Langton Capital – 2017-03-14 – RTN closures, Gym Group, street food, costs & other:
RTN closures, Gym Group, street food, costs & other:
A DAY IN THE LIFE:
I don’t know what people are doing sending me out to buy dishwasher tablets.
Because the best that’s going to happen is that I’ll end up buying some random thing from the cleaning aisle – be it a rag, some glass-cleaning spray or a block of fire-starting tablets – and it’s more likely that I’ll spend an hour or two mooching around the Halfords and the Poundstretcher next door & come home with a boot-load of old junk via the newly opened food-pub at the end of the road.
Thankfully I’m not a betting shop kind of person and I can see the theory. If I’m asked to do something often enough, perhaps in the end I’ll do it. On to the news:
PUB, RESTAURANT & DRINK PRODUCERS:
• Commenting on the growth of the Street Food market, Pragma consulting suggests ‘what started as artisan and relatively ad hoc, is becoming increasingly commercial and investment is starting to flow.’
• Pragma singles out London Union as on the verge of expansion but Pragma poses the question ‘is the street food format inherently transient, or can it be commercially viable in the longer term?’
• Pragma highlights the relatively low levels of capital employed in the Street Food market as one of the factors that could spur growth.
• Ruby Tuesday has said that it will consider selling its businesses. The group writes ‘the Board of Directors will consider all strategic alternatives including, but not limited to a potential sale or merger of the Company, and has retained UBS as its financial advisor to assist in the process.’
• Non-executive chairman Stephen Sadove comments ‘Ruby Tuesday is an iconic American brand with a 45 year legacy of serving local communities great American fare. While we continue to focus on executing against our Fresh Start initiatives including the rollout of our Fresh New Menu, Fresh New Garden Bar and Fresh Experience, we believe now is the right time to explore strategic alternatives that have the potential to position the business for long-term success and to carry that legacy forward.’ He continues ‘we are confident the process will identify the best strategic avenues to maximize the value of our business and achieve the best result for our shareholders, franchisees, and team members.’
• Ruby Tuesday owns and franchises Ruby Tuesday brand restaurants. As of November 29, 2016, there were 613 Ruby Tuesday restaurants in 42 states, 14 foreign countries, and Guam. The group comments ‘of those restaurants, we owned and operated 546 Ruby Tuesday restaurants and franchised 67 Ruby Tuesday restaurants, comprised of 18 domestic and 49 international restaurants. Our Company-owned and operated restaurants are concentrated primarily in the Southeast, Northeast, Mid-Atlantic, and Midwest of the United States, which we consider to be our core markets.’ Ruby Tuesday stock surged 15 percent in after-hours trading on Monday.
• The Restaurant Group has put another six restaurants (four Frankie & Benny’s and two Coast to Coast sites) up for sale in Scotland, England, and Wales. The company recently put 23 sites on the market in January after flagging a fall in sales and is currently in the process of overhauling and simplifying its menus to create a more competitive business. Savills has been appointed to market TRG’s properties, as well as acting to acquire new sites for the company across the Midlands, East Anglia, the South of England and Wales.
• The number of EU nationals seeking hospitality work in London has risen slightly since the Brexit vote. Data from luxury hospitality recruiter The Change Group shows that, in the six months since the referendum, 6% of job applicants were EU citizens from outside the UK, compared to 55% before the vote. ‘Despite the slight rise in the number of people looking for work, there is still a recruitment crisis in London hospitality,” says The Change Group’s director Craig Allen. ‘Until clarification on [the rights of] EU citizens in the UK is made, much more work needs to be done to encourage Britons to work in hospitality if they are to make up for the shortfall in staff numbers.’
• ‘Posh’ kebabs have yet to take root as a concept outside the capital but that hasn’t stopped a restaurant in Sunderland from introducing a better quality kebab that ‘bear[s] no resemblance to those that people eat on the way home after a night out.’
• Ocado has updated on trading for the 13wks to 26 Feb saying that gross sales were +13.1% with average order numbers per week +16.7%. CEO Tim Steiner said ‘we are pleased with the steady progress and growth achieved in the period, as shoppers continue to embrace our proposition for online shopping.’ He concludes ‘while the market remains very competitive, there are the first signs of a change in market pricing dynamics coming through. However, it remains too early to predict how this will unfold throughout the year, and in particular is dependent on any future currency movements.’
• The pub operator and brewer, Brakspear, has untaken significant investment in its managed estate with the refurbishment of the Townhouse in Stratford-upon-Avon.
• The potential of the casual dining, brewing and bars industry in offering young people alternatives to more academically orientated careers is beginning to be acknowledged in the government, a study by Perceptions group has found. MD at Perceptions Group, Maureen Heffernan, stated ‘A number of the MP’s that attended the Apprenticeship Showcase event recognised the significant number of apprenticeship opportunities our industry has to offer’.
• Migration Watch UK report has prompted the ALMR to remind the government that it must safeguard the working rights of EU nationals currently working within the hospitality sector. Research suggests that almost 25% of the sector’s workforce are EU nationals. ALMR Chief Executive, Kate Nicholls stated ‘The Government needs to ensure that arrangements for both employers and migrant employees are put in place well in advance of the eventual withdrawal date to ensure that businesses have some clarity and a chance to plan accordingly.’
• The London Borough of Hackney has reportedly begun consultation on the introduction of a late night levy, which would apply to all venues that permit the sale of alcohol between midnight and 6am. The consultation closes on 7 May. Solicitors Poppleston Allen understands that if the decision is made to introduce the levy, it would come into effect on 1 November 2017.
• Asda is offering staff a higher wage in exchange for a new contract that will mean unpaid breaks and an obligation to work over Bank Holidays. The supermarket group will pay its workers £8.50 an hour should employees accept the contract.
HOLIDAYS, LEISURE TRAVEL & HOTELS:
• Ryanair is calling for ‘more urgency’ from the UK government in addressing the air travel implications of Brexit. Speaking at German travel trade show ITB in Berlin on Friday, chief marketing officer Kenny Jacobs said: ‘What happens with open skies is a major question. British politicians say it’s inconceivable we won’t have flight access [to the EU]. But Brussels politicians aren’t saying the same. Europe is going to make it very difficult for Britain to leave. We don’t know what is going to happen and Europe needs to find a solution. All airlines will be encouraging the British government to move a bit quicker.’
• New official figures confirm that flying remains the safest form of long distance travel with the equivalent of one major accident for every 2.56 million flights last year.
• Queensgate Investments Fund II has bought Generator Hostels from Patron Capital and Invesco Real Estate in a €450m (£393m) deal. The group owns 14 predominantly freehold assets containing 8,639 beds in London, Paris, Copenhagen, Amsterdam, Miami, Dublin, Hamburg, Barcelona, Berlin Mitte, Berlin Prenzlauer Berg, Stockholm, Madrid, Venice and Rome.
• Holidaymakers will soon be able to interact with storytelling robots at Disney theme parks, according to the company’s senior vice president for research and development.
• Eurotunnel Le Shuttle services have experienced a 2% passenger vehicle drop in February, on the same period last year. The number of passenger vehicles fell to 166,175 (from 169,908) and Le Shuttle freight traffic decreased by 6% year-on-year.
• Lobby group Airlines 4 Europe (A4E) say that airline passengers are in for a ‘summer of disgrace’ due to planned strikes by air traffic controllers in Europe. It has been estimated that 1,500 flights were canceled due to last week’s French strikes, with A4E warning that there could be more to come around Europe this summer.
• Gym Group has reported full year numbers to end-Dec saying sales rose 22.5% to £73.5m with Adj. EBITDA +33.4% at £33.7m.
• Gym FY: Group reports adj. PBT of £8.7m (vs loss of £2m last year) with a full year dividend of 1p.
• Gym FY: Reports 15 gyms opened in 2016 with mature sites returning £476k EBITDA. Re outlook, says early 2017 is in line with the Board’s expectations.
• Gym FY: Reports will open near 20 sites this year. CEO John Treharne comments ‘2016 has been a good year with strong financial and operational progress. Our existing estate continues to deliver excellent returns and our low cost, 24/7, no contract model is disrupting the market and attracting new members. We will continue to expand rapidly in 2017 through a well-developed site pipeline.’
• A new £3.5bn theme park by Paramount will open in Essex with the project being informally known as ‘the British Disneyland’.
FINANCE & MARKETS:
• Markit reports rise in business confidence in Feb, albeit from a 4yr low. Says 52% of respondents expect to grow their sales
• Countrywide reports newly-let residential rents fell in February for the first time in 7yrs
• The UK is in line to generate $70bn in corporate transactions in Q1
• OBR reports HMG may struggle to clear its deficit 2025. The OBR says that the government faces “a lot of challenges”.
• Brent up a shade at $51.35
• Sterling down vs US$ at 121.64c but up vs Euro at 114.19c
• UK 10yr gilt up one BP at 1.25%
• World markets: UK up yesterday, Europe also higher & US mostly up. Far East mostly higher in Tuesday trade
RETAIL NEWS WITH NICK BUBB:
• French Connection : The beleaguered French Connection was in the spotlight in the Sunday papers, with the Sunday Telegraph flagging that today’s final results would show losses continuing and cash running down, to the consternation of activist investors. Well, the net cash position is only slightly down at £13.5m and the underlying loss was somewhat reduced, from £4.7m to £3.7m, thanks to an improved trading performance in H2. And the embattled boss Stephen Marks says, defiantly, that “The noticeable improvement we have seen during the second half and into the new financial year leads me to believe that we are moving in the right direction. The reaction to this year’s collections has been very strong so far with sales both in our stores and wholesale customers up on last year”.
• Ocado: Today’s Q1 update (for the 13 weeks to Feb 26th) shows that gross Retail sales increased by 13.1%, which, boringly, is the same rate of growth as in the previous quarter, but the main talking point is the cryptic comment by feisty CEO Tim Steiner that “While the market remains very competitive, there are the first signs of a change in market pricing dynamics coming through”.
• News Flow This Week: The highlight of this week is the 4-day Cheltenham Festival (see below), but, in terms of boring old Retail news, tomorrow brings the Inditex Q4, the Marshall Motors finals and the embattled Philip Green’s 65th birthday! Thursday then brings the Sainsbury Q4 (for the 9 weeks ending March 11th) and the latest MPC interest rate announcement.
• White Day Watch: In 2017 March 14 marks the start of the Cheltenham Festival for horse racing fans in the UK, but in Japan (and other Asian countries) it is White Day, one month after Valentine’s Day. In Japan, Valentine’s Day is typically observed by girls/women presenting chocolate gifts to boys/men as an expression of love, courtesy, or social obligation. On White Day, the reverse happens: men are expected to return the favour by giving gifts, often on the basis that they are two to three times the worth of the Valentine’s Day gift.
• TIPS Watch: The great 4-day Cheltenham Festival jumps racing starts today and our alter ego, “Honest Nick”, will be bringing you his each-way Tips each day. Now, just like last year, Cheltenham is expected to be a bonanza for the great Irish trainer Willie Mullins, but he can’t win every race…In the first race, at 1.30am, we’re taking on the Willie Mullins trained favourite Melon with River Wylde (although Ballyandy is respected) and his trainer Nicky Henderson has the banker of the day, Altior, in the next race, the 2.10. In the big race at 3.30, the Champion Hurdle, we’re taking a chance on the Willie Mullins trained outsider Footpad. And in the last race, at 5.30, we’re going for the Dan Skelton trained Two Taffs. So, as our “Three to Follow”, we’re going with River Wylde e/w in the 1.30, Footpad e/w in the 3.30 and Two Taffs e/w in the 5.30.