Langton Capital – 2017-05-02 – Just Eat, Texas Roadhouse, PPHE & Action Hotels & other:
Just Eat, Texas Roadhouse, PPHE & Action Hotels & other:
A DAY IN THE LIFE:
So, another short week, the third in less than a month & with another to come at month end.
It’s a wonder that we get anything done. Still, Mr Corbyn has said that Labour will introduce another four Bank Holidays, ‘in order to drive spending and equalise the UK with the rest of Europe’. No economic worries there, then, that should do the trick. On to the news:
PUB, RESTAURANT & DRINK PRODUCERS:
• Just Eat updates on Q1 saying it is seeing a ‘strong performance’. The group is reiterating its full-year guidance
• JE reports Q1 revenues +46% at £118.9m. Up 40% on a constant currency basis ‘driven by strong order growth, last year’s commission increases, including the UK, and the inclusion of SkipTheDishes.’
• JE reports 39m orders in Q1 (+25% on a LfL basis) with UK orders at 24m (+17%). Growth would have been 19% if Easter and the Leap Day were taken out of Q1 numbers last year.
• JE says it is seeing ‘continued progress rolling out our Orderpad restaurant platform, through the UK, Canada, Denmark, Ireland, Italy and Spain.’ CEO & CFO Paul Harrison reports ‘Just Eat has enjoyed another period of strong growth. In addition to structural market growth, we are also seeing the benefits of ongoing investments in technology and marketing. We are pleased to reiterate guidance given at our 2016 full year results on 7 March 2017, for full year 2017 revenues of between £480-495 million, and underlying EBITDA of £157-163 million.’
• Texas Roadhouse reports Q1 numbers, says revenues +10% at $568m with diluted EPS down 4% at 48c. Co says LfL sales rose 3.1% at managed units at 3.8% at franchised restaurants. Texas Roadhouse reports ‘we are pleased with our top-line momentum and operating performance in the first quarter of 2017 with positive comparable restaurant sales and traffic growth, which continued through the first four weeks of the second quarter.’
• Re current trading, Texas Roadhouse reports ‘comparable restaurant sales at company restaurants for the first four weeks of our second quarter of fiscal 2017 increased approximately 2.6% compared to the prior year period.’ For the full year, management expects ‘positive comparable restaurant sales growth‘, with around 30 new restaurants opening. It expects US food price deflation of 1% to 2%.
• Horizons reports ‘a host of data, released for the month of March, is beginning to paint a troubling picture for the eating out market’.
• Horizons reports negative stats from the High Street, from Visa & from Barclays. Says ‘growth at the end of Q1 2017 is now heading for negative territory’.
• Horizons says problems caused by ‘a crowded market, consumers unwilling to open their wallets too widely and rising costs’.
• Redchurch Brewery looks to raise £500k on Crowdcube, off a pre-new money valuation of £5m. Redchurch reports ‘since previously raising on Crowdcube, Redchurch has undertaken a rebranding exercise which has helped it secure listings in M&S and Waitrose’.
• Bubble& has reported that it did not reach its funding target on Crowdcube. Curious Restaurants also failed to make its target last month.
• An MCA poll of leading operators has found that more than half expect overall menu pricing to increase at a rate of 3% to 5% over the next year. The main factor driving price increases is rising input costs, followed by labour costs, supplier prices, and a weaker sterling. Value engineering, smaller portions and cheaper alternatives have been the most common reactions to rising costs and a weakening sterling, while product development and premiumisation will continue to grow.
• The value of Single Malt Scotch exports has surpassed £1bn for the first time ever, thanks to a 12% rise in value during 2016. According to the SWA, the main source of sales growth for Single Malt exports was the US, which accounted for an additional £48m worth of shipments. Commenting on the figures, Julie Hesketh-Laird, acting chief executive at the SWA, said: ‘With Scotch Whisky exports returning to growth and rising to more than £4 billion, and Single Malts exceeding £1bn for the first time, we’re feeling optimistic about the future.’
• Boxpark founder Roger Wade wants to open an additional 20 developments in the UK over the next five years and is close to signing off on a third site, per MCA.
• Bloomin’ Brands Inc. has sold 54 company-owned restaurants to franchisees, all but one of them Outback Steakhouse locations.
• A joint operation conducted by Interpol and Europol has seized 26.4 million litres of counterfeit alcohol and more than 9,800 tonnes of fake food worth some €230m.
• China’s wine imports reached 151.1 million litres in the first quarter of the year, up 8.7% year-on-year, although its imports value has fallen by 1.6%.
• BrewDog, which recently sold a 22% stake to TSG Consumer Partners, plans to release specialised mixers along with the launch of its new Lone Wolf spirits range. The group also intends to add whiskies and other spirits to the Lone Wolf gin and vodka line that has been in the making for two years.
• Eight-strong Thai cafe concept Rosa’s has put discussions regarding new funding on hold as the group focuses on upcoming new openings in West Hampstead, Seven Dials and One Tower Bridge, per MCA.
• West Berkshire Brewery is developing a new 38,000 ft2 premises which will include a bar, café and shop.
• Amazon Q1 net sales rose by 23% to $35.7bn and net income increased by 41%, beating analysts’ forecasts and reaching $724m. This marks the eighth quarter in a row that the company has generated a profit. Growing advertising revenues and the success of the Amazon Prime scheme drove results.
HOLIDAYS, LEISURE TRAVEL & HOTEL
• PPHE updates on Q1 trading, says LfL revenues +17% at £53.3m ‘driven by a marked recovery in the leisure segment in London, the opening of the extension of Park Plaza London Riverbank, improved trading in Germany and a currency exchange rate benefit.’
• PPHE says Q1 total revenue increased by 28.9% to £57.7m. The group reports LfL room rate +11.2%, LfL occupancy +560bps and LfL REVPAR +20.7%.
• Action Hotels reports FY numbers saying that it opened & began to operate 3 hotels in the period under review. Revenue in the year rose by 22% (on new openings) to $53.1m. Re current trading, the group reports ‘trading in Q1 2017 is solid with total revenue up c.14% over the same period as last year.’ It says it is seeing ‘stable performances continue from our mature operating hotels, with average occupancy in line with last year 76% (Q1 2016: 77%).’ CEO Alain Debare comments ‘we remain focused on driving performance at our operating hotels and our full year results reflect the solid performance of our mature hotel portfolio.’ He adds ‘we have a solid pipeline of hotels in development with the Company’s current expectation of 17 operating hotels by 2019.’
• Barclays has reported ‘the UK remains an extremely attractive holiday destination for both domestic holidaymakers and international travellers, as our research across the globe revealed. With an average holiday budget of £952 from domestic travellers and £3,443 from overseas visitors, this certainly could lift the mood of the hospitality and leisure sector during the current uncertain climate’.
• Barclays reports its ‘research explores both British and overseas tourists’ motivations for taking holidays in the UK, as well as preferences on locations and holiday experience. It also uncovers different leisure spending patterns across the demographic groups. It concludes that the UK remains an attractive market.
• Thomas Cook will close a further 17 stores affecting 62 members of staff and is also making 51 homeworking contact centre roles redundant. Director of retail and customer experience for Thomas Cook UK & Ireland, Kathryn Darbandi, said: ‘These store closures come as part of the ongoing review of our store network to make sure that we can serve our customers in the way that suits them best. We know there is a big role for our shops in helping our customers choose and book the right holiday for them, and I’m looking forward to announcing more Discovery store openings in the coming months to help us to achieve that.’
• Airport foreign exchange bureaux continue to offer less than €1 to the pound despite sterling’s recovery this year, per analysis reported by The Times. Before the bank holiday weekend, holidaymakers using Southampton airport were being offered the lowest rate at €0.94.
• Jan Freitag, SVP of lodging insights at Hotel News Now’s parent company STR, noted that the bump in performance for Q1 is partially due to a shift in the Easter holiday from Q1 in 2016 to Q2 in 2017. ‘March 2017 data was off the charts in a good way … and it will be off the charts in a much worse way next month, and it’s all because of the Easter shift,’ said Freitag.
• Host Hotels & Resorts Q1 2017 was stronger-than-expected, reporting RevPAR up 3.4% ($171.92) and adjusted EBITDA up 6.4% to $367m.
• Escape room operator Escape Hunt is due to float its shares on Aim tomorrow. The FT says the operator offers a ‘leisure activity [that] strikes [a] chord with punters eager for unique experiences’. The FT reports ‘the immersive gaming phenomenon, where players solve puzzles and crack codes in order to break out of locked rooms within a set time limit, has struck a chord with punters eager for unique experiences, and serves as a novel team-building activity.’ It says that some corporate customers use the rooms either as a team-building exercise or ‘as part of their recruitment processes.’ The company told the FT that ‘the industry was “absolutely booming”’.
• UK has around 600 escape rooms. Market growing very rapidly but it remains fragmented. Newly-listed Escape Hunt has no sites in the UK but it is planning to open eight by the end of the year.
• Twitter and Bloomberg are partnering up to create a service that will stream news to Twitter, in a move that has sent the tech firm’s shares up 6%. This announcement follows strong results last week when Twitter reported its strongest user growth in over a year.
FINANCE & MARKETS:
• The IFS has said politicians should not make election pledges on “tax locks” as this will restrict their ability to respond to changed circumstances. Both Labour & the Tories have said that they will not raise VAT.
• Output in Chinese factories rose in April but there is evidence that the rate of expansion has slowed.
• Oil down around 70c from Friday at $51.36
• Sterling down a little vs US$ at 1.2891
• Pound markedly weaker vs Euro at 1.181
• Sterling 10yr gilt yield up 3bps over the long weekend to 1.09%
• US labor market tightens in move that makes a June rate rise look more likely.
• UK GDP rose by 0.3% in Q1 this year. The number, which is lower than expected, brings the rolling 12m increase to around 2.1%
• US BBA mortgage approvals fell in March to c41k.
• World markets: UK down on Friday with Europe also lower. US up yesterday with Asia higher in Tuesday trading
YESTERDAY’S LATER TWEETS:
• Later tweets: Coffer Peach Tracker poor for Easter, pubs down 1% LfL over the holiday Weekend & restaurants down 9%
• Tracker in context. Poor Easter partly due to falling in middle of month, customers overspent during good-weather w/ends of 1st & 8th
• Tracker. Later Easter implies better weather but didn’t come through in numbers. Customers only have so much to spend
• GfK says UK consumer confidence down. ONS reports UK economy only +0.3% in Q1 as service sector slows
• GfK says surprising confidence is as stable as it is given ‘reports of rampant inflation, stagnating wages & anxiety re borrowing binge’
• Pendragon says used car market strong. Get used to it? New car production also buoyant but much going to exports
• Starbucks. In US has 29% paid on mobile in its Q2. Some 8% is now pre-ordered (up from 7% in the company’s Q1.
• Pret results show how strong the group is. If it rolled out to regions (25% plus of new openings will be there) would it challenge Costa?
• Adnams says current trading is encouraging with ‘continuing strong growth in beer and spirits’ sales’
RETAIL NEWS WITH NICK BUBB:
• Saturday Press: The main news on the front pages of Saturday’s papers was the weak 0.3% growth in Q1 GDP (the FT headline was “Growth slows as rising prices hit households”). Otherwise, things were a bit thin and the Telegraph had to resort to the fashion model photo opportunity provided by the obscure news that the Canadian fashion chain Kit and Ace (?) is to close its UK stores. Canada was also in the news in the Guardian, via its scoop that the Canadian coffee chain Tim Hortons is opening in the UK (in Glasgow). And the Times flagged the news that the next Chairman of DFS is to be Ian Durant (who is also the Chairman of Greggs and CapCo).
• Sunday Press: The big news in the Sunday papers was the Sunday Telegraph scoop that Marks & Spencer is thinking of a partnership with Ocado to get its mooted M&S Food delivery service off the ground. However, the Business editorial in the Observer flagged that Online M&S Food would also be a threat to the core Ocado business model, whilst the City Editor of the Mail on Sunday thundered that M&S Food delivery could the step that defines the leadership of M&S CEO Steve Rowe. The other big news in the Sunday Telegraph was that US luxury retailer Coach is eyeing a £1bn plus swoop on the Jimmy Choo business, whilst the Mail on Sunday flagged that the Dutch lingerie chain Hunkemoller (which is run by the former Moss Bros boss Philip Mountford) is weighing up a launch into the UK. There were several downbeat previews of the Sainsbury final results this week: the Sunday
• Bank Holiday Monday Press: Thin pickings again in today’s papers, but the FT had an interesting front page headline (“Interest-free credit cards are a “ticking time bomb”, bankers warn”), whilst the Telegraph highlighted that the current sale of the Mosaic Fashions group will lead to store closures in the Coast, Oasis and Warehouse chains.
• Today’s Press and News: The annual Sunday Times Rich List is not published until next weekend, but the Times has an exclusive that Philip Green and his Monaco-based wife, Tina, have seen their joint fortune fall by £433m to a mere £2.87bn…And the Telegraph lists five lessons to learn from the Amazon boss Jeff Bezos, “the world’s second-richest man”.
• Footwear Shop Watch: We flagged on Friday that Drapers magazine had its final “Hit or Miss” survey of Spring fashion retailing, this time on the Footwear shops in the Milton Keynes shopping centres. The best of the Footwear Specialists was judged to be Clarks, with a score of 9 out 10 (“Attractive, airy store design and truly excellent customer service”). JD Sports scored 6 and Shoe Zone scored 5. The best of the Clothing Multiples for Footwear was judged to be Next, with a score of 7.5 (“An excellent footwear offer in a well-designed space – but no staff”) and the worst was Marks & Spencer, with a score of only 4 (“Some great product is let down by the worst store experience”).
• News Flow This Week: After yesterday’s Bank Holiday, things are quite busy this week, as we move on into May. In the US the Apple Q2 is out this evening and then back in the UK the shopping centre giant Intu Properties has a trading update tomorrow and mighty Next issues its Q1 update on Thursday. Otherwise, it’s the Food Retailers which are in focus, with the latest monthly Kantar/Nielsen grocery market share figures coming out at 8am tomorrow, just after tomorrow’s Sainsbury finals, whilst the Morrisons Q1 is on Thursday.