Langton Capital – 2016-10-10 – Ed’s, night tubes, UK holidays, US interest rates & other:
Ed’s, night tubes, UK holidays, US interest rates & other:A DAY IN THE LIFE: Popping into a busy York over the weekend with the 10yr old, we had a pleasant meal, pizzas & soft drinks for £50, nice but no bargain, and then had to make a visit to Hawkin’s Bazaar in order to buy emergency supplies, to wit, a whoopee cushion, a back-up whoopee cushion, an egg-shaped bouncy ball designed to take your eye out and a set of spy glasses so that above-referenced child could see behind her when her brothers were in the room as they would undoubtedly be trying to do something awful to her. And glad we were to do our bit to keep the wheels of commerce turning. But I can see no upside from the glasses (‘don’t worry dad, I’ll pay you back’) and the stock of whoopee cushions are being secreted around the house in places most likely to make me jump out of my skin. On to the news: PUB, RESTAURANT & DRINKS PRODUCERS: • Risk Capital Partners is competing against R Capital and another unidentified bidder to acquire casual dining chain Ed’s Easy Diner. The chain’s auction comes less than a year after its previous sale process and it is thought that lenders to Ed’s are pressing for an urgent change in its financing arrangement. • The Telegraph has this morning run with the story that R Capital will announce that it has purchased Ed’s as soon as tomorrow. The Telegraph says that ‘the deal with R Capital is expected to value Ed’s at less than its debts, which stand at just over £20m.’ • Calling a spade a spade, the rollout and subsequent disposal of the Ed’s Easy Diner chain has not been a success • WSH International, which owns Benugo and Searcys amongst other businesses, has reported revenues +10% to £650m in the year to 1 Jan. PBT came in at £8.2m vs a loss of £6.5m last year. The group says ‘we firmly believe we were able to deliver these results by staying true to our founding principles of providing fresh locally sourced food, creatively prepared by well trained staff.’ • Moody’s has reported that Constellation Brands’ purchase of Utah-based craft whiskey maker High West Distillery for $160m is credit positive. It says ‘the deal, which will have a minimal effect on Constellation’s credit metrics, is credit positive because it extends Constellation’s spirits business into the high-margin and fast-growing craft whiskey segment.’ • The ALMR has hailed the success of the night tube as the initiative expands to additional tube services, with late-night restaurant bookings reportedly up by 21%. ALMR Chief Executive Kate Nicholls said: ‘London has one of the most attractive late-night hospitality offerings in the world and the night tube has given more people access to first class pubs, bars and restaurants… The ALMR has always been a vocal supporter of the night tube and a believer in the benefits that such a scheme would bring. The continuation of the scheme to incorporate another line will provide even greater flexibility for customers wishing to enjoy a night out in London. Crucially, it will also provide improved convenience for hardworking members of staff who work in pubs, bars and restaurants.’ • Oakman Inns & Restaurants has reported a 4.2% increase in like-for-like sales for the 26 weeks ending 2 October. The group has been busy, exchanging contracts on a ‘substantial’ freehold property acquisition in Central Olney and taking possession of its second unit for the Hunky Dory Pubs partnership with Enterprise Inns. Oakman Inns’ CEO, Peter Borg-Neal, said: ‘This is a pleasing result in the current environment and the business has also done well regarding key ratios, a reflection of the ongoing benefits of strengthening our operations team over the past year. As a result, we are comfortably ahead of our profit budget for the half year. • Oakman continues ‘whilst we are happy with our sales performance we have seen a degree of volatility in recent months. Much of this can be explained by the variable weather and assorted sporting events. However, there is a general sense of commercial uncertainty and unease. The current trading environment is not for the faint-hearted, but we remain committed to our business plan.’ • The 2016 harvest in Chablis has been reduced by some 50% following frosts and hail storms. • Just Eat has invested in UK start-up Flypay, which aims to use its platform to help restaurant and pub chains consolidate their technology processes. The £3.5m round serves as an extension to the company’s previous Series A that saw it pick up £7m, with TimeOut heading the backers. Just Eat describes the investment as a ‘strategic partnership’. • UK consumer spending grew by 2.4% year-on-year in September, according to the Visa UK Consumer Spending Index, marking the measure’s highest growth since April. This follows broadly flat growth in August. • British manufacturers have enjoyed a sales boost since the EU referendum, although the much larger services sector shows signs of faltering. The conclusion comes from one of the first big economic surveys since the referendum, after the British Chambers of Commerce canvassed more than 7,000 companies between August and September in what was the largest private sector business survey in Britain. • The BCC said that the c15% drop in sterling might well have boosted the UK’s manufacturing businesses, with the balance of manufacturers seeing export sales growth up from 9% to 17% over a three-month period. However, the services sector (which makes up nearly 80% of the economy), has seen a sharp fall in sales since the referendum, while ‘The forward looking indicators are showing that firms across both sectors are planning less investment growth, less employment growth and that there is more pressure on prices for manufacturers, while confidence is not as high as we would want it to be.’ • The British Retail Consortium in increasing its pressure on the government to ensure that Brexit trade talks concentrate on keeping shop prices low for consumers. ‘The retail industry is the UK’s biggest importer, and has huge experience of importing from every corner of the world. We will be engaged in a constructive dialogue with Government that will bring our experience to bear on the Brexit talks to the benefit of everyone in the UK,’ said Richard Baker, chairman of the BRC (alongside Whitbread and DFS). Baker added that the fiercely competitive sector has very little margins left to absorb the added costs from import tariffs and administrative burdens. LEISURE TRAVEL & HOTELS: • Pragma Consulting has reported that UK travel behaviours are changing. Inbound businesses ‘benefitted from the post-Brexit boom to the tune of £1.4bn.’ Pragma says ‘with lengthy Brexit negotiations likely to see exchange rate uncertainty continue, and an ongoing threat of terrorism in previously popular destinations such as France, Turkey and Egypt, there’s no signs of this growth abating.’ • Pragma says a net 7% of consumers intend to spend more on holidays next year. • The number of UK visitors to Greece grew by more than 5% during the first half of the year, with 1.4m Brits visiting the country according to Bank of Greece figures. • The level of increasing demand for flights fell back in August from 6.4% to 4.6% and industry load factor dropped by 0.9% to 83.8%, according to figures from Iata. Cheap fares are sustaining passenger growth, however, and ‘airline profitability is stronger than ever as a result of a better industry structure and efficiency gains’. • Thomas Cook will close 28 high street shops by December and is increasing its presence in ‘higher footfall’ shopping centres. Twenty-one of the shops affected are Co-operative Travel agencies that were taken over by Thomas Cook under the joint venture six years ago and which are in locations where there is an overlap. The changes come following a review of its 793 store network. • InterContinental Hotels Group now has over 100 hotels that have been signed or opened in Germany. • Almost half of the flights cancelled by EasyJet ahead of a planned strike affecting air traffic control will still not operate despite the strike being called off. OTHER LEISURE: • Press reports have Wm Hill likely to tie up with PokerStars gaming website in £5bn merger. PokerStars’ owner is Amaya of Canada. FINANCE & MARKETS: • US employment growth slowed in Sept. Some 156k non-farm jobs were added (vs +167k in Aug). • US unemployment rate up to 5.0% in September from 4.9% in August. Rate rise speculation re December now a shade muted. • US dollar a shade weaker on slower employment growth. Betting still on a December interest rate rise • Eurozone inflation could hit 2% by late 2018 or early 2019 per European Central Bank President Mario Draghi. M Draghi said ‘by year end or the first months of next year, [Eurozone CPI] should pick up and move towards 1 percent, and later on, above 1 percent, essentially due to the base effect of energy prices.’ • NIESR reports GDP rose in UK by 0.4% in Q3 vs 0.7% in Q2. • NIESR says ‘while retail sales have been buoyant in recent months, the production sector has acted as a drag on economic growth.’ It adds ‘we estimate that output from the production sector declined by 0.2 per cent in the third quarter of this year.’ Suggests UK is spending more but producing less. • Halifax has reported house prices have fallen by about £3k since EU vote. • Halifax reports property prices +5.8% in year to Sept. Says younger buyers struggling to get on ladder in South. Halifax says first-time buyers are around 27yrs old in North & Wales but around 34yrs in Slough & some London boroughs. • UK industrial production down by 0.4% in August per ONS. Manufacturing up but oil & gas down • UK trade deficit with rest of world up in August to £4.7bn including services credit. Deficit in goods rose from £9.5bn to £12.1bn • Sunday Times reports Goldman Sachs saying it will move 2k jobs out of UK in the event of a hard Brexit • Carter Jonas has reported that City & Docklands rents should fall by between 10% and 12% over the next couple of years • Spain set for 3.1% growth in 2016. • World markets: UK mixed on Friday with FTSE100 higher. Europe down and US lower. Asia mostly down in Monday trade • Oil down a little. Brent Crude trading around $51.50 per barrel • Sterling trading at around 124c per dollar. Some airport currency booths now supplying less than one Euro to the pound YESTERDAY IN A NUTSHELL – SELECTION OF TWEETS, LIVE TWEETS ON WEBSITE: • The Alcoholic Health Alliance has said in a report that ‘cheap booze can be found on every street corner’ for ‘pocket money’ prices • Ruby Tuesday reports Q1 numbers, says total revenue down 8.2% to $256.7m as a result of 109 company owned stores reduction • Ruby Tuesday says US restaurant market ‘remains highly competitive & challenging’. Reveals LfL sales decline. • Walmart has guided to flat earnings this year. It is to slow its rate of store openings. Group shares fell by around 2% on the news. • World food prices rose in Sept, due largely to rising sugar price, according to the Food & Agriculture Organisation’s food price index • Operating losses at Chipotle Mexican Grill UK have widened from £3.38m to £4.71m, despite turnover growing by 11.8% to £8.19m • Sterling hitting new 31yr lows. Trading at around 124c per dollar. Fell at one point to 118.4c. Was blamed on a ‘flash crash’. • Oil price continues to edge higher. Brent Crude trading at around $52.45 per barrel this morning. • Other Tweets: Sterling slide getting a bit serious. Oil price up from $27 in Jan this year to $52.50 but, given what Sterling’s done, it’s +125% for us • Sterling down on ‘fat finger’ but not bounced all the way back. Perhaps fatty was right? • Inflation in pipeline as Sterling’s collapse continues. Passing on price rises may be tough, margins (also profits, capex & jobs) could fall |
|