Langton Capital – 2017-04-18 – Starbucks, beer gardens, US trade, busy Easter & other:
Starbucks, beer gardens, US trade, busy Easter & other:
A DAY IN THE LIFE:
Technology’s great but, I think, sometimes it goes a bit too far.
By that I mean that it’s perfectly capable of creating a solution for a problem that isn’t there or, in some cases, it may create (or at least over-emphasise) a problem that doesn’t really exist – I mean take keyless cars. That is those which have a key but where it just has to be on the person of the driver in order for the car to start.
Because here it’s perfectly possible to cadge a lift to the station and drive there oneself leaving the person giving you a lift to drive the car home whilst you take the keys on a 200 mile trip to London.
And that’s a problem because, when the vehicle next stops (or stalls in traffic), it won’t be starting again until you can be fetched back from our dear capital at some point the next day.
Fortunately this hasn’t happened – yet – but I fear that it will and I’ve thought of a rinky dink little solution which would be to have a ‘docking station’ in the vehicle so that the keys would always be in it when they were needed. And you could call this ‘docking station’ a keyhole.
Déjà vu? Well, perhaps. Anyway, it’s not Monday, it’s a short week so let’s not waste any more time. On to the news:
PUB, RESTAURANT & DRINK PRODUCERS:
• Starbucks has reported a sharp fall in its UK profits saying that ‘Starbucks in the UK has experienced significant economic and geopolitical headwinds this year which affected sales, including slowing economic growth, impact of Brexit and ongoing security concerns contributing to weakening consumer confidence.’
• Starbucks reports PBT in UK fell 61% to £13.4m in year to 2 October. UK LfL growth down to 1%, less than half the rate of inflation. Group reports ‘whilst there are undoubted challenges presented by a more cautious consumer environment, lower High Street footfall, and adverse currency impacts, we are investing significantly to drive innovation in our food and coffee offering, and are greatly encouraged by our customers’ response.’
• HM Government rejects move by London to ban smoking in pub beer gardens. Government spokesman Marcus Jones makes it a political point. He says that ‘we already knew that Labour councils charge higher council taxes and levy more red tape. Now Labour’s municipal killjoys have been caught with a smoking gun, trying to ban adults enjoying their local pub garden. If implemented, these ill-founded proposals would lead to massive pub closures.’
• Brexit. Barista Visas may allow EU nationals to stay in UK for 2yrs. Sun says the baristas (and presumably fruit pickers) will be allowed to stay but will not have the right to claim benefits. Quotes Lord Green as saying ‘we can kill two birds with one stone here.’
• Sunday Times reports Pizza Hut UK could change hands for around £100m on the back of interest shown by Pricoa. Rutland Partners bought the then-struggling chain for just £1 in 2012.
• Greene King will open 14 new Farmhouse Inns sites over the next 12 months and has already recruited 1,000 staff to support the roll-out. MCA writes that the managed concept has been identified by the Bury St Edmunds-based pubco as a specific growth area for 2017.
• While take-away food outlets saw net growth of 294 stores last year, pubs and inns suffered a net loss of 259, according to the Local Data Company’s review of 2016. Take away shops were the fourth best performing category for the year (after vaping shops, barbers and beauty salons). The data shows cafes and tearooms (generally independent) with a net gain of 241 sites and coffee shops (predominantly chains) adding 219. Restaurants and bars is the 10th classification in the list, with 176 net openings. Public houses and inns is the only leisure classification to sit in the table of top net closures (at number 4).
• MEATliquor will open its twelfth unit at Queens Ice and Bowl in Queensway in London in May and has brought in Shed Design to design the site. The MEATliquor unit will have a 200-capacity bar and 80-cover diner overlooking the 12 bowling lanes of Queens, which has undergone a nine month rebuilding programme.
• Spanish pizza chain Telepizza is to enter the UK market with ten new franchised sites in 2017. The chain currently operates in 20 countries, with sales of €570m in 2016 and EBITDA of €63.6m in 2016.
• China has seen the biggest growth in wine consumption of any country in 2016, with China now having the second largest area under vine after Spain, according to the OIV’s latest annual report. China’s vineyard surface area saw steady growth to 847,000 hectares whereas both France and Spain have been decreasing since 2010.
• Data by TDn2K through The Restaurant Industry Snapshot indicates that US restaurants continued to wrestle with sales and traffic declines in March. Same-store sales were down 1.1% while traffic dropped 3.4%, meaning sales have been negative in 11 out of the last 12 months. The Restaurant Industry Snapshot is based on weekly sales from over 26,000 restaurant units and 145 brands, representing $66bn dollars in annual revenue.
• US consumer group Post Holdings is believed to be about to acquire UK cereal group, Weetabix, for $1.76bn. According to Thomson Reuters UK target M&A post-Brexit is at its second-highest level in eight years, with the weaker pound making UK companies more attractive to foreign investors.
HOLIDAYS, LEISURE TRAVEL & HOTEL
• This Easter saw a boost of around £1.7bn to the British economy due to around 6.6m people planning overnight breaks in the UK. This constitutes a 600,000 increase in overnight breaks compared to 2016.
• Around 2m British holidaymakers headed overseas during the Easter weekend with Good Friday being the busiest day for travel, according to Abta.
• Arne Sorenson, chief executive of Marriott International, has warned that Donald Trump’s immigration policies are damaging the US tourism industry. While some travellers were being deterred by the strong dollar, Mr Sorenson said the Trump administration’s efforts to impose a travel ban on visitors from some countries had harmed the country’s reputation as a friendly destination.
• British motorists can now be fined up to £640 for speeding in European countries after the government passed a controversial change in EU law. EU countries can now obtain UK motorist’s driving details in order to chase a speeding fine.
• Hays Travel managing director John Hays has said the ban on laptops and other electronic devices on flights from Turkey puts an end to any prospect of a revival for the country. Hays said: ‘We were seeing an upturn to Turkey compared with last year. Realistically, that’s going to stop dead in its tracks. For anyone who hasn’t already booked, terrorism is going to be flagged up to them. It’s going to be right in their faces. I see prospects for Turkey bookings being absolutely terrible, unfortunately.’
• The embattled boss of United Airlines has reiterated that he will not stand down after it was announced that he man removed from an overbooked flight plans legal action.
• Virgin Trains East Coast’s workers will stage a 48-hour strike later this month on 28 and 29 April due to a dispute over the role of guards on trains and at stations.
• Facebook Messenger has reached 1.2bn monthly active users, up 20% and now making up 64% of Facebook’s 1.68bn monthly users.
• Netflix has seen growth slow in Q1 this year after adding 4.95m new users. Observers had been looking for around 5.2m. Group insists that growth opportunities are still ‘gigantic’. Co CEO Reed Hastings reports ‘we have come to see these quarterly variances as mostly noise in the long-term growth trend and adoption of internet TV.’
• Shares in Snap fell by 1.5% yesterday as a disgruntled employee accused its CEO as saying that the company would not concentrate on ‘poor countries’ such as India and Spain.
FINANCE & MARKETS:
• B of England reports high-street banks and building societies are planning to rein back on consumer credit over next 3mths. Dis-saving, i.e. borrowing, has been behind much of the continuance in consumer spending over the last 9mths or so. Real wage growth is set to swing below zero in April.
• BCC says UK firms want to recruit but cannot find staff. Historically, this state of affairs has led to inflation. The problem would be exacerbated if migrant workers return home.
• China’s economy grew by an annualised 6.9% in Q1 this year
• Lloyds Bank is reportedly about to set up a European base in Germany per the BBC. The bank currently employs around 300 people in Berlin
• Oil little changed over the long weekend at $55.40
• Sterling little changed at $1.256 and €1.1801
• UK 10yr gilt rate unchanged at 1.05%
• World markets: UK mixed on Thursday with Europe down. US up yesterday but Asia mostly down in Tuesday trade
YESTERDAY’S LATER TWEETS:
• Later tweets: That old decision. Keep your mouth closed & keep them guessing. Open it & prove yourself a foo. Michael Gove chooses latter
• Down the Rabbit Hole. D Trump realises ‘strong $ good, weak $ bad’ just doesn’t cut it. It’s more complicated than that
• Markets jittery, realise lunatics have the keys to the asylum. S&P now below 50dy moving average for first time since November
• BDO Sales Tracker has online sales +21% after +21% last year. ‘It might be a big deal, this internet thing’ says Big Retail
• Fulham Shore’s Franco Manca adds first store of new financial year. Opens at Brighton Marina. More units to follow
• Dorcaster to buy escape rooms operator Experiential Ventures for £12m. Relists next month, changes name to Escape Hunt
• March Tracker. UK poor but London good. Pubs (helped by weather) performed more strongly than restaurants.
• Coffer Peach March Tracker suggests ‘late Easter dampens March sales for restaurant and pub operators’
RETAIL NEWS WITH NICK BUBB:
• Saturday Press: The front pages of the Saturday papers were full of stories about the crisis between the US and North Korea…but the Business pages had a few Retail stories. The FT Review of the Week highlighted the impact of exceptional costs on Tesco’s full-year profits and the FT market report noted the optimism in the City about Primark ahead of ABF’s final results next week. The Times flagged that sacked HQ staff at BHS are to get increased redundancy payments following an appeal and the Telegraph highlighted that John Timpson of the eponymous shoe repair firm has lashed out at the introduction of the “apprenticeship levy”.
• Sunday Press: Tesco was in the spotlight again in the Sunday papers, after its results last week, with the Mail on Sunday highlighting that Tesco Bank has been pushing £35,000 unsecured “jumbo” personal loans just as the Bank of England warns against excessive consumer lending, whilst the Business Leader column in the Observer mocked Tesco’s use of the phrase “customercentricity” (in an article about the ghastly corporate-speak of companies like the discredited United Airlines) and the Sunday Telegraph flagged the concern of the boss of the Bestway cash and carry group about Tesco’s planned takeover of Booker (as the franchisees of Booker’s Premier chain are obliged to buy two-thirds of their goods from the wholesaler). The Sunday Telegraph also noted that Amazon is looking for a massive 1300 new warehouses across Europe to help fulfil demand from its Prime Now customers and had a
• Bank Holiday Monday Press: The focus turned to Debenhams in today’s papers, with the Telegraph leading its Business front page with the story that the new CEO of Debenhams will unveil a radical refashioning of the 165 stores and cull some in-house brands in his strategic review this week. The Telegraph also flagged that “Pep & Co losses quadruple after pricey push to take on Primark”, highlighting that losses jumped to £18.9m in y/e Sept 2016 at Pep & Co, the new UK discount clothing chain of the South African retailer Christo Wiese. The main Business story in the Guardian was that two-thirds of BHS stores still lie empty as the anniversary of its collapse approaches (with just 52 of the 164 stores with new tenants in or lined up), but it also flagged up the anomaly that Tesco is to save £105m a year in business rates after the latest rates revaluation. There were also a few
• The Grocer Watch: The widely followed Grocer “33” weekly supermarket pricing survey in Saturday’s The Grocer magazine saw Morrisons end Asda’s three-week winning run, with its basket of £60.84 coming in just over £2 cheaper than 2nd placed Asda. And Asda also had to dole out a £2.61 Price Guarantee voucher, for failing to be at least 10% cheaper than its main rivals. Tesco came third, on £63.23, and Sainsbury was in 4th place, with a £63.76 basket. As usual, Waitrose was in last place, on £78.82 (albeit this was distorted by charging as much as £15.53 for a pork leg joint). The separate regular Grocer “Mystery Shopper” weekly survey on Store Service and Availability was won again by Sainsbury, as its 55,000 sq ft superstore in Shrewsbury came top, scoring a solid 81 out of 100 (the Waitrose store in Woodley, Berkshire came bottom of the survey, hurt by poor stock availability).
• News Flow This Week: Things are quiet this week after Easter, but tomorrow we get the Burberry Q4 and the ABF (Primark) finals, Thursday brings the much-awaited Debenhams interims and strategic update and the ONS Retail Sales figures for March are on Friday.