Merlin, SAB Miller, Air Partner, easyHotel & other:

A DAY IN THE LIFE:

Is anyone else out there a little worried about London?

It’s still busy, it’s hard to get into some restaurants and you have to queue at others and the like but, with teachers, bus drivers and police officers increasingly forced to live further and further from their place of work, is there a point at which it booms ‘too much’ or is that just a fallacy?

Because it’s hard to judge London with reference to the rest of the UK. The South Wales valleys, Scunthorpe, Rotheram, Rochdale and the like have very little in common with our nation’s capital which, it has to be said, only really has one peer city globally.

Hence it may be possible for London to continue on its merry way for some time but, if high rents force out casual diners and the authorities have to ship in a few hundred thousand caravans for the ‘staff’ to live in, I’m not sure that it will keep its appeal. On to the news:

PUB, RESTAURANT & DRINKS PRODUCERS:

• SABMiller’s shareholders have voted overwhelmingly in favour of its £79bn takeover by AB InBev.

• New data from Nielsen suggests that the value of the ‘free from’ category could be as high as mineral water within two years. More people now actively avoid certain ingredients in their diet, with ‘free from’ sales up 19% in the UK over the last year to £754m.

• Mike Watkins, Nielsen’s UK head of retailer insight, commented: ‘If this growth continues, ‘free from’ would be a £1bn market within two years – the same size as today’s mineral water market. People are adopting a more back-to-basics mind-set, focusing on simple ingredients and fewer processed foods; they’re also taking a more active role in their own health care, which includes better nutrition, itself a reflection of the rising trend in chronic-disease rates.’

• Dark Star’s managing director of sixteen years, Paul Reed, has left the brewer to join Sussex brewer Bedlam. Reed told the MA: ‘It’s been on the cards for some while. It’s been very much my style at Dark Star to give people a lot of freedom and autonomy in the way they manage the business. Over the past year or so I’ve been rather superfluous – we’ve got excellent operations guys, on the marketing side, excellent head brewing team and I felt it was overdue for another challenge.’

• US fast-casual restaurant chain operator Cosi Inc has filed for protection and is now pursuing a sale of the business. The company reportedly has assets of $31.24m and debt of c$20m.

• German pizza chain L’Osteria is introducing itself in the UK with a first site in Bristol to be owned and operated by ex-Mcdonalds franchisee Pru Naik in a joint venture. Naik previously had 25 restaurants in central and west London turning over £55m in 2013, according to Propel.

• BBPA stats show the on-trade sold less beer than supermarkets and c-stores for the first time on record (dating back to 1980) last year. In 1980, the on-trade was responsible for 87.7% of all beer consumed, compared to 49% in 2015 and the BBPA has attributed most of this to the beer duty escalator.

• Almost nine in 10 students prefer to pay with debit and credit cards through contactless or chip and pin, according to a survey by Vista Retail Support. ‘Our survey shows a significant shift in how students are choosing to pay for their goods and how they’re willing to avoid retailers who don’t allow room for choice.’ Said James Pepper, technical services director at Vista. ‘For canny retailers who have put the right solutions in place, however, the potential gains could be huge as local students become loyal customers.’

• William Grant & Sons has posted a record profit after tax of £147.4m, up 8.9% year-on-year, on the back of a 6.1% rise in turnover to £882.5m. The spirits producer said that increased volatility across Eastern Europe, the Middle East and Africa was offset by strong demand for super premium spirits in the US and Asia.

• William Grant & Sons’ chief executive, Simon Hunt (pictured) said: ‘This success was driven by our constant focus on building brands and investing in them for the long term. We have also continued to invest in our operational capabilities and our route to market infrastructure. It has been a challenging market place but we are well positioned to continue our growth in 2016 and beyond.’

• The ALMR has welcomed Sadiq Khan’s commitment to the agent of change principle, which puts the onus on new residential buildings near clubs to pay for their own soundproofing. ALMR Chief Executive Kate Nicholls said: ‘The Mayor’s commitment to the agent of change principle is a very welcome step towards the protection of nightclubs and venues that are both integral economically and cherished socially. The ALMR has been pushing hard for this and have long argued that nightclubs, bars and other late-night music venues are an absolutely essential element of the UK’s wider music scene as well as fantastic drivers of growth in town and city centres.’

• The ALMR has also welcomed the appointment of Graham Evans MP as Chairman of the All-Party Parliamentary Beer Group.

LEISURE TRAVEL & HOTELS:

• EasyHotel yesterday reported that it had succeeded in placing 38m new shares at 100p. it says Placing remains conditional on the passing of the Resolutions which are to be proposed at a General Meeting of the Company to be held on 14 October 2016 and Admission taking place by no later than 17 October 2016.

• Air Partner reports H1 numbers, says results are ‘strong’ with ‘Broking and Consulting divisions both performing well.’

• Air Partner says H1 revenues +2.4% with PBT +35% to £3m. EPS 22.3p (2015: 17.1p) and H1 dividend 8.06p (2015: 7.33p). Group CEO Mark Briffa reports ‘the Group has performed well in our first six months and I am very pleased to have seen strong performances across both Broking and Consulting. Our customer focused approach is delivering results and this is evidenced by significant contract wins from both new and existing customers. We have entered the second half of the year with confidence and look forward to continuing to develop and grow our services and capabilities across the world.’

MERLIN UPDATES ON CURRENT TRADING (38 WEEKS):

• Merlin has today updated on current trading saying that it is achieving ‘further growth despite difficult trading conditions in certain key markets’

• Merlin reassures that, post its ‘key summer trading period of July & August’, its 2020 milestones remain on track

• Merlin says LfL constant currency growth was negative 0.4% at Midway, +2.2% at Legoland and +3.0% at Resorts. Group is +1.3%

• Merlin y-t-d revenue growth of 10.6% ‘reflects the continued strong contribution from new accommodation and attractions’

• LfL revenue growth 1.3%

• Merlin says seeing ‘evidence of recovery in Resort Theme Parks Operating Group’ & continued growth in LEGOLAND Parks, despite tough comps

• Merlin’s Midway attractions are still seeing ‘ongoing difficult trading in certain key markets’. Here the group has announced a potential new brand Little Big City.

• Merlin CEO Nick Varney reports ‘Merlin continues to deliver overall revenue growth despite challenging trading conditions in certain key markets, testament to a diversified portfolio and a strong new business development strategy across all three Operating Groups.’

• Mr Varney continues ‘trading across the existing estate has been mixed. Our Resort Theme Parks Operating Group is now showing year on year revenue growth, reflecting the ongoing recovery in trading at Alton Towers. In Midway Attractions, London in particular continues to suppress overall trading performance as we are yet to see any significant benefit from the depreciation of Sterling, while the growth in LEGOLAND Parks reflects a tough comparative period in 2015 and a more challenging market in Florida.’

• Midway sees tougher trading. Merlin says ‘many of our city centre attractions have experienced volatile trading patterns as a result of wider security concerns that have affected both domestic and international visitation. This continues to have a significant impact on Midway London, the largest Division within the Operating Group, where visitor volumes have also yet to see any material benefit of Sterling weakening to current levels.’

• Merlin says ‘the financial position of the business remains strong, with a significant reduction in net debt since the end of June, reflecting the seasonality of cash flows.’

• Merlin concludes ‘we remain pleased with progress in LEGOLAND Parks and Resort Theme Parks and expect continued growth in these two Operating Groups, reflecting strong product momentum and the ongoing recovery at Alton Towers.’ It says ‘despite specific headwinds in the Midway Attractions Operating Group, we remain positive on the medium term outlook, reflecting the strength of the brands, diversity of the portfolio and confidence in the strategy.’

OTHER LEISURE:

• Nielsen has reported that Virtual Reality is close at hand, that Pavers (early adopters) will soon be getting stuck in. Converts will follow. A study, conducted by Nielsen’s Media Lab team, found that adult consumers 18-54 feel about as knowledgeable about VR as they do about other popular tech trends, including wearables, 3D printing and the internet of things.

• Nielsen says that Pavers make up around 24% of the US adult population below the age of 55 & Converts make up c20%. Nielsen says ‘advertisers will be pleased to find that Pavers are ‘triple-A’ consumers: they adopt new products and service, they advocate for the brands they love and they appreciate premium quality—and are willing to pay a premium price.’

FINANCE & MARKETS:

• The IMF has said once again that it believes low inflation and sluggish trade growth remain a threat to the global economy. The body may be right, but what does it suggest other than more government spending? It says urgent action is needed to reverse a slowdown in trade and stop low inflation from triggering a downward spiral of weak growth, job cuts and higher debt. It says the slowdown in trade growth since 2012 has been ‘remarkable’.

• Aberdeen Asset Management’s Martin Gilbert has warned that a bond bubble may be inflating. He told Bloomberg that rates will not remain low forever and bond prices may at some point come under downward pressure.

• SMMT has said that the success of the UK motor industry could be “jeopardised” if the UK leaves the single. Mike Hawes told the BBC ‘don’t be blinded by the good news that you’re seeing not just around our sector but around business in general. We’re very concerned that the future state of the automotive industry and the success could be jeopardised if we’re not in the single market.’

• Sacked former Greek finance minister Yanis Varoufakis has told the BBC that George Osborne will be remembered as a “particularly inept” chancellor

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

• Oil price sharply better as OPEC agrees to limit production. Brent Crude changing hands at around $48.65 per barrel

• OPEC agreement to small production cuts is the first such deal since 2008.

• The ECB boss Mario Draghi has been defending his bank’s ultra-low interest rate policy at a meeting of the German Bundestag. M Draghi has rejected German criticism that sub-zero interest rates were dissuading saving and were doing more harm than good

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

• Easyhotel announces placing of 38m shares at £1 to raise £36.7m net. Group will use cash primarily to fund owned hotel roll-out strategy.

• Easyhotel sees opportunity to become ‘a leader in the super budget market in Europe and the Middle East.’

• TUI says ‘the Summer 2016 season is almost fully sold, with a continued strong performance by the UK, Riu and Cruises’

• TUI sees ‘sustained strong performance by the UK, with revenue and bookings up 5%.’

• Re consumer confidence, NPD suggests it has ‘experienced the biggest drop seen in a month in the U.K. for decades’ post Brexit vote

• NPD says consumer confidence dropped by 8pts in July, the biggest drop in over 20yrs

• NPD cautions ‘it is still uncertain whether the positive performance in Q2 16 will continue over the next quarters’

• Snoozebox reports H1 numbers to end-June, revenue down to £2.2m from £2.4m, loss before tax £2.1m (2015: loss £3.1m)

• Hotel in Europe reported mostly negative year-on-year results in Aug 2016, RevPAR down 1.5% to €87.88.

• The World Trade Organisation has cut its estimate for global trade growth this year from 2.8% to 1.7%.

• Other tweets: Sterling flirting with post-Brexit vote lows. Will impact costs. Sainsbury: ‘The effect of the devaluation of Sterling remains unclear…’

• Sainsbury says ‘we expect the market to remain competitive’. Looks as though it is lagging Wm Morrison. And Waitrose.

• Deutsche Bank casts bad spell (& smell) over banking sector. RBS cops to $1.1bn mis-selling claims. Some say $70tn of derivatives out there

• Sainsbury (-1.1% LfL) makes Argos (+2.3%) look good. Also MRW LfL gain looks good in context, Waitrose still >>0%

• TUI says ‘we do not hedge the impact of foreign exchange translation of results in non-Euro currencies.’ Sterling fall to cost c€100m

• Price of dishcloths said to have risen 17%. These ones were made in India & importer passed cost increase on. Sign of things to come…

RETAIL NEWS WITH NICK BUBB:

• SuperGroup: SuperGroup is hosting a Capital Markets Day for analysts and investors today up in sunny Manchester that will include a tour of its next generation Superdry store located in the Arndale Centre. The presentations will focus on “the group’s global growth opportunities, multi-channel development and the opportunities across the business created through the next generation store”, but, in that deathless phrase, “no new material information or update on trading will be provided”, although we would expect a bit of moaning about the difficulty of selling autumn/winter coats and jackets with the weather so warm…

• Essex Watch: Meanwhile, the first ever John Lewis store in Essex opens this morning, in sunny Chelmsford, and, as we were in the area (after visiting McColl’s in nearby Brentwood: more on this tomorrow), we popped in for a sneak preview yesterday afternoon. Anchoring the new upscale 300,000 sq ft Bond Street leisure and shopping development by the river, behind the High Street, the 90,000 sq ft John Lewis is the third in the new generation of smaller, full-line department stores (after Exeter and York). Spread over 3 floors and with some distinctive new visual merchandising, the attractive new store seems to have everything you would expect, apart from kidswear, although some departments (eg white goods) are downsized somewhat, with relatively more space given to upmarket Beauty brands. The MD Andy Street won’t be able to be there today, as he will be up in Birmingham to
hear the result of the Tory candidate selection for the West Midlands Mayor election next year…

• News Flow This Week: The widely followed GFK Consumer Confidence survey for September is out first thing tomorrow.