Heineken, interest rates, Sterling, costs & other:

A DAY IN THE LIFE:

Langton is on a beach still paying stupid rates for its Euros. On to the news:

PUB, RESTAURANT & DRINKS PRODUCERS:

• Heineken reports Q3 numbers. Says consolidated beer volume +2.0% organically, w. growth in Americas, Asia Pacific & Europe

• Heineken sees ‘weaker volume in Africa Middle East & Eastern Europe’. Says premium beer sales +3.5%.

• Heineken Q3. CEO Jean-François van Boxmeer reports ‘performance in the third quarter was robust despite strong comparatives in Americas and Europe, and a tough environment in Africa Middle East & Eastern Europe. Strong performance continued in key markets such as Vietnam and Mexico, with Europe also showing further positive momentum. Our full year margin expectations remain unchanged despite continued adverse economic conditions in some developing markets, as well as increasing currency headwinds.’

• Heineken. Organic Q3 beer sales +0.6% in Europe but down 3.6% in Africa, Mid East & Eastern Europe. Says in the latter area ‘organic consolidated beer volume declined 3.6%. Weak volume trends were seen primarily in Russia, Egypt and the DRC, which more than offset growth in Nigeria, Ethiopia and Algeria.’

• Heineken Q3 in Europe. Group says ‘organic consolidated beer volume increased by 0.6%, despite tough comparatives for the quarter and stocking in June ahead of the excise tax increase in Greece. Performance was helped by good weather in most European markets. Volumes were down in the UK ‘partly due to tough comparatives.’

• Heineken reports cumulative net profits to end-Sept of €1,239 million (2015:€1,776 million).

• Deltic Group’s Night Index Report, compiled by Censuswide, shows people are going out less in general but spending more when the do for a ‘good experience’. The survey found that 40% of Brits go out on a late night out once a week, with that number rising to 72% for 18-21 year-olds. Consumers spend £58.48 on average on entry, food, drink and transport, of which £9.18 is spent on pre-drinks and £16.37 on drinks at the venue.

• Coca-Cola in Japan is close to a deal with brewer Kirin Holdings to establish an operational and capital partnership amid intense price competition in the Japanese soft-drink market. The companies are considering cross-holding shares in the resulting entity from the merger of Coca-Cola West, Coca-Cola East Japan, and a unit of Kirin Holdings called Kirin Beverage.

• Punch Taverns has announced a partial redemption of its Class B4 Notes to take place on 1 November using £65m of the pub company’s cash.

• The BBPA has welcomed the government’s decision to endorse a third runway at Heathrow as a step towards getting the airport capacity that ‘Britain so badly needs’. CEO Brigid Simmonds commented: ‘British beer and pubs are right at the heart of our national tourism offer, which stands to benefit from the additional capacity promised in the announcement today.

• ‘British beer is world-renowned for tradition and quality, and visiting a pub is third on the list of things to do when tourists come to the UK, with seven out of ten overseas visitors coming to a pub whilst they are here. More capacity means more opportunity for tourists to visit Britain, and this decision represents a great chance for our pubs to benefit economically from this announcement.’

• Casual Dining Group has signed its first UK franchise deal for Belgo in Bloomsbury Crown Plaza Hotel, following overseas openings in Dubai and New Delhi.

• The Wine and Spirits Trade Association (WSTA) has warned customers to expect price hikes for both spirits and wine. Some £3.3bn is already spent in the UK in spirits duty, but this could grow by at least £60m, of 34p a litre. Government policy dictates that alcohol duty rises are pegged to inflation, which is forecast to rise by 3%.

• Chapel Down has been permitted to build its Curious Brewery in Ashford after raising £1.7m for the project through crowdfunding. The English wine company recently reported first half sales growth of 26% to just over £4m, with Curious Drinks seeing growth of 55% to £1.5m. Chapel Down’s beer division was established in 2011, as a means of boosting cash flow and revenue, and is now available through 300 on-trade accounts and through distributors including Matthew Clark.

LEISURE TRAVEL & HOTELS:

• Foreign Secretary Boris Johnson has said that building a third runway at Heathrow is not the right thing to do due to the airport’s location in the suburbs of London.

• More than 30 travel companies have met with government officials to demand a resolution to the current flight ban to Sharm el-Sheikh. Airlines, tour operators, cruise lines and hoteliers attended the meeting with the all-party parliamentary group on Egypt, leading Rasha Azaizi, director of the Egyptian State Tourist Office in London’ to comment: ‘This long-term ban on flights to Sharm el-Sheikh is now affecting many UK travel businesses as well as airlines and is causing deep consumer confusion. The Foreign and Commonwealth advice is currently that it is safe to visit Sharm el-Sheikh but not to go through the airport.

• ‘That’s given people the impression that they can’t visit Egypt when in fact British Airways, easyjet, Thomas Cook, Thomson and Egyptair are all already operating direct flights to other airports in Egypt. No other country apart from Russia still has a flight ban on flights to Sharm el-Sheikh, but the UK government has still not yet made a decision.’

• As many as four people have been killed on a water ride at Australia’s biggest theme park after a ‘critical incident’ involving a conveyor belt. Dreamworld theme park on Australia’s Gold Coast confirmed the deaths.

• Thomas Cook chief Peter Fankhauser has joined calls for the abolition of Air Passenger Duty, calling it ‘a tax on people’s holidays’ that has risen by some 820% since 1994. APD produces more than £3 billion for the Exchequer, but Fankhauser contends that abolishing the measure could boost UK GDP by 1.7% and create more than 60,000 jobs by 2020.

• The Thomas Cook CEO added: ‘That’s because getting rid of it will improve our international competitiveness, make it cheaper for people go on holiday or for foreign tourists to visit the UK. APD in the UK is more than twice the rate of the next highest air tax in Europe, Germany.’

• The government has congratulated itself on ‘taking decisive action’ in the protracted airport capacity debate by endorsing a third runway at Heathrow. There will be a one year consultation process allowing MPs and the public to air concerns over the move. A statement from the department of transport called the decision ‘truly momentous’ for both businesses and passengers alike.

OTHER LEISURE:

• Netflix is looking to raise some $800m of debt to fund its content acquisition, consolidation, and investments, and follows a similar $1.5bn senior notes raise in February last year.

• Apple has confirmed a 9% fall in Q4 revenue to $46.85bn in its third consecutive quarter of falling iPhone sales, although its 45.51m units sold did beat expectations. The trend is being driven by a slowdown in the smartphone market and intensifying competition, particularly from Asia and Chinese rivals. The firm also forecast higher-than-expected holiday season revenue of between $76bn and $78bn.

FINANCE & MARKETS:

• World markets: UK mixed yesterday but Europe down. US lower and Far East down in Wednesday trading

• Oil price down a little at around $50.20 per barrel.

• Sterling down below 122c again. Currently trading around $1.216 per US$

• Times reports 000s of jobs at Vauxhall at risk post Brexit vote. Says co has seen $400m hit.

• Bank of England’s Mark Carney says Bank’s monetary policy has had a positive impact on Britain’s economy “without parallel”.

• Carney reports Bank cannot ignore the impact Sterling’s slide will have on inflation. He told the House of Lords ‘there are limits to the willingness of the Monetary Policy Committee to look through an overshoot of inflation.’ This will be taken into account when deciding whether or not to cut interest rates when the MPC meets next week. Carney said ‘Sterling starts to really move as it becomes clearer the timing of the Article 50 triggering, and the market’s perception – and I really underscore it’s the market’s perception – of what the potential relationship will be between the United Kingdom and Europe.’

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

• WTB H1 results. Numbers said to be in-line but slide in Costa returns (on increased investment) may come as a surprise to some

• WTB H1. Says Premier operating profit +8.9% at £271.5m but Costa operating profit down 4.0% at £64.6m.

• WTB says H1 reduced Costa profit performance is ‘due to increased investments in the first half’.

• Whitbread reports H1 numbers to 1 Sept. Says has ‘strong fundamentals’ & trading is ‘in line with expectations’

• WTB reports total H1 revenue of £1.556bn (+8.1%) with underlying PBT of £307m (+5.4%). EPS is 133.9p (underlying), up some 5.2%

• WTB says has seen Premier Inn total sales growth of 8.9% and like for like sales up 2.4%. Costa is +10.7% and +2.3% LfL in UK.

• WTB says FY should be ‘in line with full year expectations’ despite ‘uncertainty in the UK’s economic outlook’.

• Brewdog is to arrange for trading in its shares today, 25 October. The group says it has 50k shareholders worldwide

• Government to review gaming machines. Will look at maximum stake and prize limits

• New analysis has shown that there are more fast food outlets than average in deprived areas of the UK where obesity levels are high

• Fleuret’s comments that transactional volumes in the quarter following Brexit were ‘a little subdued’

• The Scottish government has been permitted to continue with its proposed 50p per unit minimum alcohol pricing.

• A Post Office Travel Money report finds that there remains a sustained appetite for overseas travel despite the weak pound

• Latest CBI Industrial Trends Survey shows manufacturing exports have received a significant boost from the weakness of Sterling

RETAIL NEWS WITH NICK BUBB:

• Carpetright: Yesterday’s share slump yesterday implied that Carpetright CEO Wilf Walsh might have to report his first profit warning with today’s H1 trading update (for the 25 weeks to Oct 22nd), but the message is that “The Group’s full year profit expectations are unchanged”, although UK LFL sales are down by 2.9%. and the full year guidance of the decline in gross profit margin is revised down to between 150 and 200 basis points (“ a combination of increased sourcing costs resulting from the devaluation of sterling, competitive market conditions and a mix impact”). Much depends on the continuing success of the store revamp programme and the management team have a further opportunity to win the City over with the analyst’s visits to the refurbished stores in Purley Way Croydon and Epsom this afternoon.

• Shoe Zone: The Shoe Zone share price has also been under pressure, but today’s pre-close trading update for the 52 weeks to 1 October, reports that “the group has traded well in the second half of the year” (although no LFL figures are provided) and “the Board expects pre-tax profit for the period to be broadly in line with expectations and marginally ahead of the prior year”.

• Sofa Watch: We are indebted to the Retail Week website for pointing out that Fabb Sofas, the new furniture retailing venture of the DFS founder Graham Kirkham, has just opened its first store, a big 35,000 sq ft unit on the Hedge End retail park near Southampton. There are five more stores on the way (in Croydon, Watford, Orpington, Nottingham and Edinburgh), according to the retailer’s website (http://www.fabbsofas.com).

• Yesterday’s Press and News: Thin pickings today in the papers, with the main focus on the news that French Connection shares climbed yesterday on takeover talk. Access to Retail Acquisitions’ books could be vital, according to the Guardian, as the administrators of BHS try to wind up Retail Acquisitions, the company used by the infamous Dominic Chappell to buy BHS. The Telegraph’s Questor column recommends buying Morrisons, although the Yorkshire Post reports that Barry Williams, who was due to join Morrisons as its Ambient Trading Director, has instead decided to join Poundland instead as Trading Director (!). And after the Evening Standard last night noted that Hammerson, the owners of Brent Cross have announced an ambitious £1.4bn bid to more than double the size of the 40-year-old north London shopping centre to 1.9m square feet (Including a huge new M&S), their rivals Intu
Properties have announced the sale of one of their original shopping centres, Intu Bromley, to provide capital for its development pipeline.

• Tapi Watch: Having flagged yesterday that the Furniture retail veteran Graham KIrkham has just opened the first store of his new Fabb Sofas venture, we spotted our first Tapi Carpets (the new venture of the Carpet retail veteran Phil Harris and his son Martin Harris) on the North Circular at Edmonton (near the big Next Home store) yesterday morning. And we were astonished to then see on the company website (http://www.tapi.co.uk/stores) that there are now over 60 Tapi Carpets stores around the country!

• Today’s Press and News: Apart from the controversial Government decision to favour a third runway at Heathrow, the big news in the papers today is that the next John Lewis MD will be a woman, Paula Nickolds and there are plenty of headlines like “John Lewis appoints first female boss” (the Times). But Carpetright’s trading update gets plenty of coverage too, with the headlines focusing on the news that the fall in the pound is forcing up carpet prices at Carpetright: the Telegraph quotes CEO Wilf Walsh as saying that it was “a pretty volatile half, with no patterns to consumer behaviour…It’s the exchange rate that hurts us, and competitive pressure – it’s pretty competititve out there, but it’s too soon to call consumer confidence”. The warning from Intu Properties that the demise of BHS would hurt its short-term rental income also gets some attention: the FT headline is “Intu
bullish on demand for stores despite rental hit after BHS collapse”. And the has a snippet Daily Mail about the report from Shoe Zone that it had not been impacted by the EU Referendum.

• Apple Watch: It was amusing to read last night that mighty Apple announced their Q4 results in the US and Tim Cook, Apple’s CEO, trumpeted in the statement that “We’re thrilled with the customer response to iPhone 7, iPhone 7 Plus and Apple Watch Series 2, as well as the incredible momentum of our Services business, where revenue grew 24% to set another all-time record”. He glossed over the fact that total revenues were down by 9% in the end September quarter versus last year, with iPhone revenues down 13%…

• News Flow This Week: The Debenhams finals and the Inchcape Q3 sales are announced tomorrow and, with the end of the month coming up fast now, the CBI Distributive Trades survey for “October” is also out tomorrow morning, whilst the monthly GFK Consumer Confidence survey is out first thing on Friday.