Gregg’s, Chocolat, Elegant Hotels, Brexit & other:

A DAY IN THE LIFE:

Do you think there’s an inverse relationship between the size of companies on the London Stock Exchange and the length of their trading updates when talking about how they’ve performed over Xmas or whatever?

Because M&B managed to get everything onto one side of notepaper on Friday and M&S and Tesco didn’t take up much more space.

But when you look at one or two small hoteliers or edge-of market retailers, they seem to be keen to tell us much more when it comes to how they’ve got on.

Which is all well and good but, if a market is wobbling or in flux, as some always are, we don’t really need to know about the contents of the stationery cupboard. Whilst it’s not always true to say that less is more, the marginal piece in an endless stream of information doesn’t always add to our stock of knowledge. It should be noted that today’s updates are blessedly short. On to the news:

PUB, RESTAURANT & DRINKS PRODUCERS:

• Gregg’s updates on FY trading saying total sales +7.0%, LfL +4.2%. Has undertaken 208 refits in year, 145 new shops, 79 closed

• Gregg’s: Says ‘full year results anticipated to be slightly ahead of previous expectations’. Sees some ‘headwinds’ for this year. CEO Roger Whiteside reports ‘we finished 2016 well, delivering our thirteenth consecutive quarter of like-for-like sales growth, and anticipate that we will report full year results for 2016 slightly ahead of our previous expectations.’ He adds ‘in the year ahead, whilst we will undoubtedly see a number of well-documented industry headwinds, we are confident we will continue to make progress with the implementation of our strategic plan, including significant investment in our capability to supply a growing shop estate.’

• Gregg’s: Reports Xmas period ‘particularly strong, aided by a favourable trading pattern’. Q4 LfL sales +6.4%. Ex-Xmas +4.1%.

• Gregg’s re outlook. Says ‘there is greater uncertainty in the trading environment with increased pressure on real income growth.’ Company sees ‘industry-wide cost pressures in 2017 and these are likely to have a modest impact on margins in the short term.’ Nonetheless, the co says ‘2017 will be another busy year of change as we continue to progress our investment in better systems and the transformation and development of our supply chain. Over the medium term we are confident of making further progress as we implement our plan to grow Greggs as a modern food-on-the-go brand.’

• Hotel Chocolat Q4 update (to Xmas Day). Says total sales +16.2% (14.6% on a constant currency basis).

• Hotel Chocolat says ‘retail growth was driven by increases in footfall and items per basket, with customers also choosing to buy more higher-priced gift items. The digital business showed similar momentum.’

• Hotel Chocolat: Opened 10 stores in H2, has 90 in UK. Says ‘trading since December continues to be in line with management’s expectations’ CEO Angus Thirlwell comments ‘the growing strength of the Hotel Chocolat brand has enabled us to perform well. Our seasonal ranges included many new innovations and our cafe drinks offer adds a new dimension to our experience.’

• The Sun has reported that Euro Garages is in talks to buy Little Chef.

• A happiness survey conducted by Young’s finds that a restaurant or pub is the nation’s happiest place outside of home

• Vianet data derived from its iDraught cellar and bar management system suggests Christmas beer sales in pubs across the UK were flat over the festive period and volumes were down year-on-year. Total volumes fell 1% between 16 December 2016 and 1 January 2017 in the sample of 11,700 managed, independent, tenanted and leased pubs across the UK. The top three trading days mirrored those of the previous year; Christmas Eve, the last Friday before Christmas (18th) and New Year’s Eve.

• A Vianet Group spokesperson said: ‘Our insight data shows that the festive period is one which traditionally features the three highest volume trading days for pubs, so operators will no doubt be a little disappointed that overall beer volumes were down on the previous year. It suggests that that like-for-like sales growth that many operators have reported has come via price uplifts versus December 2015 and, of course, food.’

• Industry bodies the BBPA, CAMRA, and SIBA are urging MPs to write to the Chancellor to support their calls for a cut in beer duty in the Budget on 8 March. A recent report by economic experts Oxford Economics (OE), found that the beer and pub industry in Britain employs almost 900,000 people, and contributes £23.1bn to the British economy, whilst paying a hefty £12.6bn in tax. The BBPA has also launched a new website for the beer duty campaign, www.cutbeertax.co.uk, which enables the public to write to their MPs to promote the cause.

• Mike Benner, SIBA Managing Director, commented: ‘Britain still pays the second highest rate of Beer Duty in Europe and more than thirteen times as much as Spain or Germany, despite beer from British independent craft breweries being in high demand for its quality and flavour. We would urge the Government to introduce a cut in beer duty in the next Budget to allow this important British manufacturing industry the chance to continue to grow and thrive.’

• D&D London has reported a strong festive trading period, with UK like-for-like revenues up 7% and ‘very strong’ performances from new sites such as German Gymnasium, per MCA. Co-founder Des Gunewardena sounded a note of caution with regards to the coming year, however, warning that 2017 is likely to be ‘challenging’ due to cost inflation and Brexit worries. Nevertheless, the group intends to have one of its busiest years ever in terms of openings, spearheaded by the expansion of its Bluebird café business.

• Old Growler, Stour Valley Gold, and Suffolk County brewer Nethergate, has acquired a new site at Long Melford, Suffolk, which will house a brewery, shop, and visitor centre.

• Greg Mulholland, MP and outgoing chair of the All-Party Parliamentary Save the Pub Group, has said that it is ‘essential’ he and his successor Toby Perkins work together. Speaking to MA, Mulholland said he plans to remain a member of the group and will use the opportunity to spend more time chairing the British Pub Confederation, which aims to fight on behalf of independent pubs.

• Greggs Delivered, the baker’s delivery service which piloted in Newcastle in October, will now be available to London’s Greggs Cheapside (EC2V 6AT) and Greggs Eastcheap (EC3M 1BU). The service will initially allow customers to order food up to 10 days in advance via delivery time slots if the order is above £20 and within 0.4 miles of the respective outlets.

• Petrol station transactions reached a post-recession high last year on the back of an 8.8% rise in the average price of retail sites, per Christie & Co’s latest business outlook report. 

• Moody’s has reported that Tesco’s building momentum in LfL sales increases is credit positive. It says ‘the momentum demonstrates Tesco’s continued progress in adapting to changed competitive dynamics in the grocery sector.’

• Moody’s reports M&S’s strong Xmas sales are credit positive. It says ‘although the operating environment remains volatile, the sales data are credit positive for Marks & Spencer because it shows some recovery momentum in the clothing and home business. It also points to improvement in the food business, which returned to positive like-for-like growth of 0.6% from negative 0.9% in both the fiscal first and second quarters.’

LEISURE TRAVEL & HOTELS:

• Elegant Hotels reports FY numbers (to Sept) saying revenue down 5.2% to €57m with REVPAR 6.7% lower.

• Elegant Hotels: FY EBITDA down 11.6% with EPS of 13.1c vs 14.7c last year. FY dividend of 7p. CEO Sunil Chatrani reports ‘against a backdrop of challenging market conditions, the Group has delivered a solid performance and made good progress in key areas during the year.’ He says ‘despite the current challenges that the Group and the wider Barbados luxury hotel market are facing, we continue to be confident in our long term growth prospects and remain committed to our expansion strategy in both Barbados and across other parts of the Caribbean.’

• Exchange firm Travelex says that UK travellers buying US dollars are getting the lowest rates since 1986 ($1.17 for every £1).

• First Rate Exchange Services’ Holiday Confidence Index suggests that consumers have so far been undeterred by the slide in relative value of sterling.

• The Foreign and Commonwealth Office has issued a warning to travellers in light of a deadly mass shooting at the Mexican resort of Playa Del Carmen.

• Intercontinental Hotel Group reports that ‘today’s customer…increasingly expects brands to deliver experiences that satisfy contradictory needs.’ It says that, amongst other things, consumers are seeking ‘abundant rarity’ and that they want things to be ‘separate but connected’. Good luck with supplying that.

• IHG has said that it will seek to ‘integrate’ rather than ‘balance’ the demands of customers. The latter, it maintains, implies perhaps striving (but failing) to make everyone happy at the same time. IHG says its ‘Trends Report is the fifth in a series of reports that share insights into the changing world and provide best practices to help make brands fit for the future. The insights it contains are based on a series of related studies spanning a five-year period and involving nearly 40,000 interviews with travellers across the globe.’

• Gobbledegook reported to be alive & well.

FINANCE & MARKETS:

• The International Monetary Fund has increased its forecast for the UK’s economic growth this year from 1.1% to 1.5% and has left global growth forecasts of 3.4% in 2017 and 3.6% in 2018 unchanged.  The IMF has downgraded its prediction of UK growth in 2018 from 1.7% to 1.4%, however.

• Bank of England Governor Mark Carney has told the LSE that ‘a little inflation ‘greases the wheels’ of the economy.’ Too much inflation can be bad, he adds, as can deflation. He tops this off by saying that ‘recognising the social value of inflation control is one thing, delivering it is quite another.

• Bank’s Carney says Brexit ‘will have a significant bearing on inflation.’ Says MPC stands ready to deal with the situation. In full re Brexit, Mr Carney says ‘over the next few years, the magnitude of the effects of this adjustment on the economy’s supply potential, domestic demand, and the value of sterling will be somewhat uncertain; and this process will have a significant bearing on inflation. Whatever transpires, the MPC will manage monetary policy to achieve the inflation target in a sustainable manner consistent with the preferences and instructions of the people of the United Kingdom.

• Bank Governor Mark Carney has said that the UK economy remains dependent on domestic consumption. He says ‘growth is expected to remain below past averages for the next few years. One corroborating indicator of this potential deceleration is that the UK expansion is increasingly consumption-led.’

• Carney suggests consumer is blasé about Brexit. Adds that there will be some headwinds this year. He says ‘we do see a slowing in the economy and household spending this year.’

• The IMF has left unchanged its estimates of 3.4% for global growth this year and 3.6% next. It is cautious ahead of as-yet-unveiled Trump policiies

• Theresa May is due to outline today how a clean (or Hard) Brexit is to be brought about. It will be Red, White and Well Thought Through and Through

• The Eurozone’s trade surplus with the rest of the world widened to an unadjusted €35.9bn in November. So much for European failure. The continent, admittedly led by Germany, certainly seems to be producing what the rest of the world wants to buy. The UK’s trade deficit is c£10bn per month.

• Brent up a shade at $55.70

• Sterling holding above $1.20 at around 120.7c per dollar. Down vs Euro at 113.5c.

• UK 10yr gild yield back to 1.31% (was 1.36%). US markets closed

• World markets: UK broke its winning run yesterday with modest losses. Europe down, US closed & Far East mixed in Tuesday trade

TODAY IN A NUTSHELL – TWEET VERSION & YESTERDAY’S LATER COMMENTS:

• Gregg’s updates on FY trading saying total sales +7.0%, LfL +4.2%. Has undertaken 208 refits in year, 145 new shops, 79 closed

• Gregg’s: Says ‘full year results anticipated to be slightly ahead of previous expectations’. Sees some ‘headwinds’ for this year

• Gregg’s: Reports Xmas period ‘particularly strong, aided by a favourable trading pattern’. Q4 LfL sales +6.4%. Ex-Xmas +4.1%.

• Gregg’s re outlook. Says ‘there is greater uncertainty in the trading environment with increased pressure on real income growth.’

• Hotel Chocolat Q4 update (to Xmas Day). Says total sales +16.2% (14.6% on a constant currency basis).

• A happiness survey conducted by Young’s finds that a restaurant or pub is the nation’s happiest place outside of home

• Vianet reports Xmas beer sales in pubs across the UK were flat over the festive period and volumes were down y-o-y

• Industry bodies BBPA, CAMRA & SIBA are urging MPs to write to the Chancellor to support calls for cut in beer duty in Budget on 8 March

• D&D London has reported a strong festive trading period, with UK like-for-like revenues up 7% and ‘very strong’ performances from new sites

• Elegant Hotels reports FY numbers (to Sept) saying revenue down 5.2% to €57m with REVPAR 6.7% lower.

• Exchange firm Travelex says that UK travellers buying US dollars are getting the lowest rates since 1986 ($1.17 for every £1).

• The International Monetary Fund has increased its forecast for the UK’s economic growth this year from 1.1% to 1.5%

• Bank of England Governor Mark Carney has told the LSE that ‘a little inflation ‘greases the wheels’ of the economy.’

• Bank’s Carney says Brexit ‘will have a significant bearing on inflation.’ Says MPC stands ready to deal with the situation

• Bank Governor Mark Carney has said that the UK economy remains dependent on domestic consumption

• Theresa May outlines today how clean (or Hard) Brexit is to be brought about. It will be Red, White and Well Thought Through and Through

• Later tweets: Sterling hits new post-Brexit vote lows. Markets beginning to think politicians are really going to do it. At least Trump supports Brexit.

• Market struggling a bit after early gains. Wondering whether it should push on to 13th record. In context, market only +4% during this run

• Hard Brexit, Soft Brexit, Clean Brexit, Red White & Blue Brexit. Government in search of soundbite to opine tomorrow

• Guardian says NXT the big loser over Xmas. Winners Aldi & Lidl. Daily Mail dubs Dave Potts the ‘Winner of the Week’

• Luke Johnson highlights lack of coffee, pub & hotel experience on Board of coffee, pub & hotel company Whitbread

• Brexit, Sterling, Interest Rates? Out, down, up. Implications for pension deficits? What pension deficits? CPI out tomorrow

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RETAIL NEWS WITH NICK BUBB:

• Greggs: Today’s Q4 update from Greggs (our “Tip for 2017”) reports that, after a strong finish to the year, full year results for 2016 will be slightly ahead of management’s previous expectations. Sales over the Christmas period were particularly strong, “aided by a favourable trading pattern” and, as a result, Q4 company-managed shop LFL sales grew by as much as 6.4%.  Excluding the final two weeks of the year Q4 LFL sales growth was 4.1% (in line with the full-year outcome of 4.2% growth). Greggs say that “Customers enjoyed seasonal favourites such as our Festive Bake and traditional mince pies, but our growing strength in food-on-the-go was the main driver of sales”. The only slight dampener is that Greggs warn that “We continue to expect some industry-wide cost pressures in 2017 and these are likely to have a modest impact on margins in the short term”.

• Hotel Chocolat: The trading update from rising star Hotel Chocolat is a bit more muted, as although for the 13 weeks ended 25 December total Group revenue increased 16.2% (14.6% on a proforma constant currency basis) that didn’t leave room for much (unquantified) LFL sales growth, as UK store numbers were up from 80 to 90 in the second half of last year. The company says that “Trading since December continues to be in line with management’s expectations” and Angus Thirlwell, Co-Founder and CEO, says: “The growing strength of the Hotel Chocolat brand has enabled us to perform well”.

• News Flow This Week: Tomorrow brings the Burberry Q3 and the Game Digital AGM update. On Thursday we get the Halfords Q3, the N Brown Q3, the Pets At Home Q3 and, in the Retail Property world, the British Land Q3. Then Friday brings the Bonmarche update and the ONS Retail Sales for December…and, over in the US, the much-dreaded inauguration of President Trump…