Langton Capital – 2016-11-11 – Beer duty, current trading, travel, Trump & other:
Beer duty, current trading, travel, Trump & other:
A DAY IN THE LIFE:
Technology’s great but, when it doesn’t work, it can be intensely frustrating – I mean take, for instance, my phone.
It’s a great little piece of kit. More than 2yrs old but it still does the job that it’s required to do which, chiefly, is to make & receive phone calls. However, it’s recently become a little temperamental. It seems to be taking my goodwill for granted and, when it tells me ‘unfortunately phone has stopped working’, it doesn’t seem to realise that it’s putting its head in a noose when my thoughts turn to technical redundancy and the like.
But here’s a radical solution for you; why don’t I go back to the old days, have a Soviet-era phone that will work even if you drown it and periodically throw it under the wheels of a bus – and also carry a tablet?
True, you’d end up a bit weighed down & you might have to huddle in restaurant doorways student-style to steal WIFI but at least your phone would work when someone wanted to ring you urgently to tell you that you’d probably had a car crash in which case you most definitely deserved compensation. On to the news:
PUB, RESTAURANT & DRINKS PRODUCERS:
• The BBPA, SIBA, and CAMRA have published ‘The Story of Beer Duty: 2008-2016’, chronicling how the government’s decision to halt the Beer Duty Escalator sparked a major turnaround. A 42% increase in beer duty caused beer sales to fall by 18.5%, 3,700 pubs closed and 75,000 jobs were lost. The relaxation of the escalator, coupled with a ‘penny off a pint’ initiative, has been credited with making 2014 the first year of beer sales growth in a decade.
• A new publication called ‘Managing Safety in Pubs’ aims to provide licensees with tips on helping customers and staff feel secure in the run-up to Christmas.
• Markets have been relatively sanguine in the wake of Trump’s election victory although Constellation Brands, the largest US importer of Mexican beer, has seen its shares fall. The group paid $4.75 billion to Anheuser-Busch InBev for Grupo Modelo’s US beer business in 2013, giving it an exclusive permanent license in the US to import, market, and sell Corona and Modelo.
• Qatari officials have confirmed a ban on alcohol in public spaces during the 2022 Qatar World Cup and are seeking to ban alcohol in stadiums. The secretary-general of the Supreme Committee for Delivery and Legacy Al-Thawadi said in an interview with Arabic language newspaper Al-Sharq that booze will only be permitted in ‘far-away places’.
• Liverpool’s council approved the city’s proposed Late Night Levy in a meeting last night.
• A Swansea licensee has been fined £65,000 for illegally broadcasting Premier League football via a ‘domestic’ decoder box.
LEISURE TRAVEL & HOTELS:
• Manchester airport has broken the 25 million-passenger mark thanks to new long haul services and capacity expansion on its short haul routes. New long-haul routes set to be introduced this year and next include ones to Phuket, Mauritius, Goa, Tobago, Muscat, San Francisco and Cayo Coco, while the UK’s third largest airport has also seen ‘massive growth’ in low-cost short haul carriers. Deputy CEO Collette Roche commented: ‘At a time when capacity in the south is constrained, we are adding more passengers and routes than ever before. This underpins the role we play in the north as the global entry point of the Northern Powerhouse and as economic provider and job creator.
• ‘We have more than 22 million people living within two hours of Manchester Airport and our continued addition of new routes and increased frequencies is seeing both business and leisure customers choose Manchester, rather than other airports. With two full-length runways and a £1 billion transformation programme announced, Manchester airport has, and will continue to have, the available capacity and demand to meet the needs of our catchment area and beyond.’
• Europcar suffered a 3.3% year-on-year fall to €96m in net profit in its summer quarter despite a 6.5% rise in rental days and a 2.1% rise in revenue. The rental group partially attributed the drop on the weakness of sterling.
• Spain is poised for another record year of international arrivals, with 74 million holidaymakers due to visit the country in 2016, up 9% year-on-year. The UK market has even outperformed this overall rise with an estimated 17 million Britons visiting Spain, which represents an 11% increase on 2015’s figures.
• The US hotel industry saw a 3.5% drop in occupancy 64% and a 1.6% rise in average daily rate to $123.17 was not enough to stop RevPAR falling 1.9% to $78.82.
• UK betting companies made a combined loss of about £6m on the US election, which they say was the biggest political betting market ever.
FINANCE & MARKETS:
• The Royal Institution of Chartered Surveyors has warned of a ‘dire shortage’ of housing in the UK, which continues to drive up prices. Price increases are expected across most of the country, save for London, which has seen its eighth straight month of falling house prices.
• Theresa May has vowed to work for a ‘golden era’ in the UK’s relations with China as the latter’s vice-premier visits London for talks.
• ONS to include elements of housing costs in inflation measure from March 2017. CPIH is likely to show inflation higher than CPI. That is unless rents & mortgage costs start to fall. Not likely, perhaps, if council tax and interest rates begin to rise.
• ECB member Yannis Stournaras has said that the Eurozone is on course for a consumption-led recovery. He says ‘we are pleased of course with the string of new data, which show that the labour market developments are benign and consumption is growing’. He concludes ‘it seems that monetary policy is working.’
• Reuters reports ECB pushing through changes banks’ calculation of capital requirements. Move will aid their move from UK to Europe. Reuters reports Goldman is considering a partial relocation. Reuters says ‘Paris, Milan, Luxembourg, Dublin and Madrid are also wooing banks in London.’
• Goldman Sachs’ boss Lloyd Blankfein has said that Trump could be good for growth.
• ECB reported to be considering measures to maintain oversight of Euro trading for when Britain leaves the EU
• World markets: UK mixed (FTSE100 down, mid-cap up) and Europe down yesterday. US up but Asia down in Friday trade
• Brent around $45.75 per barrel, down a shade.
• Sterling up a little vs US$ at 125.5c.
• US 10yr bond yields holding over 2%. Trading around 2.15% currently.
YESTERDAY IN A NUTSHELL – SELECTION OF TWEETS, LIVE TWEETS ON WEBSITE:
• YNGA H1: Managed house LfL sales +5.5% with Geronimo returning to growth. Margin ‘strong’ at 18.5%.
• YNGA H1: Drink sales +6.4% LfL with wine sales +9.1% (in total). Food sales +4.0% LfL and +6.9% in total
• YNGA H1: Tenanted LfL EBITDA +3.8%. Net debt down by £2.9m at £127.3m ‘despite high level of investment’
• YNGA recent trading: Managed LfLs +3.0% in last 13wks. Says we were up against the exceptional results we delivered’ during the Rugby
• Inflation in the offing…It would be surprising if Sterling’s collapse didn’t lead to rising input costs
• Sainsbury boss Mike Coupe urges suppliers to absorb cost of rising prices rather than pass them on to customers (i.e. J Sainsbury)
• Binge drinking could be prevented by allowing 16 and 17 year olds drink in supervised establishments says Tim Martin
• Hoseasons, part of Wyndham Vacation Rentals, has told a Birmingham conference that it benefited from ‘spectacular’ growth this year
• Santander economist Adam Dent has said that the price of foreign holidays hit a 30yr low in September
• Bank of England expects ‘broadly stable or slightly lower investment spending over the coming 12mths’.
• UK trade deficit rose to £5.2bn in Sept from £3.8bn in Aug per ONS. Exports fell by £0.2bn and imports rose by £1.2bn
• Later tweets: Bond proxies taking a bit of a battering as US yields rise. Trump may spend more, tax less. What could go wrong?
• YNGA confirms London still performing well – even in Oct against Rugby World Cup numbers last year.
• % margins may fall due to input cost increases – but it’s still possible for cash margins to rise. Perhaps significantly.
• Barclaycard warns the 81% of people surveyed are expecting prices to rise. Margin-starved operators will not want to disappoint them
• Barclaycard: Spending in pubs +12.5% & restaurant spend +12.2% in Oct vs same month last year. Must be helped by contactless rise to £30?
RETAIL NEWS WITH NICK BUBB:
• Today’s Press and News: We haven’t been able to see all the newspapers today, but it looks like the Halfords and SuperGroup updates provided plenty of food for thought and the Evening Standard last night highlighted the contrast between them as “losers” and “winners” from the weakness in sterling.
• Haberdashery Watch: In a clear reference to the recent Sunday Times Magazine article, John Lewis put out a press release last night saying “Following recent speculation, John Lewis would like to make clear that we have no, nor have we ever had, plans to close or downgrade our haberdashery departments. In the last five weeks, we’ve opened new shops in Chelmsford and Leeds with already popular haberdashery departments, both of which include a meeting area for local crafting groups. We would like to reassure our customers that haberdashery is woven into the fabric of our business and remains at the heart of John Lewis”.
• BDO High Street Sales Tracker: We flagged on Wednesday that John Lewis did quite well in Fashion last week (although it did even better in Electricals), but today’s BDO High Street Sales Tracker for small/medium-sized Non-Food chains for w/e Nov 5th flags that their Fashion Store LFL sales index was also strong, up by 5.1%, helped by the cold snap and soft comps. Boosted somewhat by robust Homewares and Lifestyle sales, total Store LFL sales were up by 5.4%. Online sales were up by a decent 20.3% overall.
• Trade Press (1): The front cover of Retail Week magazine today has a photo of Kingfisher CEO Veronique Laury, with the headline “Laury lays new foundations”, noting that it is the Kingfisher chief’s first interview since taking the top job. RW also has a preview of what to expect from the Black Friday sales spectacular this year and a review of the Oxford Street flagship store opening of the US sportswear giant New Balance. In terms of news stories, RW focuses on the news that Sainsbury’s has poached Poundland boss Kevin O’Byrne to become its next CFO (just months after he took charge of the discount chain) and Marks & Spencer CEO Steve Rowe has pledged to keep prices down for customers despite sterling’s plunge. In his column the Editor flags that “Rowe’s roadmap for M&S puts focus on fewer but better stores” and thunders that “In the end, it’s not so much how many stores
• Trade Press (2): The Editor of Drapers magazine, inevitably, also looks at Marks & Spencer in her column today and thunders that “Rowe still has work to do to put M&S back on track”. In terms of News stories, Drapers focus on the M&S store closures, but it also flags that H&M is gearing up to launch a new brand concept in the UK with the working title “P eleven” and that Arcadia and Debenhams are both making redundancies in their Buying teams at HQ to cut costs and counteract tough trade. In terms of features, Drapers also has a review of the new New Balance store in Oxford Street, as well as a profile of British brands in India, but the highlight is the second in their excellent “Hit or Miss” surveys of Autumn fashion on the High Street, this time Menswear chains in the Meadowhall shopping centre (more on this on Monday).
• News Flow Next Week: Tuesday brings the B&M interims and the Card Factory Q3 update, as well as the latest Kantar/Nielsen grocery market share figures (for the 4/12 weeks to Nov 5th). On Thursday Asda will then have to try to explain away another dreadful quarter of LFL sales declines, on the back of the Wal-Mart Q3 in the US, whilst that day also brings the ONS Retail Sales figures for October, the Majestic Wine interims and the Boohoo Spring/Summer range preview. Next week is also quite busy in the world of Retail property, with the Land Secs interims on Tuesday and the British Land interims on Wednesday.