Langton Capital – 2017-05-11 – Tracker, Pret, Apps, Loungers, London hotels & other:
Tracker, Pret, Apps, Loungers, London hotels & other:
A DAY IN THE LIFE:
Isn’t it rather annoying when your computer decides to install updates.
I mean it may well be necessary but it means both that when you turn your computer off it won’t turn off and when you try to turn it on in the morning, it won’t turn on.
Admittedly you may have slept in a bit and be in a panic but, when the thing tells you that it’s ‘configuring updates’ and that it’s 65% or 68% or whatever of the way through the process, it’s enough to make a grown man cry.
And, Microsoft, whilst I’m in making mistakes and blaming everyone but myself, you’ve ruined my spelling.
This witnessed by the fact that, when I completed my 11yr old daughter’s KS2 SATS English test yesterday, I was officially graded as ‘appalling’ (which is a couple of levels below ‘dreadful’ and well out of sight of ‘challenged’).
In fact, I just spelled ‘appalling’ incorrectly but, as my insidious Spell Checker corrected it automatically, I’ll never learn, will I? Anyway, let’s move on to the news:
COFFER PEACH TRACKER – APRIL 2017:
• Tracker: Great April but, wherever the record number of hotel visitors to London were, they weren’t in the capital’s restaurants
• Coffer Peach Tracker points to LfL growth of 4.4% in April. Implies very strong start followed by a weaker Easter period. Total sales were +7.4%, showing the still-material impact of new openings.
• Tracker: Running 12mth LfL sales are +1.1%, i.e. a little more than half the level of inflation.
• April Tracker: Reports managed pubs +6.1% (good weather) but restaurants only +1.5% LfL in the month.
• April Tracker: London +2.8% LfL but provinces +4.9%. This despite strong visitor numbers attracted to Capital by weaker Pound. The Tracker comments ‘the fluctuations between London and the rest of the country shows that there is still volatility in the market – and despite the bounce in April, operators will remain cautious about prospects for the rest of the year, and underlying growth is still fragile.’
• April Tracker: Peter Martin comments ‘this month’s numbers compare with a 0.5% dip in like-for-likes in March, and the gap between the two can be largely put down to the Easter holidays falling in March last year but in April this.’
• April Tracker: Easter less good, down 3.8% LfL on last year. But March + April combined still show growth over last year
• April Tracker: Feature was ‘branded restaurants in London having a particularly tough April.’
• Davis Coffer Lyons reports ‘consumer confidence is expected to weaken’ whilst RSM suggests that ‘the habitual and prioritised nature of spending on eating and drinking out continues to prevail.’
APPS AND THE ON-TRADE:
• Langton has been let loose with a pen again & we’ve written about Apps in the On-Trade. Briefly they’re here, they’re big & they’re getting bigger. The note is here
PRET A MANGER:
• Pret rumoured (strongly & knowledgeably) to be considering an IPO in the USA. Value of the business depends very much on which parts of it are floated. JP Morgan and Jeffries are reported to have been appointed.
• The above said, Pret a Manger (Europe) is by far the biggest business but it is likely that the entire business will be listed
• The European business had as at Dec 2015 (the most recent accounts available at Companies House) revenues of £520m with EBITDA of a pretty healthy £80.4m. It has grown considerably since.
• The ultimate holding company is PAM Group Ltd. Pret has briefly updated more recently on its parent’s performance to December 2016
• PAM turned over £776m in 2016 (up from £676m a year earlier) with LfL sales +4.8% and EBITDA of £93m (up from £84m). PAM lists some 45 active subsidiary companies in its accounts.
• For 2016, Pret comments that US sales exceeded $200m (up 14%) for the first time
• PBT numbers are arguably less meaningful due to the financing structure of many private-equity-owned companies. Indeed parent company PAM made a £19.6m loss in the year to Dec 2015 after financing costs, financing costs and more financing costs.
• As at end-Dec 2016, the group had 444 shops in total, up from 399 a year earlier. The group aims to open its 500th shop at some point this year.
• PAM is majority controlled (c65%) by Bridgepoint Europe with Pret founders, directors & its CEO owning c31%.
• Some valuations as high as £1.7bn (19x EBITDA) have been attached to the group. This is rather rich. It pre-supposes that the group is able to a) hold on to what it has got in terms of earnings and b) continue to expand rapidly overseas. The group has also pointed to travel hubs as an area for future expansion.
• This may be possible. Indeed Pret’s red star and earth-friendly persona is likely worth a premium but the execution risk is substantial.
• Bridgepoint comments ‘as a committed shareholder in Pret we are always exploring appropriate opportunities to ensure the future growth of the company. If such opportunities materialise, we will update the market.’
PUB, RESTAURANT & DRINK PRODUCERS:
• Loungers has reported that it has opened its 100th site. The group also reported turnover for the year to 23 April +34% at £91.7m.
• Loungers has reported FY EBITDA of £12.7m, up 49.7% on a year earlier. CEO Nick Collins reports ‘hitting a 100 sites is an impressive landmark for the business and we are proud to have achieved this whilst at the same time having improved our conversion and posted some decent like-for-likes.’ The group says that it is to add to its 18-strong Cosy Club estate with an opening in Worcester in July and further Lounges are due to open in Evesham, Southend, and Rustington in the next couple of months.
• The Spanish tapas group, Camino, has announced it is to open its fifth site, this will be the group’s first opening since H1 2015. This site in Shoreditch will be the first step in the group’s expansion plans designed in 2013 after receiving £3m in funding from the British Growth Fund.
• Wendy’s shares rise as the US fast food company weathered tough industry trading conditions to post better-than-expected Q1 earnings. The shares rose 6.8% to a 10 year high of $16.12.
• IFS reports both Labour & Tory plans to raise National Minimum Wage could cost jobs. It says ‘there must also be a point beyond which higher minimum wages have substantial impacts on employment.’
• The MCA has reported that YO! Sushi is to make is debut in Australia later this year. The Mayfair Capital-backed brand currently operates 16 sites internationally, with this new site opening at Sydney Airport in partnership with SSP.
• The US based chicken concept, Wingstop, is to launch in the UK, with 100 sites targeted in the rollout.This will be Wingstop’s first move into Europe despite operating 1,031 sites across the globe. The group plans to open 100 sites in the UK in the next 12 years.
• The MCA has reported that the Jamie Oliver Restaurant Group is to open two international sites for its barbecue concept, Barbecoa. These sites are believed to be in Bangkok and Austria.
• Booker chief executive, Charles Wilson, has warned of the threat of Amazon, and similar companies, to independent grocers. Mr Wilson made the comments at the Scottish Grocer’s Federation’s Business Summit, stating that the proposed £3.7bn Tesco and Booker merger should not as big a concern for independents as the prospect of Amazon and its ilk offering internet grocery solutions
HOLIDAYS, LEISURE TRAVEL & HOTEL
• On the Beach reports H1 numbers, sees 33.8% increase in PBT to £9.9m on turnover +7.3% at £38.1m
• OTB reports EPS of 6.1p (up 22%) and declares a H1 dividend of 0.9p (2016: nil). Debt down to £2.3m from £6.6m last year.
• OTB increased international revenue by 20% in Sweden but is making an EBITDA loss of £1m from its overseas operations. CEO Simon Cooper reports ‘On the Beach has delivered a solid performance in H1, with booking growth strengthening towards the end of the period and continuing into H2.’
• OTB expects H2 performance would be stronger than H1 ‘with more favourable YOY comparators in H2 and because H1 was impacted by the later timing of the low cost carriers’ seat release as well as key hotel partners in the Western Mediterranean holding back capacity to sell in the late market. All of these assumptions played out in the first half and have continued in H2. Given these market dynamics, we took a proactive decision to balance volume and revenue growth. This position remains under constant review to ensure that business performance is optimised.’
• OTB concludes ‘the changing market dynamics are presenting a number of exciting opportunities for On the Beach to leverage its scale and technological capability and we are delighted to have recently completed the acquisition of Sunshine.co.uk to further strengthen our market leading position.’
• OTB says ‘given the resilient and flexible nature of our business model the Board remains confident in delivering a full year result in line with management’s expectations.’
• Preliminary April 2017 data for London from STR indicate a record breaking performance for hotels. The data shows occupancy up 3.7%, average daily rates climbing 6.4% and RevPAR increasing 10.3% to £119.40, compared to April 2016.
• A study by Travelzoo has found that over two thirds of people are waiting before committing to a summer holiday, due to the general election, Brexit and safety fears. UK general manager for Travelzoo, Joel Brandon-Bravo, said we are ‘seeing a growing trend for people to leave holiday booking to the last minute – with news and geopolitical factors playing an important role in shaping where these people choose to travel to.’
• Eurostar has seen a 9% rise in UK business travellers in the first three months of 2017. The train operator has seen revenue increase by 15% to £232m, compared to the same quarter last year, with passenger numbers increasing 2% to 2.27 million.
• EasyJet has partnered with tour provider Get Your Guide in a deal that will offer 16,000 activities across Europe on a dedicated website and the EasyJet app.
• The Department of Homeland Security could extend a ban on larger mobile devices onboard aircraft, according to reports in the US. The DHS is ‘likely’ to include flights from the UK and Europe in this ban due to heightened security fears. A decision from the US government is expected in the next few weeks.
• Gatwick’s overall passenger numbers increased by 15% in April to 3.8m, with the late Easter accounting for an additional 496,200 passengers. The number of long-haul routes increased by 23% and domestic routes grew by 10.7%.
• Sharm el Sheikh resort in Egypt has been cut from Thomas Cook’s winter 2017-18 and summer 2018 programmes, being the first airline operator to do so. The suspected terrorist bombing of a Russian Metrojet at the resort led to a government ban on flights from the UK to Sharm el Sheikh in 2015.
• Blackstone Group has sold a 21% stake in SeaWorld Entertainment to Zhonghong Zhuoye Group for c$449m.
• Cabify, a Latin American ride-sharing app, raises US$100m in its latest round. The company is reported to be looking for up to US$500m.
FINANCE & MARKETS:
• RICS reports that summer house sales could be flat. General Election said not to be helping in the short term. The RICS says ‘although the picture clearly does vary across the country, the bulk of the feedback we are receiving points to a fairly flat summer for both activity and prices’. It adds ‘lack of stock on the market remains a key challenge for the sector.’ Not crazy prices, then?
• Oil up $1.40 or so to $50.41
• Sterling down fractionally vs US$ at $1.2935 but up marginally vs Euro at €1.1898
• UK 10yr gilt yield 3bps lower at 1.20%
• World markets: UK up yesterday with Europe also higher. US higher and Far East up in Thursday trade
YESTERDAY’S LATER TWEETS:
• Later tweets: Oil price down markedly & Sterling up. Double benefit to inflation albeit for later in the year. April CPI announced next Tuesday
• World metal prices weak & Sterling strong; helps lower inflation. Softs: Proteins up but cocoa, sugar, coffee down.
• UK lenders getting over-exposed in the car market? Headlines might have you believe so. NINJA loans making a return in £40bn market?
• John Lewis halo slips a little more. Inadvertently underpaying staff & Waitrose now in negative LfLs (down 0.7%) over the last 14wks
• NIESR expects UK growth 1.7% this year & 1.9% next. Inflation should top out at 3.4%. No rate rises & employment remains ‘robust’
• NIESR says ‘by 2018 we expect consumer spending growth to have effectively stalled.’
• STR: London hotels v. strong. April data: Supply +2.8%, demand +6.6%. Occupancy +370bps to 83.0% & rate +6.4%. REVPAR +10.3%
• STR: Says Q1 for London hotels ‘record-breaking’ & April REVPAR is now highest on record.
RETAIL NEWS WITH NICK BUBB:
• SuperGroup: Some in the City were worried that today’s pre-close trading update from SuperGroup (which is the first report since the interims and Xmas update on Jan 12th) might flag a slowdown, but there seems to be nothing much to worry about: Retail LFL sales growth was “only” 9.4% in the last 16 weeks, driven by Online growth, but that was against a very strong comp and Wholesale growth has remained very strong. And the Board anticipates that “full year profit will be in the range of £86m-£87m in line with market expectations”. And CEO Euan Sutherland says “With a clear strategy and a number of long term opportunities to establish Superdry as a global lifestyle brand we remain confident in the continued delivery of sustainable revenue and profit growth”.
• Mothercare: Out of the blue and ahead of next week’s final results, Mothercare has announced that its CFO, Richard Smothers, has resigned (with 12 month’s notice). There is no suggestion of anything untoward and CEO Mark Newton-Jones makes some positive remarks about him, but the FD hasn’t been there long and there is no mention of what his plans are, so the City will be a bit unnerved this morning.