Langton Capital – 2017-06-12 – Brelection, Breturn, GDP, Loungers, Coffee #1 & other:
Brelection uncertainty, GDP, Loungers, Coffee #1 & other:
A DAY IN THE LIFE:
I think there is an inverse correlation between the number of toes a dog has (less the standard number of 20), and its intelligence.
And, as our dog has 26 toes – or possibly 27 if a rather suspicious lump is re-categorised as a toe – then it’s perhaps understandable that he’s categorised as ‘pretty thick’.
In fact, if the average dog is thought to have the intelligence of a 3yr-old human being, then our canine companion is in minus numbers but even he would not have botched up an election campaign in the way that our illustrious leader has just done. On to the news:
PUB, RESTAURANT & DRINK PRODUCERS:
• Loungers has announced that Justin Carter has been appointed to the newly created role of Lounge managing director (MD). Jake Bishop has been appointed to the newly created role of group commercial director. Loungers CEO, Nick Collins, said “These changes set us up really well for the future. Justin’s appointment as Lounge MD is a natural step for the business having decided two brand MD’s would be more appropriate than a COO. Amber and Paul’s promotions at Cosy Club are particularly pleasing, and really demonstrate our commitment to internal progression”.
• SA Brain has appointed Sapient Capital to help look at future funding options to expand its 77-strong Coffee#1 business. The business, which has been rated the best coffee shop operator by UK consumers by Allegra, could be valued in excess of £50m.
• Bank of England quarterly survey of attitudes towards inflation has suggested that expectations have risen to 2.8% from 2.7% three months ago
• Buying specialist Lynx Purchasing believes a hung parliament might bring disruption to the hospitality and catering industry at a time in which it requires ‘stability to help counter the effects of food and drink inflation’.
• MCA reports ‘there is not truth in the rumours that [The Alchemist] is seeking a new buyer’. The Sunday Times reported that the group was looking for a sale in order to fund a tripling of sites.
• Vita Mojo has raised nearly £3.3m via its crowd-funding campaign
• Moody’s has reported that the Seattle Soda Tax is credit negative for big beverage firms. It says that, after the Seattle, Washington City Council passed a tax of 1.75 cents per ounce to be paid by distributors of sugary beverages such as sodas and energy drinks, beverage companies could feel the pinch.
• The British Beer & Pub Association (BBPA) hopes that the uncertainty generated by last week’s General Election can be quickly resolved so that pressing issues such as securing the rights of EU staff in the upcoming Brexit negotiations. Chief executive Brigid Simmonds commented: ‘Whilst Brexit will bring opportunities as well as challenges, the sector needs a stable policy framework with no new and unnecessary costs and red tape. We are already dealing with a great many new costs and regulatory challenges this year, with a big increase in beer duty in the Budget, and unfair business rates, among others. We need a relentless focus on measures that actually help business to create jobs and growth.’
• The ALMR said of the election outcome that the ‘key short-term impact is that there is a vacuum where businesses need clarity and certainty,’ as they absorb cost burdens such as business rates and the National Living Wage.
• Pernod Ricard has purchased a majority stake in Mexican spirit producer Del Maguey Del Maguey, which makes the artisan spirit brand mezcal. According to FoodBev Media, global sales of the drink rose to a record $80m in 2015, with US volumes climbing by 279% over ten years.
• Pret A Manger is to debut in Scandinavia with a site at Copenhagen airport as part of the travel hub’s aim to expand its dining options in its Terminal 2 pre-security area.
• San Miguel will unveil a series of ‘enriching experiences’ to the on-trade this year, designed to tap into the ‘increasing consumer demand for experiences over material possessions’. Dharmesh Rana, senior brand manager for San Miguel at Carlsberg UK, said: ‘We’ve evolved the campaign for 2017, so that it now supports on-trade operators who focus on creating fantastic experiences for their guests. It’s inspired by San Miguel’s founding family who were explorers and adventurers, and we want to reward and celebrate those pubs and bars up and down the UK which place a higher value on experience above all else.’
• Vimto has continued to outpace the market growing sales by 6.8% compared to the industry average of 1.4%.
• The Chinese internet group, Alibaba has forecasted annual revenue growth of up to 49%, beating expectations by ten percentage points.
• Convenience shop chain Nisa has hired bankers at Lazard to work on a potential sale following remarks from the group’s boss that Tesco’s £3.7bn takeover of rival Booker would cause ‘enormous pain’ for the sector. Nisa, which supplies 3,466 shops, is looking at bringing in outside investment without radically changing its member-owned structure and is also working on a £120m refinancing deal to aid its expansion plans.
HOLIDAYS, LEISURE TRAVEL & HOTEL
• The uncertainty surrounding the outcome of the UK general election has cast new doubt on plans for a third runway at Heathrow, and the SNP’s plan to abolish Air Passenger Duty in Scotland.
• The Japanese government has passed legislation that makes Airbnb and services like it legal to operate in its country.
• Preliminary data for the US hotel market from STR suggests REVPAR growth in May of between 3% and 5%
• Leisure visitor numbers increased by 19% to 78,600 in the first four months of the year. UK residents made up most of those visiting Jersey at 74%, with French visitors the second most common at 12.5%.
• Uber’s board has discussed CEO Travis Kalanick temporarily stepping away from the embattled ride-hailing firm and is considering sweeping changes to the company’s management practices. A person familiar with the situation said the discussion involved the possibility that Kalanick might return in a role with less authority and subject to stronger oversight. Recently Uber has suffered negative press due to allegations of sexual harassment and about the firm’s broader culture.
• Sportech PLC has been granted approval to open another 6 wagering venues in the state Connecticut, taking the group’s state venue count to 24.
FINANCE & MARKETS:
o ‘Brexit is unstoppable’ debunked. If you for some reason started to saw your arm off and you had the chance to stop, wouldn’t you take it?
o Calls for Tory party to drop Brexit, go for Breturn & heal the country. Or face Jeremy Corbyn doing the above after October landslide
o FSB calls for Brexit clarity, demand ‘new direction’. Aston Martin warns its investment is at risk, Airbus threatens to move jobs from UK
o Institute of Directors says business confidence has sunk “through the floor”. IoD says another election would be damaging, existing situation is, well, damaging. IoD says ‘this crash in confidence shows how urgently that must change in the new government.’
• NIESR suggests GDP rose by 0.2% in the 3mths to end-May. It says it is continuing to run below its 0.6% long term trend. The NIESR says ‘the subdued performance in the economy throws the political turmoil of a hung Parliament into sharp relief. People are looking for answers to low levels of economic growth, limited improvements in productivity and falling real wages. That none of the parties wholly addressed our long run problems or how we ought to address exit from the European Union is the reason there was no clear winner.’
• UK economy may be slowing as output from the building & manufacturing sectors is stagnating
• ONS reports UK trade deficit narrowed to £10.4bn in April from £12.0bn in March as economy slows
• Telegraph reports ‘Theresa May has been hit by a series of economic blows, with consumers tightening their belts and businesses increasingly showing fears of a sharp slowdown as she attempts to cling on to power.’
• Oil up a little at $48.35
• Sterling down a fraction at $1.2749
• Pound also down vs Euro at €1.1373
• UK 10yr gilt down 4bps on slowdown fears at 1.00%
• World markets: UK up Friday on Sterling slide, Europe up, US down & Far East down in Monday trade
LANGTON ELECTION OP ED:
What we wanted:
• Stability. Definition ‘something that is not likely to give way or overturn. Firmly fixed.’
What we got:
• Not the above.
• This is either unstoppable or dead, depending on which echo chamber you’ve got your head stuck in.
Where to from here?
• Either dump Brexit & scary cabinet right wing ultras & try to heal the country.
• Or wait 6mths for next election & allow Jeremy Corbyn to do the above. 5yr return to the 1970s may be an acceptable price to pay…
Press & other comment:
• Press: Times – ‘Recriminations over disastrous election failure’. PM ‘staring into the abyss’. Aides ‘childish’ and ‘arrogant’. Financial Times – ‘Aides quit amidst recriminations’. Anon – ‘It’s not as easy as you thought, is it Tee?’ Indie – This was ‘a catastrophic misjudgement’. Daily Mirror – Pact with DUP is a ‘coalition of crackpots’. The Sun – Mrs May ‘has had her chips’. Daily Express – May clings on to force through Brexit. Daily Star – BoJo to be next PM. The art of leading from the back. Daily Mail – Exclusive Diana tapes revealed. Everywhere – Lame duck clings to power. Tories (esp. BoJo) to use Theresa as human shield etc. Foreign Press – Really? You couldn’t run a bath.’ US Press – United what? Daily Mash. Too many to quote here. Satirical but from HM Queen to Theresa: ‘My idiot sons could run this country better than you.’
• Other: Institute of Directors. Tories do not have a mandate to implement their manifesto.
Various truisms consigned to the dustbin:
• There is an easy £350m per week for the NHS. We’re taking back our country.
• We’re sick of experts. Brexit means Brexit. We’re after a ‘Red, White & Blue Brexit’. We’re raising National Insurance. There won’t be a snap election. We will tax demented old people. Nothing has changed; nothing has changed. The triple lock is off. Government is ‘strong & stable’. Tory supporters will never vote for Corbyn. The young won’t get out of bed when it’s raining. There are no scary Ultras in my Cabinet.
YESTERDAY’S LATER TWEETS:
• Later tweets: The unelectable (nearly) beats the unpalatable as robotic Mrs May turns voters off big time. Massive smack in face.
• Arrogant, distant Mrs May runs alienating campaign full of U-turns & facile soundbites. What, I wonder, did we think was going to happen
• Greg Mulholland loses seat in Leeds as Labour gets the young vote out. Uncertainty the only certainty
• BBC Weather (genuine). Political influence as says ‘some sunshine today after the rain & gloom yesterday.’ Failed to add ‘May’s over now’
• Europeans say Brexit talks may not now start next week as they do not know who runs Britain. Neither do we, mes amis…
• Ms May: ‘I’ve no intention of resigning’. Theresa used as dartboard, human shield hybrid by die-hard Tories who parrot ‘nothing has changed’
• Dear Theresa. Principle: “A fundamental truth or proposition that serves as the foundation for a system of beliefs”. U-turn = not the above
• Who’s that man with the mile-wide smile? Georgie, Georgie Osborne. Evening Standard first editions out shortly.
• So, this is what ‘strong & stable’ feels like, is it? Never would’ve guessed. Feels much the same as ‘feeble & unprincipled’ did last week
• I’ve heard of amoral and asexual but is aprincipled a real word? I know who to ask. Theresa? Theresa, where are you?
• Irrelevant UKIP leader Nuttall to stand down after poor party showing in election. Mrs May, less so.
RETAIL NEWS WITH NICK BUBB:
• Saturday Press: The front page headlines of the Saturday papers made uncomfortable reading for the beleaguered Prime Minister, eg “May stares into the abyss” (the Times), “From hubris to humiliation” (the Guardian) and “Tories turn on Theresa” (Daily Mail). In terms of Retailing stories, there was plenty of coverage of the news that L’Oreal is selling The Body Shop to the Brazilian cosmetics manufacturer Natura Cosméticos (Lex column in the FT thundered that “the deal looks an ambitious undertaking” for Natura), but the news that Dixons Carphone has ended its joint venture with Sprint in the US also got quite a lot of attention. The veteran City observer Neil Collins looked in his FT column at the “sad story” of the AO.com float and how overpriced it looks now. The market report in the Times led with the bullish note by RBC on Ted Baker, focusing on its digital expansion (“Ted Baker
• Sunday Press: The front page headlines of the Sunday papers made more uncomfortable reading for the embattled Prime Minister, eg “In office, but not in power” (the Sunday Telegraph), “May’s premiership in peril” (the Observer) and “Boris set to launch bid to be PM as May clings on” (the Mail on Sunday), and there were some interesting macro-economic articles, eg the Observer had a big feature on the worry that the PCP bubble in the new car finance market could soon burst, whilst the Mail on Sunday had a feature on the outlook for weaker sterling and higher prices (“UK braced for pounding as shoppers face squeeze”) and the Economics correspondent of the Sunday Times, David Smith, looked at the gloomy outlook caused by a hung Parliament and thundered “Any Prime Minister who ignores the economy in an election campaign and expects voters to troop loyally into the polling booths when
• Motorpoint: The used car superstore business Motorpoint has had a troubled time since its IPO in May 2016 and the shares slumped further last week, as if today’s finals for y/e March might bring more bad news, but the news seems reassuring. Total sales for the year only increased by 13%, despite 2 new site openings and profits for the year were well down, but the CEO says “despite a challenging first half of the year, the group delivered an improved trading performance in the second half” and “trading at the beginning of the new financial year has started to plan and continued the positive trend from Q4 FY17”.
• News Flow This Week: As we head on into the troubled post-Election period, this week is quite busy. Tomorrow brings the Ted Baker Q1/AGM and, in the evening, we get the prestigious “The Grocer” Gold Awards for the food industry. The Mulberry finals are on Wednesday, along with a WH Smith trading update. The Majestic Wine finals, the Morrisons AGM and the ONS Retail Sales figures for May are on Thursday. Then Friday brings the Tesco Q1/AGM.