Langton Capital – 2016-12-14 – New openings, 2017 travel trends, inflation & other:
New openings, 2017 travel trends, inflation & other:A DAY IN THE LIFE: Bit pressed today & no time to prep yesterday. On to the news: PUB, RESTAURANT & DRINKS PRODUCERS: • The sixth edition of AlixPartners and CGA Peach’s Market Growth Report suggests that food pubs and restaurant brands are pushing ahead in a cautious market. The UK’s stock of licensed premises fell by 1.2% in the 12 months to September this year, to a little under 123,000, with the bulk of the decline coming from the ‘continued demise’ of old-fashioned, drink-led pubs and traditional independent restaurants. There is also evidence that the Brexit vote has engendered a degree of caution in the sector as pub and restaurant groups press pause on some of their more ambitious expansion plans, while also taking a tougher stance on underperforming sites. • Peter Martin, vice president of CGA Peach commented: ‘Nevertheless, competition in the managed chain restaurant and food pub market remains fierce and the sector continues to grow in numbers – particularly in our major cities. It is also worth noting that sites being opened tend to be much larger than the establishments being closed – leading to a net increase in trading space,’ adding that within the drink-led licensed sector ‘closures have tended to be of independent outlets, with a particular skew towards Indian or Chinese restaurants. The rising popularity of takeaways and delivery, through intermediaries like JustEat and Hungry House, has been a major pressure here. But even more significant has been the intense competition from still growing casual dining brands.’ • JW Lees has acquired The Hanging Gate in Weaverham, Cheshire, as part of the former’s strategy to expand in the North West. William Lees-Jones, Managing Director of JW Lees, said, ‘We are proud to be welcoming another new pub into the JW Lees family and we remain hungry for acquisitions of both Managed and Tenanted pubs as well as hotels in the North West.’ • Tim Martin has countered Brigid Simmonds’ suggestion that Brexit will dominate 2017 for the licensed trade by stating that UK legislation will still have the biggest impact. Martin said: ‘By far the greatest cost increases for the licensed trade as a whole in the next year will come, rightly or wrongly, from legislation which originates in the UK and is nothing to do with Brexit.’ This includes national minimum and living wage increases as well as disproportionately high VAT rates on food and alcohol paid by pubs compared to supermarkets. • JDW still buying back shares. Buys 81,410 for cancellation Monday & another 30k yesterday, both at around 818p • Marks and Spencer’s chairman Robert Swannell is to retire in 2017. • Argos drivers are threatening to strike over pay in the run-up to Christmas. LEISURE TRAVEL & HOTELS: • There will be a rise in travellers booking hotels direct next year, according to a study of European hoteliers analysing key trends in the sector. The report of over 100 hoteliers shows that 18% of respondents believed more travellers are likely to book direct via hotel websites. • Gatwick passengers continue to face travel disruption as rail services suffer from rail worker strikes, with ‘severely reduced service’ on 13, 14 and 16 December. • Manchester airport estimates passenger numbers to be +22% over the Christmas period to c640k between 23 Dec & 2 Jan. Top destinations are Dublin, Tenerife, Dubai, Amsterdam, Paris, Alicante, Malaga, Lanzarote, Abu Dhabi and Geneva. OTHER LEISURE: • Viacom / CBS merger is off. • Shares in some of the world’s largest casino operators rallied yesterday after pro-gaming legislation in Japan came a step closer. FINANCE & MARKETS: • UK CPI moves to 2yr high in November after sharpest rise in clothing prices for 6yrs. CPI at 1.2% vs 0.9% in October • Inflation. Good news? Deflation isn’t a thing any more. Bad news? Inflation perhaps is. CPI at 1.2%. ONS says ‘November’s slight rally in the value of sterling eased the inflationary pressure on businesses importing raw materials, but consumer prices continued to edge upwards, due mainly to the rising cost of clothing and fuel.’ • World markets: UK and Europe up yesterday with US also higher. Far East mostly higher in Wednesday trade • Brent around $55. • Sterling around $1.2654 and around 119c vs Euro. • US long rates down a shade from 3.16% to 3.14%. UK 10yr gilts rally with yield down from 1.47% to 1.44% • House price growth slowed in October says ONS. Prices up 6.9% in year to that date from 7.0% in September • Asian Development Bank trims forecast for Asian growth to around 5.6% for this year (was 5.7%) YESTERDAY IN A NUTSHELL – SELECTION OF TWEETS, LIVE TWEETS ON WEBSITE: • The number of pub and bar companies in the UK entering insolvency declined by 7% to 480 instances in the year to March • LfL sales across UK pubs & restaurants broadly flat this year but here’s a thought; what’s the ex-delivery number doing? • Delivery is boosting what are still called LfL sales but 20% or 30% is ending up in the hands of the marketers/delivery companies • Delivery: Opening new markets. Roo Boxes (off-site kitchens) & providing food in wet-only pubs being two such examples • Petrol prices may rise by 3p per litre to around 120p per the AA following OPEC’s decision to cut production • Rising interest rates should reduce pension fund deficits across pub & restaurant operators – see Finance & Markets • The FCA is reported set to consult on the need (or otherwise) for regulation of the crowdfunding market • BBPA chief Brigid Simmonds says that Brexit will ‘dominate’ the sector next year. Tim Martin disagrees • Today AB InBev has announced that it is to sell the businesses formerly owned by SABMiller in E Europe to Asahi for Euro 7.3bn • US restaurant companies will be a ‘market-share game’ as industry sales growth slows into 2017, per a report by Fitch • Horizons suggests consumer confidence is ‘set to falter in the year ahead prompting foodservice growth to continue to slow’. • Horizons says more Brits may holiday at home if they cannot afford overseas holidays, should benefit some pubs. • Mark Warner is reportedly introducing ‘unavoidable’ surcharges to customers of between £30-£50pp ‘for the first time in many years’. • STR’s preliminary November 2016 data for London shows a rebound in figures from last year’s hotel trade • Hollywood Bowl reports FY numbers, sales +23.9% at £106.6m with LfL sales +6.8%. Adj. EBITDA +42.6% at £29.4m • Manpower has reported that it is “business as usual” as far as recruitment is concerned. It says there was a pause post 23 June RETAIL NEWS WITH NICK BUBB: • Dixons Carphone: Ahead of today’s interims, we noted yesterday that the hard-working IR team at Dixons Carphone had helpfully circulated the City consensus for Q2 LFL (+3.0%) and H1 underlying PBT (£141m). And today’s news duly beats that slightly, with Q2 LFL sales up by 4% and PBT up to £144m. The big outperformance in LFL sales came in the core UK business, with LFL sales up by 6%, although the City will be puzzling over the caveats that sales were negatively affected by approximately 1% from refurbishment disruption, but boosted by approximately 4% as a result of sales transferred from closed stores. In terms of the outlook for the key Peak trading season, CEO Seb James doesn’t give much away in the statement, but he sounds confident and no doubt will drop a few bon mots on the 9am analysts conf call. • Boohoo: Good old Boohoo have announced strong Black Friday trading, upgraded full year profit guidance and have bought the Pretty Little Thing Online fashion business (developed by the son of CEO Mahmud Kamani) for a song (as per the fixed price option agreed at the time of the IPO). All good news for our 2016 Tip of the Year… • Grocery Market Share Watch: We flagged yesterday that the latest Nielsen grocery market data showed that overall industry sales were down by 0.4% in the latest 4 week period, but their rival Kantar actually reckoned that the industry was even worse, at -0.8% for the 4 weeks to Dec 4th. As for the market share split, the main disappointment was that Tesco marginally underperformed, with sales down by 0.9% gross, thanks to weak alcohol sales. But the others all did relatively well, with Asda down by “only” 3.9%, Sainsbury down by 0.6% and Morrisons up by 0.2%. Combined Aldi and Lidl growth improved, with gross sales up from +6.4% in the previous 4 week period to +9.8%. |
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