Langton Capital – 2017-03-30 – EasyHotel, inflation, food prices, consumer debt & other:
EasyHotel, inflation, food prices, consumer debt & other:
A DAY IN THE LIFE:
So, with Article 50 triggered, don’t you think it’s becoming increasingly difficult to separate news from opinion.
Because the print media has come down heavily on one side of the argument or the other whilst the broadcasters, who admittedly are making more of an effort to remain impartial, can’t seem to help sniggering at the comments of one or other Brexit opinion be it ‘Red, White & Blue, Golden future’ or ‘the world’s going to stop spinning because a small country on the edge of Europe is having a bit of a thrombo’.
Amidst all this uncertainty, it’s a relief to note that at least the Daily Mash is keeping a sense of perspective. Comment here – here
Anyway, Langton is struggling a bit after another night out. Not a late one but it doesn’t take much to put a bit of sand in our gears, such is the frictionless pace at which we normally add value these days. Thanks to Vicki and the opening team at Putney’s glorious new Franco Manca for hosting such a spending opening night. On to the news:
PUB, RESTAURANT & DRINK PRODUCERS:
• US Restaurant sales have slowed due to low grocery prices, recent research from NRN has shown. The price gap between restaurant and grocers has been widening since January 2015, when grocers’ price increases actually outpaced restaurants’ price hikes by 20 basis points. In December, restaurant sales increased by 2.5 percent, the worst in three years.
• BrewDog has asked people not to steal their trademarks and has blamed its ‘trigger-happy’ lawyers for issuing legal threats to a local pub in Birmingham named Lone Wolf Bar. The brewer, which simultaneously champions its self-proclaimed ‘punk anti-corporate attitude’ and ‘owns the “Punk” trademark for beer’ disputes another story published by the Guardian alleging that BrewDog’s lawyers also raised an objection to music promoter Tony Green’s plan to open a bar in Leeds called ‘Draft Punk’. As recently as October, BrewDog wrote: ‘Here at BrewDog, we don’t take too kindly to petty pen pushers attempting to make a fast buck by discrediting our good name under the guise of copyright infringement.’
• Although BrewDog dismisses The Guardian article as ‘just opportunistic lies combined with inaccurate journalism’, Lawrie IP reportedly wrote to Green to express concern ‘that provision of food and drink services under the mark Draft Punk would give rise to a likelihood of confusion in the marketplace, including a likelihood of association with our client’s earlier mark Punk.’
• Dunkin’ Donuts and Google have teamed up announcing the rollout of the mobile order-ahead service via google’s Waze navigation app. The service will operate in the US and plans to take advantage of commuters’ morning coffee routines. Waze was acquired by Google in 2013 and is a traffic navigation app, this will be its first incorporation of an order-ahead feature. The app will only be usable at Dunkin’ Donuts.
• SA Brain saw overall sales grow 7% to £135m in the year to 1st October 2016, with revenue from its cafe chain Coffee#1 rising 28%. The coffee chain is expected to open its 100th sitte in 2018. The company’s managed pub estate increased like-for-like sales by 1.5%. The leased and tenanted pub estate, however, had a like-for-like sales decrease of just over 1%, with 13 uneconomic pubs being sold.
• The Wine & Spirit Trade Association (WSTA) has urged Theresa May and the Government to safeguard the British wine industry by maintaining a ‘special relationship’ with Europe as Brexit negotiations begin this week. WSTA chief executive Miles Beale said ‘the WSTA will be working tirelessly to achieve our key aims: continued, tariff-free movement of wine and spirits to and from the EU, new, tariff-free trade agreements with priority countries outside the EU and equally safe passage of goods without extra checks at borders once we have left the customs union.’
• The Food & Drink Federation has stated ‘the triggering of Article 50 provides us with a definitive timeframe for the UK to exit the EU and the clock is ticking. We hope this means we can move swiftly from the realm of speculation into one where real issues are being resolved’. The body went on to say ‘on behalf of manufacturers, alongside our partners across the food chain, [we] will work tirelessly to help government to secure the best possible outcomes on future trade, access to the right workforce, regulation and ensuring a seamless border with the Republic of Ireland’.
• Rabobank has warned that food prices will rise no matter what Brexit trade deal is negotiated by the government with the EU as leaving the free-trade area will necessitate extra border controls on EU food imports. The agribusiness bank predicts that this would push up the cost of foods sourced from the EU – such as olive oil and some fresh fruit & veg varieties – by up to 8%, while further depreciation in sterling could also inflate prices.
• Inflationwatch. Langton will have to make less mess when building its triple-decker sandwiches going forwards as Sainsbury has put up the price of its kitchen roll again. It was 100p pre-Xmas, 110p in the New Year and now it’s 120p. The price of lumber is up 28% in the last year. In dollars, that is. In Sterling terms, it’s up by around 50%. Presumably that impacts kitchen & loo roll in due course.
• Amazon has acquired the leading Middle East ecommerce retailer Souq.com for a sum in the region of $580m-$750m.
• The US craft beer industry added 1.4 million barrels to its production volume in 2016, growing the segment by 6%, despite losing 1.2 million barrels to ‘big beer’ producers that have snapped up craft brewers throughout the year. Releasing its 2016 date on the US craft brewing industry The Brewers Association (BA), confirmed that 5,301 breweries were in operation throughout the year, representing 12.3% of the US beer industry, up 16.6% from the 4,269 breweries recorded in 2015.
• Distribution company Wincanton has announced that it has won a contract to transport Britvic’s products nationally
EASYHOTEL – REFUSAL OF PLANNING PERMISSION AT OLD STREET:
• EasyHotel has announced that it has failed in its appeal against Islington Borough Council refusal of retrospective planning permission at Old Street
• The refusal relates to 78 of the 162 rooms at the Hotel, which were converted from offices to bedrooms
• EasyHotel says ‘the retrospective planning application was identified (and communicated) as a potential risk at the time of the Initial Public Offering (IPO) in June 2014 and was inherited by the current management team in 2015.’
• It says since June 2016 it has ‘worked closely with Islington Borough Council to come to a beneficial solution for both parties, but has been unsuccessful as the Planning Inspectorate has upheld the Council’s policy to protect office space in the borough.’
• Implications: EasyHotel says ‘the was originally acquired by easyHotel prior to IPO, in June 2012, for £10 million’
• It says the offices were converted without planning permission but adds ‘the net book value of the property is £13 million and the Board is confident that the current realisable value of the building is significantly in excess of this.’
• The group concludes ‘in light of this outcome, easyHotel is now considering its options, including a sale or partial sale of the building to release capital to fund future higher yielding development projects.’
• The company adds ‘the Board is confident a full sale of the building should fund the development of at least 500 new rooms in the UK. A partial sale, which would entail the concentration of the hotel operations on the ground, first and second floors, with a sale of the upper floors, would finance the development of a further 170 rooms in the UK.’
• The group cautions, however, ‘each option, if pursued, is likely to result in a short term adverse impact to earnings in the current financial year and during the period whilst the capital released is deployed in higher yielding assets.’
HOLIDAYS, LEISURE TRAVEL & HOTEL
• UKinbound has identified four key priorities for the UK travel and tourism industry during the two years of Brexit negotiations: An immigration system flexible to business needs, continued access to the open skies agreement, a strong narrative promoting the UK as a welcoming destination, and visa-free travel between the UK and the EU. UKinbound chief executive, Deirdre Wells, said: ‘In 2016, international visitors contributed over £22 billion to the UK economy and for this success to continue we require the help and support of the government to ensure our industry can flourish in years to come.’
• Fears over soaring prices, increased bureaucracy and a less than friendly reception top the list of worries for British holidaymakers in a post-Brexit Europe. Many travellers plan to take their future holidays in the US, Caribbean, Thailand, Australia, New Zealand or in the UK instead, according to a poll of 2,000 by Cheapflights.co.uk. Company analysis of 25 million searches across 18 months suggests that consumers are making significantly fewer searches for flights to the EU in favour of longer-haul destinations.
• The head of Iata has criticised a lack of consistency between the US and UK over their respective airline cabin laptop bans.
• Uber will withdraw from Denmark in April because of new taxi laws that require drivers to have fare meters and seat sensors. In a statement the firm said: ‘For us to operate in Denmark again the proposed regulations need to change. We will continue to work with the government in the hope that they will update their proposed regulations and enable Danes to enjoy the benefits of modern technologies like Uber.’
• Staycity Aparthotels’ Marseille and Lyon properties have exceeded budget expectations in their first month of trading. The company has over 3,000 apartments across 10 European cities including Birmingham, Dublin, Birmingham, York, Edinburgh and London and will open another Staycity in Manchester later this year.
• William Hill has announced that Ruth Prior will be appointed Chief Financial Officer (CFO), effective later in the year. CEO Philip Bowcock said: “Ruth is a strong addition to the William Hill Board and Executive team. Her experience in digital operations, online payments and finance is all highly relevant to our strategic priorities to deliver an even better customer experience and faster growth. We welcome her to the William Hill team.”
• David Lloyd plans new comeback into the leisure industry with a series of new multi-activity centers. The former professional tennis player no longer has a formal affiliation with the eponymous tennis and leisure business currently in operation. His latest venture will be called David Lloyd’s Adventure Parks and will consist of three-acre sites with both indoor and outdoor activities. The UK recreation sector is valued at £4bn.
FINANCE & MARKETS:
• Institute & Faculty of Actuaries reports that life expectancy has slipped by about a year since 2013. Grim but this has implications for pension liabilities. That is, and always bearing in mind that numbers can be wrong, it should reduce them. The Institute says ‘recent population data has highlighted that, since 2011, the rate at which mortality is improving has been slower than in previous years.’ It does say, however, that the demographic time-bomb is still ticking in that ‘mortality is expected to continue to improve and there is significant uncertainty as to whether this will be at a slower rate than experienced in the first decade of this century.’
• Mortgage lending slipped in February but unsecured lending rose.
• Credit card debt is rising sharply per Bank of England. The Bank points out that it rose by 9.3% in the year to Feb, the fastest rate in 11yrs
• Brent $52.51
• Sterling up a bit but interest rates down. Pound buys 1.2435 US$s or 1.1563 Euros.
• UK 10yr gilt down to 1.15% on growth slowdown concerns. Was 1.19% yesterday.
• World markets: UK up yesterday & Europe higher. US mostly up but Far East down in Thursday trading
o Article 50 triggered.
o It’s irreversible, says Mrs May.
o But no government is able to bind its successors.
o Business variously delighted or distraught. Binary reaction. Lloyds of London has reportedly decided to move its EU business to Brussels.
• Later tweets: US consumer confidence at 16yr high. Despite Trump or because of Trump? Are we down the rabbit hole?
• B of England reports consumer lending growth & new mortgage approvals in UK slipped in February
• Despite overall lending fall, B of England data shows unsecured consumer lending growing rapidly
RETAIL NEWS WITH NICK BUBB:
• “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.