Langton Capital – 2017-05-24 – Britvic, Hollywood Bowl, Sportech, Easyhotel & other:
Britvic, Hollywood Bowl, Sportech, Easyhotel & other:A DAY IN THE LIFE: So, Trump is overseas on his first mission. He’s ticked off ‘Muslim’ and ‘Chinese’ and must be 40% or so of his way to telling the whole world face-to-face just what a good guy he is but I can’t help but think there are a lot of ‘oh, you must pop around Donald’ invites out there that haven’t been followed up on. Bit of a rush, on to the news: EASYHOTEL H1 NUMBERS: Small but perfectly formed. Sixty seconds from yesterday below: • EasyHotel’s H1s today. Small company but it’s a disrupter with plenty of growth ahead of it. • Facility creep at Travelodge & Premier Inn is opening up an exploitable gap • Managed hotel LfLs are +17.4%, with franchised units +6.8%. New sites are reaching maturity in 2mths rather than 2yrs & in the UK, they’re not having to discount as much as first thought • The pipeline’s healthy. They’re opening 3 managed & 4 franchised this year with 4 and 6 next year respectively • Overall, there’s a lot of road left in this rollout. The company has cash, new hotels are coming on stream & the competition’s getting fat & lazy. PUB, RESTAURANT & DRINK PRODUCERS: • Britvic reports H1 numbers. Says has been ‘a strong first half performance, confident of meeting market expectations for FY17’ • BVIC H1: Group reports revenue increased 11.5% to £756.3m with pre-exceptional EBITA +6.7% to £73.6m. Sees organic revenue +3.7% • BVIC H1: PBT down 4.9% to £38.6m ‘impacted by £5.8m of exceptional and other items’. Adj. EPS is +9.2% at 18.9p. H1 dividend +2.9% at 7.2p • BVIC H1: Says it has seen ‘successful management of cost inflation through disciplined revenue management and cost efficiency’ & will cut £5m of costs this year. CEO Simon Litherland comments ‘Britvic has delivered a strong first half performance driven by organic revenue growth in all our markets and successful management of input cost inflation. We have continued to make progress delivering our strategic priorities and have exciting commercial plans for the second half of the year. I am confident that we will deliver full year performance in line with market expectations.’ • The ALMR has advised its members to check security guidance and make sure staff members are briefed appropriately following yesterday’s attack in Manchester. • The MCA’s Eating Out Panel has reported that the late Easter weekend and dry weather increased eating out across the UK in April. • The online food delivery service Delivery Hero is to float by the summer break, it will be one of Europe’s largest start-ups to do so with a value of 4 billion euros. The company is set to list in Frankfurt by mid-June. • Corona and Modelo brewer Constellation Brands Inc has offered to buy $22bn Jack Daniel’s owner Brown-Forman Corp, per CNBC. • Mission Mars has bought a position in Manchester-based pizza concept Rudy’s, with plans to expand the business, the MCA has reported. The operator behind Manchester bars Trof and Alber’s Schloss, has a second site lined up for the pizza chain in Petersfield House. • Stock Spirits Group has reported sales have been satisfactory in Q1 2017. The group which mainly sells liqueurs and spirits in Central and Eastern Europe, has seen LfL sales drop 1% for vodka in Poland. • Bird in Hand’s chief winemaker, Kym Milne MW, has said cork stoppers for wine are ‘completely outdated’. • Finlay Beverage’s has sold The London Tea Company to Cafédirect for an undisclosed sum. • Vita Mojo has raised £2.05m on Crowdcube. It was aiming for £1.5m. The co is valued at £19.9m pre-new money. Vita Mojo is a ‘fast-growing restaurant chain and software company. Backed by €6bn global caterer, Elior, the company is on a mission to make food personal. With industry leaders already on board, the former MD of Itsu states that Vita Mojo is “the future of food”.’ • Bottled beer seller The BottleShop is looking to raise £350k on Crowdcube. It is up to £117k off a pre-new money valuation of £3.1m. The BottleShop is an ‘importer and distributor of the world’s most prestigious craft beer, The BottleShop has bars in London, Margate and Canterbury. With an annual revenue of £3.1m, the company aims to invest in a fully refrigerated supply chain; importing higher margin products for its bars and strong customer base.’ OVERCAPACITY IN THE US. FOOTFALL STILL UNDER PRESSURE: • Overcapacity still an issue in the US. • Vouchering can be a slippery slope (both sides of the Atlantic). Cracker Barrel says customers have got ‘used to markdowns’. • Cracker Barrel has reported Q3 numbers saying EPS came in at 195c vs 204c last year on flat revenues. LfL sales were down 4.7%. The group says ‘adjusted for the impact of the reduction of provisions for uncertain tax positions, earnings per diluted share increased 7.1%from adjusted EPS of $1.82 in the prior year quarter.’ • Cracker Barrel President and Chief Executive Officer Sandra B. Cochran reports ‘we are pleased to report that third quarter earnings per diluted share exceeded our expectations. Our operating income margin continues to grow as a result of commodity market favorability and our ongoing cost reduction initiatives. Our confidence in the strength of the Cracker Barrel brand is reflected in our raised full-year earnings guidance, our increased quarterly dividend, and our declared special dividend.’ • Journal NRN, commenting on CBRL, says the co is not ‘immune to the disease spreading through the retail sector.’ It points out that restaurant sales performed better than other retail sales but adds that traffic was down by 2.1%. • NRN re the US reports ‘retail is a tough business to be in these days. With heavy competition from Amazon.com and other online companies, retailers have been shutting their doors and marking down prices in a bid to win back customers. Hundreds of retail locations have closed since January.’ HOLIDAYS, LEISURE TRAVEL & HOTEL • A poll by the Business Travel Coalition reveals that 79% of corporate travel managers said travel to the US would be trimmed should the ‘laptop ban’ be expanded. Half of the 112 respondents thought that a potential 12 month expanded ban could lead to travel reducing by more than 25%. • The Global Business Travel Association (GBTA) predicts that ‘political uncertainty’ in the US will lead to a loss of $1.3bn in travel-related spend, $250m of which will be spending from business travellers from Europe and the Middle East. • A row between Crossrail and Heathrow has cast doubt over whether the £15bn service will have a stop at the airport. The dispute is over Heathrow demanding £570 for each train using its track and an operational fee of £107, which would cost Crossrail £42m a year. • Trivago’s summer trends study for 2017 has found that the average room-night price clicked on the site for North America is $188.89 with the average price US hitting $189. Meanwhile, both PwC and CBRE have pointed to strong lodging demand growth in the first quarter of 2017 and anticipate a 2017 occupancy rate of 65.5%. Average daily rate is expected to grow between 2.3% and 2.9%, while RevPAR should grow in the range of 2.3% to 3%. • Cila has reported figures that show the UK cruise market has slipped to fourth position in global passenger rankings for 2016. UK cruise passenger numbers rose to 1.89 million, however, China increased to 2.1 million taking it to third place. OTHER LEISURE: • Hollywood Bowl reports H1 numbers. Revenues +7.9% at £59.3m and adj. EBITDA +8.6% at £18.2m. The group is to pay a maiden H1 dividend of 1.8p. • Hollywood Bowl says its refurbishment programme is progressing well. It has rebranded 2 further Bowlplex units with 2 more planned for H2 • Hollywood Bowl reports total game volumes +8.8%. The group says its new centre opening plan is on track. Southampton opened in H1 and ‘is performing in line with expectations.’ The group’s pipeline is in place with Derby opened in April 2017, Hollywood Bowl at The O2 due to open in June 2017 and Dagenham due to open in September 2017. • Hollywood Bowl’s CEO Stephen Burns comments ‘the strength of this first half trading performance reflects the continued progress we have made in delivering against our three growth priorities; opening new centres and acquisitions; growing like for like revenue; and continuing to improve our existing estate through our refurbishment and rebrand programme.’ He says the company has ‘confidence in delivering another year of progress, and reporting results in line with Board expectations.’ • Cineworld is to host an analyst visit to Israel today and tomorrow. It says no current trading information will be disclosed during the visit.’ • Sportech is to update on trading at its AGM today saying ‘the Group has seen a positive start to 2017, and is trading in line with management expectations.’ It says ‘we expect that the Football Pools will be accounted for as a discontinued activity.’ The group adds ‘Sportech Racing and Digital has had an encouraging period to date in 2017.’ FINANCE & MARKETS: • Government borrowing in the UK hit its highest April level in 3yrs last month per the ONS with net borrowing of £10.4bn. Public sector debt is now £1.72tn or 86% of GDP. The EY Item Club comments ‘the new fiscal year began on a disappointing note for the public finances. Supportive one-off factors last year and a weakening economy suggest the deficit is set to widen.’ • HMRC reports on further signs of a slowdown in the property market in April as it sees property transactions fall 22.5% month-on-month • US President Donald Trump is to attempt to cut $3.6tn from his nation’s government spending over the next 10yrs. The proposal is not expected to get past Capital Hill. • Moody’s has downgraded China’s credit rating putting it at A1 down from Aa3. It believes that credit conditions will ‘erode somewhat over the coming years, with the economy-wide debt continuing to rise as potential growth slows.’ • Eurozond manufacturing PMI up in May, services PMI down, composite steady. These are flash numbers & may be revised. • Oil up to $54.29 • Sterling down vs dollar at $1.2972 • Pound up vs Euro at €1.1601 • UK 10yr gilt yield unchanged at 1.08%. • World markets: UK mixed yesterday (big caps down, small higher) with Europe & the US higher. Far East up in Weds trade YESTERDAY’S LATER TWEETS: • Later tweets: EasyHotel disrupting the UK budget hotel market, managed LfL sales in UP +17.4%, franchised growth +7% • EasyHotel. Plenty of growth left. Franchisees lining up. Seven hotels this year, ten next. Competition getting a bit too entitled • Derby Brewing on Crowdcube. Cuts price for second time. Was valued at £12.4m, now £5m. Fails to get EIS approval RETAIL NEWS WITH NICK BUBB:
• Topps Tiles: When we last heard from Topps Tiles, in the pre-Easter pre-close on April 4th, it reported that, although trading was tough, “based on an improving trend across the second quarter and a prudent view of the second half, management expectations for full year profits are within the current range of analyst forecasts”. So the key focus in today’s interims (for the 26 weeks to April 1st) was on what Topps said about current trading and the news is not great: “Trading in the second half to date has, as expected, been more challenging as a result of a weaker macro environment this year and a continuation of the particularly strong comparatives from the prior year when sales were boosted by changes to Stamp Duty”. LFL sales over the 7 weeks to 20 May (adjusted for the impact of one less trading day resulting from the effect of the later Easter) fell by 5.8% (having been up by
• Retail Sales Watch: We flagged on Friday that the ONS Retail Sales figures for April were, thankfully, not boosted for once by improbably strong growth for “Small Retailers”, but the Office of National Statistics (the ONS, aka the “Planet ONS”) still reported non-seasonally adjusted total sales by value up by as much 8.1% last month (ex-petrol), as boosted by the late Easter this year, whereas the BRC-KPMG measure of gross sales (which focuses on Large Retailers) was up by 6.3% (up 5.6% “LFL”)…So, who was right? Well, the new consultancy group, Retail Economics (RE), which is run by Richard Lim (who used to be in charge of the monthly BRC-KPMG Retail Sales survey), has just come out with its own overview and their estimate is that gross Retail sales rose in value by only 6.1% last month, year-on-year (non-seasonally adjusted, ex-petrol), which is clearly much closer to the BRC
• Yesterday’s Press and News: The bold front page headline of the final edition of the Evening Standard last night was “Strong and Stable? PM’s Care U-turn Turmoil” and there were similar headlines in the first editions of today’s papers and the front-page of the FT still says “May’s U-turn on social care costs rattles Tory campaign”, but campaigning in the Election has been suspended today because of the shocking terrorist attack on a rock concert at the Manchester Arena at 10.35pm last night, which came just in time for most papers to change their front pages: the Guardian goes with “Murder in Manchester: at least 19 die in arena attack”…In other news, the stockmarket reports all focus heavily on the bullish UK economic forecast made by Barclays yesterday and the Times report is headlined “Marks & Spencer investors are walking on sunshine”. The FT (which is still trying to • Dixons Carphone: Ahead of today’s Q4 update, the hard-working IR team at Dixons Carphone has circulated the following City consensus for LFL revenues for the 16 weeks ended 29th April: the UK +1.0%, the Nordics +0.0%, Southern Europe +4.1% and the Group +0.9%. And the consensus for full year Group PBT (for y/e April) is £490m. • Debenhams Sale Watch: In case you’re wondering, today’s Debenhams “Summer Spectacular” Sale is not a panic response to some weak trading, but is exactly the same timing as last year’s pre-Bank Holiday promotion, timed around “pay-day”. • News Flow This Week: Today brings the Kingfisher Q1, the Dixons Carphone Q4, the Marks & Spencer finals and the French Connection AGM. And on Thursday we get the Halfords finals, the Pets at Home finals, the Inchcape Q1, the Card Factory update and the B&M finals. • News Flow Next Week: Things are quiet after the Bank Holiday on Monday in terms of company news, but Wednesday next week brings the latest Kantar/Nielsen monthly grocery market share data, as well as the GFK Consumer Confidence Index for May. |
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