the fashion chain LK Bennett has appointed BHS’s Darren Topp and Michael Hitchcock as CEO and FD respectively. Finally, in her column, the Editor looks back at the Sports Direct AGM and thunders that “Ashley’s sorry – now he must clean up Sports Direct’s act”.

• News Flow Next Week: If, after “Super Thursday”, you’re keen to hear how current trading is going for Marks & Spencer and Debenhams then don’t hold your breath, because they’re not scheduled to report before their interims and finals respectively, on Nov 8th and Oct 27th. As we move into the second half of September, next week is relatively quiet. The McColl’s EGM on the Co-op deal is on Monday, then Tuesday brings the Kingfisher interims, the French Connection interims and the latest monthly Kantar/Nielsen grocery market share data.

• Planet ONS Watch: In the real world, August (the 4 weeks to Aug 27th) was a disappointing month for Non-Food retailers on the High Street, despite the boost to Food retailers from the hot weather, as per the BRC-KPMG Retail Sales survey. But on that strange parallel world, the Planet ONS, it didn’t look so bad overall, via yesterday’s Office of National Statistics Retail Sales figures for August. The 0.3% dip in “seasonally adjusted sales volume” month-on-month (+5.9% year-on-year), ex-petrol, wasn’t quite as bad as the City expected. However, most sensible people only look at the non-seasonally adjusted sales value figures and here the embattled ONS reported that overall growth slipped back to 3.8% in August (with Predominantly Food up 3.7%, Predominantly Non-Food up by 2.0% and Non-Store up by as much as 15.2%).

• Peach Tracker Watch: We are indebted to our friends at the Leisure sector experts, Langton Capital, for flagging up yesterday’s monthly figures from the curiously named Coffer Peach Tracker of pub and restaurant sales. The bullish Tracker headline was “Britain enjoys summer by still eating & drinking out”, but that doesn’t tell the full story, as overall LFL sales growth in August was only +0.6% (with London +2.9% and the provinces -0.1%) and, given the boost from the very warm weather, Langton thundered that “August could/should have been (much) better”…