Langton Capital – 2017-02-28 – Revolution Bars, Gregg’s, late night levies, gin & other:
Revolution Bars, Gregg’s, late night levies, gin & other:
A DAY IN THE LIFE:
Langton is still doing its staycation bit for Britain. However, the internet’s not working very well so let’s move straight on to the news:
REVOLUTION H1 NUMBERS:
• Revolution Bars Group has reported H1 numbers to end-December
• RBG H1: Reports revenues +12.7% at £66.7m. LfL sales +2.0%. LfL in first 8wks of H2 are +1.7%
• RBG H1: Sees adjusted EBITDA up 13.6% to £9.2m with adjusted EPS of 9.1p (+7.1%)
• RBG H1: H1 dividend 1.65p, up 10% on last year.
• RBG H1: Group opened 4 Revolución de Cuba bars in period taking estate to 66 units (12 of which are Cubas)
• RBG H1: Says will open 6 bars in full year. Says is seeing ‘significant growth in digital customer engagement’
• RBG H1: CEO Mark McQuater reports ‘I am delighted to report another good set of results for Revolution Bars Group. Our finely tuned operating model has delivered like-for-like sales growth and well planned expansion. During the period we have added another four Revolución de Cuba units taking the estate to 66 units, along with two more bars scheduled for opening in the second half, and we are confident of meeting our strategic growth targets.’
• RBG H1: Group says ‘recent trading over January and February has been positive. Like-for-like sales for the eight weeks to 25 February rose by 1.7%.’
• RBG H1: Says overall ‘whilst certain cost headwinds are expected in the second half, the strong first half performance, together with on-going mitigating activities mean the group is meeting expectations. It says it is ‘confident about our prospects for the future.’
GREGG’S FULL YEAR NUMBERS:
• Gregg’s FY numbers: Reports total sales +7% at £894.2m with managed sales LfL +4.2% on top of 4.7% last year.
• Gregg’s reports PBT of £80.3m vs £73.0m last year. The co has delivered ‘strong cash generation enabling significant, self-funded capital investment to support growth.’
• Gregg’s FY dividend +8.4% at 31.0p. Says it is seeing ‘growing strength in the food-on-the-go market’
• Gregg’s sees ‘further improvements to product range, including extended choice in hot drinks and hot food’. Some 145 shops were opened in the year with 79 closed. The group has commenced a £100m, five-year investment programme in manufacturing and distribution operations.
• Gregg’s re current trading. Says ‘2017 has started in line with our expectations’ with ‘company-managed shop like-for-like sales up by 2.0% in 8 weeks to 25 February 2017.’ The group says ‘underlying (excluding New Year trading pattern) Company-managed shop like-for-like sales in weeks 2 to 8 up by 2.9%’.
• Gregg’s says ‘the UK consumer outlook is more challenging than we have seen in recent years, with industry-wide pressures emerging in commodities as well as labour costs. However we are confident of making further progress as we implement our plan to grow Greggs as a contemporary food-on-the-go brand.’
PUB, RESTAURANT & DRINK MANUFACTURERS:
• The ALMR and BBPA have welcomed Cheltenham Borough Council’s move to abandon a late-night levy in favour of an existing Business Improvement District.
• Brú, the Republic of Ireland craft beer brewery, intends to start building a UK pub estate this year and has already been in discussions with pub companies about possible sites. Speaking to MA, co-founder Daire Harlin said: ‘We see pubs as a good launch platform for our brand over here. It’s something we’ve wanted to do for a couple of years and we’re looking at going into London, possibly Bristol and possible Manchester. We will hopefully open three outlets this year. We believe we have enough capital to do that.’
• The UK exported some £474m of gin last year, up 12% (£53m) year-on-year. A total of 139 countries now bulk buy British gin, although the WSTA says the industry continues to be held back by excessive duties. ‘Britain is by far the biggest exporter of spirits in the world,’ said WSTA chief executive, Miles Beale. ‘The UK has the 4th highest excise duty rate on spirits in the EU, making British gin’s achievement more impressive. A modest 2% duty cut is a winning tonic that would boost the UK drinks industry, its employees and consumers as well as generating additional revenue to help public finances.’
• Carlsberg has reduced its energy consumption by 6%, according to the group’s latest sustainability report.
• Oakman Inns & Restaurants has been crowned ‘Best Company to Work for 2017 in Hospitality Sector’ and ‘Best Improver’ in the Sunday Times Best Companies Awards. Peter Borg-Neal, Oakman Inns’ chief executive, who founded the business in 2007 with his first pub, The Akeman in Tring, said: ‘I am incredibly proud of what we’ve achieved. To reach the top 10 in “The Sunday Times 100 Best Companies to Work For” is a credit to every one of our team.’
• Fairtrade has expressed fears that the Brexit vote will lead to a fall in Fairtrade sales as deals already struck with the EU will need to be renegotiated
• Kona Grill reports 2017 numbers, says Q4 revenues increased by 14.5% to $43.6m. LfL sales fell by 4.1%. The group made a Q4 loss of $16.6m including write-downs of $12.5m. CEO Berke Bakay reports ‘as previously announced, we faced a challenging environment during the fourth quarter which led to our first same-store sales decline in the last 14 quarters and only our second quarterly decline in the last six years.’ Mr Bakay concludes ‘by scaling back development [in new store openings], we will significantly reduce our preopening and depreciation expense to drive improvement in the bottom line while our lower capital expenditures will increase our financial flexibility.’
• Nation’s Restaurant News in the US reports ‘waiting in line or making a phone call to order food from a restaurant may soon be a relic of the past, as the increased availability of digital ordering enables more consumers to get the food they want, when they want it, with just a few scrolls, taps and clicks.’
HOLIDAYS & LEISURE TRAVEL:
• Commenting on the decision to move the Ogden Rate to 0.75% from 2.5%, Saga has said that it has for some time ‘held a specific amount within its reserve margin in anticipation’.
• Saga reports ‘given the size of the rate change, there will be a one-off, pre-tax impact on profit of £4m on the Group’s results for the year ended 31 January 2017. This will not impact the Board’s deliberations regarding the proposed final dividend recommendation and the Group remains well capitalised.’ It concludes ‘the Group does not expect the Ogden rate change to have a material impact on its financial outlook.’
• The Egyptian Ministry of Foreign Affairs has confirmed that the visa fee for tourists visiting the country will more than double from $25 to $60 (£48).
• Newcastle airport has reported a strong start to the year after seeing almost 40,000 passengers pass through in January, up 16.2% year-on-year.
FINANCE & MARKETS:
• Consumer confidence slipped in the UK in February but the business barometer moved forward.
• World markets: UK up yesterday with Europe mostly lower. US markets up with Asia mostly better in Tuesday trad
• The merger between the London Stock Exchange & the Deutsche Boerse would appear to have stalled due to the LSE’s refusal to dispose of an Italian business and to countenance the move of the enlarged company from London to Frankfurt
• BCC says Brexit should delayed if no trade deal can be agreed in the next 2yrs
RETAIL NEWS WITH NICK BUBB:
• ABF (Primark): Yesterday’s pre-close update from the ABF conglomerate for the 26 weeks to March 4th, doesn’t advance the case for Primark much beyond the post-Xmas update given on Jan 12th, but the core UK business gets a good plug, via the news that “the UK has performed well with LFL sales 2% ahead of last year and market share increased reflecting the strength of our consumer offering”. And the business is still opening new stores: there were big relocations in Reading and Sheffield, as well as new stores in Carlisle, Stafford, Truro, York and Colchester (with Uxbridge about to open), whilst the store at the Tottenham Court Road end of Oxford Street was extended by almost 40% (to 114,000 sq ft), making it one of their largest stores after Manchester and Newcastle. Elsewhere, the news is that “our business in the US continued to develop”, with 6 stores now open and an extension to
• McColl’s: Ahead of yesterday’s finals for the 52 weeks to Nov 27th, the convenience store group McColl’s didn’t give a post-Xmas trading update, but the message is that LFL sales are still running slightly down (by 1.9% last year), but gross margins are firm (up 70bps last year, thanks to more fresh food and food-to-go in the sales mix). However, adjusted EBITDA of £36.7m was marginally down, despite structural cost pressures and after £0.5m costs incurred in advance of the transformational Co-op store integration. The latter of course is the key issue and the news is that “the integration of the 298 Co-op stores is progressing well with the first store opening in Canvey Island on 31 January, and over 20 stores now trading as McColl’s. We have been pleased with the early performance of the integrated stores and in the first few weeks they have traded in line with our expectations”.
• Consumer Confidence Watch: The outlook for discretionary spending is quite closely correlated to consumer confidence, so the monthly GFK Consumer Confidence survey published overnight will be pored over by the likes of Carpetright and Dixons Carphopne and the news is…mixed. The overall index has slipped from -5 to -6 and “Any momentum behind the post-Brexit, debt-fuelled, consumer-spending boom now appears to be softening”, according to Joe Staton, Head of Market Dynamics at GfK. The highlights were that GfK’s “major purchase intentions” sub-index fell from 10 to 5 and the “personal situation over the next 12 month” index declined from 7 to 3, but there was a slight improvement in the reading for the balance of expectations of the “general economic situation over the next year”, rising from -23 to -20.
• Boohoo: Another day, another profit upgrade from mighty Boohoo, the leading Online fashion business. Today’s pre-close update flags that Boohoo has delivered a strong trading performance since the group’s last trading update on 10 January and that the Board now expects boohoo Group revenue growth for the twelve months to 28 February 2017 to be around 50%, ahead of the previously guided range of 46% to 48%. And the group continues to benefit from improved operating leverage in the business and so it now expects to deliver an adjusted EBITDA margin at the top end of the previously guided range of 11% to 12%.
• Greggs: Today’s finals from Greggs for y/e December look good, with LFL sales up 4.2% (as previously guided) and underlying operating profit up 8.6% to £78.1m. More importantly, the company flags that “2017 has started in line with our expectations”, with LFL sales up by 2.9% in the last 7 weeks. – Roger Whiteside, the CEO, says “The UK consumer outlook is more challenging than we have seen in recent years, with industry-wide pressures emerging in commodities as well as labour costs. However we are confident of making further progress as we implement our plan to grow Greggs as a contemporary food-on-the-go brand”.
• News Flow This Week: As we move remorselessly into March, tomorrow brings the MySale interims and the Inchcape finals (as well as the latest quarterly FTSE index review) and then on Thursday we get the Travis Perkins finals and the Shoe Zone AGM.