Langton Capital – 2017-03-29 – Carnival, SAGA, TUI, new openings & other:
Carnival, SAGA, TUI, Red’s, new openings & other:
A DAY IN THE LIFE:
Still rather busy. On to the news:
PUB, RESTAURANT & DRINK PRODUCERS:
• Red’s True BBQ reports it is reported to be in refinancing talks per Propel
• Pret a Manger is opening a second all vegetarian and vegan shop in London, on Great Eastern Street in Shoreditch.
• The Scottish Beer & Pub Association has appointed Punch Taverns’ operations director for Scotland Brian Davidson as its new President. Davidson will succeed Diageo’s Mark Baird, who is stepping down after a year in the role.
• McDonald’s is in talks to acquire Drake & Morgan’s former The Happenstance site in London’s Ludgate Hill, per MCA. The Bowmark Capital-backed group is relocating The Happenstance to a former Corney & Barrow unit in Paternoster Square, where it will reopen on 24 April.
• Joseph Holt has agreed a £25m deal with the Royal Bank of Scotland to support further growth plans to the brewer’s pub estate, brewery and new products. The Manchester brewery intends to purchase and open more community and food-led pubs in its pub-restaurant division.
• The BBPA is ‘very pleased that the Government has listened to [its] concerns and brought forward a new proposal for pubs’, which will ensure that pubs remain in the A4 use-class, rather than being placed in a class of their own, giving them a specific right to extend the restaurant use of the pub without requiring planning permission.
• Uber plans to roll out its restaurant delivery service to more than 40 locations across the UK. The UberEATS app has been downloaded over one million times since its launch in the UK last year, even though the service is only available in London, Birmingham and Manchester. Jambu Palaniappan, UberEATS’ regional manager, stated ‘It’s clear from the response we’ve seen in London, Manchester and Birmingham that there’s huge appetite from people to order food at the touch of a button’.
• Argentine-style steak restaurant group, Gaucho, has announced its first new site opening in seven years. The 120-cover restaurant and bar will open in Birmingham’s Colmore District in May. Tracey Matthews, the group’s COO, said they had ‘looked at locations around the UK, we decided that Birmingham with its exciting growth potential is the perfect home for us’.
• US chain Darden Restaurants has reported Q3 numbers saying its seven brands continued to outperform the casual-dining segment
• Darden. Reports 1.4% LfL sales increase in Q3 across its c800 Olive Gardens. CEO Gene Lee comments ‘we are focused on operational excellence.’ He continues ‘the consumer is pretty steady. We know the consumer is looking for everyday value. When you give the consumer what they want, they’re visiting restaurants.’
TUI H1 TRADING UPDATE:
• TUI has updated on its 31 March H1 trading period saying ‘winter 2016/17 is closing out as expected’ and ‘summer 2017 remains in line with our expectations’
• TUI CEO Friedrich Joussen adds that, for summer 2017, it has sold almost half of its programme
• TUI adds ‘we are progressing our transformation as the world’s leading integrated tourism business focussed on own hotel and cruise brands, financed by our strong cash flows and proceeds from the disposals of Hotelbeds Group and Travelopia, creating a more competitive and less seasonal business for the long term.’
• TUI reports ‘whilst the impact of macroeconomic and geopolitical challenges is evident in certain source markets and destinations, our balanced portfolio of markets and destinations, our focus on growth in own hotel and cruise brands and our strong balance sheet put us in a robust position.’
• TUI reiterates its guidance ‘of at least 10% growth in Group underlying EBITA in 2016/17.’
• Group says for winter, ‘Hotels & Resorts have performed well overall, with a good performance by Riu and Robinson offsetting the impact of continued lower demand for Turkey and North Africa and the non-repeat of gains on disposals in the prior year.’
• A late Easter will shift about €30m into Q3
• For summer 2017, the group reports trading is in line with 48% of the programme sold. It says ‘trading reflects growth in demand for destinations such as Greece, the Canaries and long haul, with a further shift away from Turkey (having already reduced significantly as a destination in prior year).’
• TUI reports ‘excluding Turkey, bookings are up 7% overall, with Germany up 8% and Nordics up 9%. UK revenue and selling price performance reflects continued growth in long haul and cruise (with the launch of TUI Discovery 2 in May), as well as the impact of currency inflation for Euro based destinations.’
• Regarding the outlook, TUI reports ‘overall, Winter 2016/17 and Summer 2017 are trading in line with our expectations. Our balanced portfolio of markets and destinations, our focus on growth in own hotel and cruise brands and our strong balance sheet put us in a robust position, despite the impact of macroeconomic and geopolitical challenges in certain source markets and destinations. We therefore reiterate our guidance of at least 10% growth in Group underlying EBITA in 2016/17.’
• The group says ‘we are continuing to deliver the transformation of the business, financed by our strong cash flows and the proceeds of disposals, which we believe will put us in an even stronger competitive position and create a less seasonal business for the long term.’
CARNIVAL Q1 NUMBERS:
• Carnival reports Q1. Co reports numbers to end-Feb, says generated U.S. GAAP net income of $352 million, or $0.48 diluted EPS, compared to $142 million, or $0.18 diluted EPS for the prior year.
• Carnival reports Q1 adjusted net income of $279 million, or $0.38 EPS, compared to adjusted net income of $301 million, or $0.39 EPS for the prior year.
• Carnival. Reports Q1 net revenue yields in constant currency increased 3.8% compared to prior year, better than December guidance of up 1.5 to 2.5%
• Carnival. Re outlook, co reports ‘at this time, cumulative advance bookings for the remainder of 2017 are well ahead of the prior year at considerably higher prices.’ The group reports ‘FY 2017 net revenue yields in constant currency are expected to be up approximately 3.0% compared to the prior year.’ It says ‘FY 2017 net cruise costs excluding fuel per ALBD in constant currency are expected to be up approximately 1.0% compared to the prior year.’
• Carnival President and Chief Executive Officer Arnold Donald reports ‘we are off to a good start delivering another quarter of operational improvement on top of a very strong first quarter last year. Our performance was driven by increased demand, particularly for our core Caribbean itineraries, leading to higher year-over-year ticket prices which enabled us to overcome the significant negative impact of both fuel and currency to exceed the high end of our guidance range.’
• Carnival CEO Arnold Donald reports ‘wave season, our peak booking period, was strong leaving us well positioned with bookings at considerably higher prices and with less inventory remaining for sale in 2017 compared to the prior year, resulting in increased earnings guidance. We are clearly benefiting from our efforts to increase cruise consideration through guest experience innovations, creative marketing, and public relations programs. We are reaching consumers through multiple touch points and laying the foundation for continued earnings improvement and sustained double digit returns on invested capital.’
HOLIDAYS, LEISURE TRAVEL & HOTEL
• SAGA reports full year numbers to end-Jan. Group says it has turned in a ‘consistent financial performance.’
• SAGA reports PBT of £193.3m (up 9.7%) with EPS of 14.1p (+6%) and a full year dividend some 18.1% higher at 8.5p. CEO Lance Batchelor reports ‘for the third successive year since IPO, we have delivered a strong set of financial results.’
• SAGA reports ‘our performance has continued to prove the strength of the Saga business model, which builds multi-decade relationships with our target demographic through a range of excellent products and services.’ The group concludes ‘our confidence in continuing to deliver a consistent financial performance in 2017 is strong. We have started the financial year well, and I look ahead with a great deal of optimism for the business.’
• Security fears are thought to have weighed on visitor numbers to London last year, as attractions across the capital posted an overall increase of just 0.1%. The British Museum, the Natural History Museum and the Victoria and Albert Museum saw more than a million fewer people in total in 2016 compared with the previous year. The most popular attraction outside London was Chester Zoo, which saw a 12% increase to almost 1.9 million. The British Museum remained the most popular visitor attraction overall for the 10th year running with 6.4 million visitors, followed by the National Gallery with 6.2 million visitors, up 6% year-on-year.
• Speaking after Virgin Atlantic’s inaugural flight from Heathrow to Seattle touched down, Sir Richard Branson said travel has already been damaged ‘severely’ by the Brexit fallout. Branson warned that a hard Brexit could end up costing airlines billions and that an impact has already been felt even before the process has begun.
• The European Commission has warned that UK airlines could suffer severe restrictions on European flights immediately after a ‘hard’ Brexit. Such restrictions would mean that UK airlines would only be able to operate direct flights to the continent, restricting flights between continental EU locations.
• Intertain (a subsidiary of Jackpotjoy) reports full year numbers to end-Dec saying that revenues were £269, (+15%) with net income per share of 113p vs 95p last year. CEO Andrew McIver reports ‘the past financial year has been a turbulent one for the Group’ but he says ‘strong group revenue growth of 15% has been driven by growth across all our business units, with our largest brand, Jackpotjoy, reporting impressive growth of 17%.’ He concludes ‘looking ahead to 2017, I am excited about what the year holds for Jackpotjoy plc, following our listing on the London Stock Exchange in January 2017. I am confident that our strong portfolio of brands will continue to deliver strong organic growth and this is further evidenced by the 10% revenue growth year-on-year we are forecasting for Q1 2017. I look forward to updating you further on our progress throughout the year ahead.’
FINANCE & MARKETS:
• Article 50 letter to be sent today. Mrs May confident that all will be brilliant. Definitive research here – ow.ly/1JVT30ak9g6
• Brent up at $51.50
• Sterling lower at $1.2409 vs $1.2568 yesterday
• Pound down vs Euro at 1.1478 vs 1.1565 yesterday
• UK 10yr gilt yield lower at 1.19%
• World markets: UK up yesterday with Europe also higher. US up but Asia mostly lower in Wednesday trade
• Later tweets: Tesco paying bumper fines, restitution fund for shareholders whilst other shareholders demand halt to Booker deal
• Tasty. No real read across to other operators (at least in our opinion) as group gets offer and sites, well, a bit wrong…
• Tasty shares had slipped 36% from high as of yesterday. Fallen by further 30% today on warning that it will miss its numbers
• Inflation. No respite says Prestige Purchasing. Foodservice costs rising at 3.7% p.a. in Feb up from just 1.8% in Dec
• Mrs May to trigger Brexit. Everything rosy. Daily Mash updates on latest. ow.ly/1JVT30ak9g6
RETAIL NEWS WITH NICK BUBB:
• Game Digital: The profit warning from its US peer GameStop on Thursday did not augur well for poor old Game Digital and its share price has been drooping below 40p, but today’s interim results for the 26 weeks ended 28 January don’t seem to contain a profit warning. The sales figures are much in line with the picture given in the update on Jan 18th (poor UK and good Spain) and on that basis adjusted EBITDA is 30% down at c£23m, with the interim dividend slashed to 1p (from 1.67p), “reflecting the decision to increase investment in the group’s new retail concepts and UK store optimisation programme”. However, Game are looking on the bright side about current trading and say “we currently anticipate an overall positive sales performance for the second half given the sales of Nintendo Switch, together with our other sales initiatives to offset the declines expected in Xbox and
• John Lewis Partnership Sales Watch: We flagged a week ago that trading would probably look even worse last week (Week 8 of the new year), given the full Easter comp with last year, despite the boost from Mother’s Day on Sunday…and we were right. In w/e March 25th, Waitrose sales were down by a heavily distorted 12.9% gross (down c15% “LFL”) and John Lewis was down by 4.1% gross (c6% down “LFL”). It will take another 4 weeks for the calendar shift to unwind.
• Today’s Press and News: The front pages are full of photos of the PM signing the fateful letter that will formally begin the UK’s departure from the EU: the FT headline is “May signs historic Brexit letter and opens way for compromise”, whilst the Guardian flags that “Today Britain steps into the unknown” and the Sun runs with “Dover and Out”…As for Tesco, after yesterday’s SFO/FCA settlement over the 2014 accounting scandal, the Times Business front page headline is “There’s no more trouble in store, says Tesco boss”.
• Trade Press: Yesterday was print deadline for Retail Week magazine and the Tesco/Booker news came just in time for the Editor to opine in his column (via the website) that “Tesco’s Booker deal deserves benefit of the doubt”, flagging that “While it is true that many mergers have failed to deliver on their original promise, the door cannot be closed to new thinking. While sticking to the knitting may often be a good general principle, the past few years have shown that old models need to be updated”. The Editor of RW also thundered that this week’s administration of 99p Stores leaves a bad taste, thundering that “Administrations should be used in the circumstances for which they are designed, emergencies, rather than as a convenient method of business streamlining”.
• News Flow This Week: The Booker finals and DFS interims are out tomorrow, with the latest monthly GFK Consumer Confidence survey coming out first thing on Friday.
• News Flow Next Week: The Topps Tiles Q4, the ASOS interims and the latest Kantar/Nielsen grocery market share figures are out on Tuesday next week. Next Thursday then brings the Mothercare Q4 and the Dunelm Q3 is out next Friday.
• NB “The Daily Retailer” is taking a well-earned rest in the US for a few days, but we’ll be back bright and early on Tuesday.