October Tracker, Dart Group, Majestic Wine & other:

A DAY IN THE LIFE:

I was wondering the other day, just what is a job? I mean I would contend that I work hard but, at the end of the day, what do I really do?

Perhaps best not go into that too deeply but, on the train the other day, I couldn’t help noticing that the apparently hard-working lady opposite seemed to be busying herself making phone calls to co-workers advising them not to come back to work too soon, to take more rest, to ship in a box-set from Amazon and to try to pitch up at work by early December.

She then moved on to other (presumably work colleagues) telling them not to get stressed, to take more breaks, to get into work later and to ask for emergency-holidays from time to time. They’d be making funds available for back rubs, for coaching, personal mentoring and the like leaving me wondering just why I haven’t ever worked at a place like that? On to the news:

COFFER PEACH OCTOBER TRACKER:

• October Coffer Peach Tracker has pub & restaurant sales down 1.0% LfL against Rugby W Cup comps. Weather was similar.

• Tracker: Total sales +1.9% ‘reflecting the fact that leading groups are continuing to open new sites.’

• Tracker: Oct moves backwards as 3mth run of positive LfL sales numbers comes to an end.

• Tracker: Says sales ‘slip back in October’ as ‘Rugby World Cup hangover hits London trading in particular’

• Tracker: London sales much worse than regions in Oct. LfL in capital down 2.5% but only minus 0.5% in regions. Tracker says much of this fall is ‘being put down to the boost eating and drinking-out, especially in the capital, received from last year’s Rugby World Cup.’

• Tracker: Peach’s Peter Martin says ‘in October last year, like-for-likes were up 2.5% across the country, and ahead a bumper 3.8% in London, largely on the back of the popularity of the rugby tournament, with pubs doing especially well. This last month we seem to have seen the downside of that.’ Mr Martin goes on to say ‘we have had three consecutive months of positive sales growth in the sector following the EU-referendum, but these October figures demonstrate that operators need to remain cautious with plenty of volatility, uncertainty and competition out there in the market,” Martin added.’

• Tracker: Pubs less good than restaurants in Oct at minus 1.2% vs minus 0.7%. London pubs down 3.3%.

• Tracker: Says property ‘hotspots’ in London are still hot despite ‘strengthening headwinds’.

• Tracker: Davis Coffer maintains ‘although the sector is expecting some strengthening headwinds, at Davis Coffer Lyons we are finding strong undiminished demand for restaurants and other licensed property in our core markets. Demand for property in London and various provincial ‘hotspots’ remains unchanged, proving that the current successes and failings within the leisure and hospitality sector do vary considerably around the country. As we approach 2017, we may start to witness some areas with slower rental growth due to the pressure of food costs, wages and rates, but premiums will certainly hold for landmark or key leisure pitches with high footfall.’

• Tracker: ‘October will be viewed as a disappointing month for many, but LT trend over of last 12mths is of slightly positive LFL growth’

PUB, RESTAURANT & DRINKS PRODUCERS:

• Trade bosses have warned that pubs could be in for two tough years of trade after Article 50 is triggered and the UK leaves the European Union. Potential issues include more difficulty in recruiting staff and lower disposable income, according to industry figures invited to accountancy firm Weller’s roundtable in London. Other issues discussed included the national living wage and business rates.

• The Campaign for Real Ale has called on the UK government to freeze beer duty ahead of the Autumn Statement to slow the rate of pub closures across the country. ‘UK pubs and breweries are facing a great deal of uncertainty in these times of economic uncertainty,” said Colin Valentine, CAMRA national chairman. Pubs in particular are facing significant cost burdens, including business rates, pension auto enrolment and increases to the national living wage. Coupled with UK beer drinkers paying significantly higher duty on their pint than other leading beer drinking nations, at 52.2p on the pint, we are seeing a significant shift from people drinking in pubs to people drinking at home.’

• The secretary of state for the Department of Business, Energy and Industrial Strategy (BEIS) has backed Paul Newby as the pubs code adjudicator. Greg Clark said he disagreed with a letter from the chair of the BEIS committee that the appointment process for the PCA should be reopened, adding: ‘The appointment process was run in accordance with the code of practice for ministerial appointments to public bodies. As part of the appointment process, the panel considered whether Paul Newby has conflicts of interest that might call into question his ability to do the job and concluded he did not.’

• Heineken has set up a new ‘Brew House’ brand that will be listed as a separate retail outlet on Deliveroo, which will sell Heineken, Birra Moretti, Kronenberg, Amstel, Old Mout, and Bulmers.

• Research from The NPD Group shows that the market share for branded food to go has taken market share from independents. NPD’s research shows that the market share for brands versus independents in terms of number of visits was 43% to 57% eight years ago, but has now nearly reversed as of the year ending (YE) September 2016 with the brands leading at 56% to 44%.

• Camelot has announced a 5.8% fall in first half National Lottery sales to £3.39bn, generating a direct returns to Good Causes of £783m.

• Moody’s reports AB InBev Debt Swap Offer is Credit Positive as regards SABMiller Debtholders. It says the bonds will be converted into new ABI notes and benefit from ABI’s guarantees.

• Shrinkflation. It’s a new thing. Suppliers can say that they’re not putting prices up. Consumer price warriors, beware

• Majestic H1 sales +13%, dividend reinstated. Back in profit, just. LfL at Majestic +5.7% with Naked +26.7%. Group says ‘the transformation plan to deliver future sustained growth in shareholder value is on track. The investments we have made are working, our lead indicators are improving and sales are growing.’

• Majestic. Says ‘we reiterate our goal of £500m annual sales by FY19.’ CEO Rowan Gormley says ‘our plan is working. We said that we would deliver sustainable growth, not by opening more stores, but by investing in better customer service and better customer retention. Both of these are working – sales are up over 10% and the projects driving that sales growth, like nationwide next day delivery, are on time and on budget. Now that we have built a solid platform for future growth, future cost growth will be much lower.’ Mr Gormley concludes ‘we are reiterating our commitment to hitting our goal of delivering £500m sales by 2019, and we believe that will translate into healthy profit growth now that the step change in investment is complete. We are reinstating the dividend as a signal of our continued confidence in the plan.’

LEISURE TRAVEL & HOTELS:

• Dart Group managed to generate 21% growth in group revenue to £1.241bn and a 12% rise in profit before tax to £163.7m for the half year to 30 September. Basic EPS rose by 14% for the six months to 90.65p, while the travel and logistics group also bumped up its interim dividend by 53% to 1.375p. Leisure Travel revenue growth of 22% to £1,160.8m was driven by a 36% increase in the number of Jet2holidays package holiday customers to 1.28m (50% of overall flown customers, up from 42%).  Jet2.com flew 2.51m flight-only passenger sectors.

• Dart Group has total cash and money market deposits of £595.1m, an increase of £183.1m, as net cash flow from operations rose by c13% to £226.5m. Average load factor at Jet2.com was slightly lower (93.2% vs. 94.1%) due to its 13% increase in capacity, although a 1% rise in the price of package holidays and a 2% rise in non-ticket retail revenue per passenger allowed Leisure Travel revenue to grow by 22% to £1.161bn.

• The group cautions that, although it has enjoyed a ‘strong summer’ particularly in its Leisure Travel business, ‘increased losses are to be expected in the second half of the year as we invest in the launch of our new Birmingham and London Stansted Airport bases together with additional aircraft, advertising and people in readiness for further flying programme expansion in the summer 2017 season.’

• As for Dart Group’s outlook in a somewhat turbulent airline sector, the group comments: ‘Whilst we recognise the likely upward pressures on market pricing following the weakening of Sterling post Brexit; for the long term, we have confidence in the resilience of our Leisure Travel business and are encouraged by the increasing proportion of customers taking our great value, real package holidays,’ adding ‘With winter 2016/17 Leisure Travel bookings continuing to perform in line with expectations, the Board is currently optimistic that market expectations for the full year will be slightly exceeded.’

• Sheriff James Spy has warned disruptive behaviour is becoming ‘endemic’ at Glasgow airport due to the ease with which passengers can drink in terminals.

FINANCE & MARKETS:

• UK unemployment fell by 37,000 to 1.6 million in the three months to September, reaching an 11-year low, while the jobless rate fell to 4.8%. New figures from the Office for National Statistics also show that the number of people in work went up by 49,000. Average weekly earnings grew by 2.3% in the year to October including bonuses.

• World markets: UK, Europe & US all lower yesterday. Far East currently trading down in Thurs trade

• Brent down a shade at around $46.50 per barrel

• Sterling a bit lower at around $1.243 per US$. Still around 116c to the Euro

• Yield on 30yr bonds in the US slipped a little further. Now trading around 2.02%.

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

• ALMR has written to Chancellor Phillip Hammond calling on him to actively support the pub industry in his Autumn Statement

• Kantar Worldpanel data show Tesco has continued to grow its grocery market share with fastest rate in 3yrs

• UK’s major supermarkets reported to have cut petrol prices by 3p per litre in attempt to attract pre-Xmas shoppers

• Council of Mortgage Lenders says mortgages are now more affordable than they have ever been. Not sure would be true if rates rose

• Morrison’s has launched a service at Amazon. Orders will delivered same day by Amazon. What role Ocado

• easyHotel is in ‘advanced discussions’ regarding the potential acquisition of a freehold site in Sheffield

• STR’s October Pipeline Report shows 153,206 rooms in 1,007 projects under contract in Europe

• UK inflation in surprise fall in October, CPI falls to 0.9% from 1.0% a month earlier. Economists were looking for 1.1%.

• IEA reports infrastructural spend (under Trump or in Europe) will not be sufficient to boost Western economies

• Bank governor Mark Carney has attacked politicians for criticising the Bank in what he called a “massive blame deflection exercise”

• Later Tweets: Oil sharply up, Dow at all-time highs & bond rates falling again. Trump? Impact thus far much more muted than expected

• Dip in inflation unlikely to last. Input prices are rising. Will rise more with Rates, NLW etc. Operators just can’t take the margin hit

• Cold weather helped fashion sales last week. Outdoor beer gardens not so much. At least it was dry.

RETAIL NEWS WITH NICK BUBB:

• Majestic Wine: The interim results from Majestic Wine today (for the 6 months to Sept 29th) are weak, as flagged by the profit warning back on September 21st, with adjusted PBT tumbling from £8.3m to just £0.1m, despite 13% sales growth. But the interim dividend of 1.5p has been reinstated, reflecting confidence in the future growth prospects, and the company says that although “challenges remain, we are comfortable with current consensus expectations” (the PBT range for FY17 is between £11.9m and £12.4m). The CEO Rowan Gormley says, confidently, that “We are reiterating our commitment to hitting our goal of delivering £500m sales by 2019, and we believe that will translate into healthy profit growth now that the step change in investment is complete”.

• Ted Baker: Today’s Q3 update from Ted Baker is bang up to date, as it covers the 13 weeks to November 12th, and the news is good, with total sales up by 14.8%. Retail sales for the period increased by 15.4% (6.7% in constant currency), “despite on-going external factors”, albeit average retail square footage rose by 8.8%. Wholesale sales were up by 13.2%. The company says “The Board remains confident of making further progress for the full year. However, as ever, the full year outcome will be dependent on trading during the important Christmas period”. And the great Ray Kelvin, the Founder and CEO, says: “The brand continues to perform well despite challenging trading conditions and we remain focused on the long-term development of Ted Baker as a global lifestyle brand”.

• Planet ONS Watch: In the real world, October (the 4 weeks to Oct 29th) was a better but mixed month on the High Street, with Clothing retailers and Electricals retailers doing well, as per the BRC-KPMG Retail Sales survey. But we will find out at 9.30am this morning how life was like last month on that strange parallel world, the Planet ONS, via the Office of National Statistics Retail Sales figures for October. For what it’s worth, our friends at Capital Economics think that the figures could provide some further evidence that the recent strength of consumer spending is unlikely to be sustained and have pencilled in a 0.5% rise in “seasonally adjusted sales volume” month-on-month (leaving the year-on-year growth at 5.3%), including petrol.

• Tesco Management Watch: We didn’t have time to go to yesterday’s “Capital Markets Day” for Tesco held at the new HQ in Welwyn Garden City in Hertfordshire. But the presentation for analysts, investors and suppliers ran from 9am to 4pm and, after an introduction from the Chairman John Allan, there were sessions on each of the 6 Strategic Drivers that Tesco unveiled with the interims on Oct 5th, with the most interest in “who talked about what”. For the record, as an aide-memoire for head-hunters, the first section, “A differentiated brand”, was hosted by Dave Lewis, Michelle McEttrick, Jason Tarry and Alison Horner. “Reduce operating costs by a further £1.5bn” was then the CFO Alan Stewart (with Break-out sessions from Allan Lyall, Tony Hoggett and David Williams). “Generate £9bn cash from operations” was Kate Koch, Bruce Marsh and Michael Snape. “Maximising value from property” was
Steve Rigby (with Break-out sessions from Marcus Vinnicombe, John Gibney, Hugh Garavelli and Tim Golding). “Maximising the mix to achieve a 3.5%-4.0% Group margin” was Trevor Masters, Matt Davies, Duncan Hoy, Adrian Letts and Kari Daniels. And, finally, “Innovation” was Dave Lewis…

• Morrisons/Ocado: Following Morrison’s  announcement yesterday morning that it was launching its new Grocery Online store-pick service via mighty Amazon, we are grateful to the inestimable FT Alphaville “Markets Live” webcast for pointing out that their partner Ocado issued a confusing email response to the press about the news, to say “Although we are not aware of the details, we have been assured by Morrisons that they acknowledge and respect the exclusivity provisions in our agreement, which oblige Morrisons to operate their online grocery business only through the Ocado arrangements. Meanwhile we are making good progress with development of the Erith CFC, which we will operate for ourselves and for Morrisons.com, and with the creation of a store-pick solution for Morrisons.com”.

• News Flow Today: The Boohoo Spring/Summer range preview takes place from midday onwards in Covent Garden, the Asda/Wal-Mart Q3 update will be out at lunchtime and this evening brings the prestigious Drapers Fashion Awards.