May spending Tracker, Majestic, earnings & other:

A DAY IN THE LIFE:

I think I’d like to come back as a Polling Booth attendant.

I mean under normal circumstances (and admittedly these are not normal circumstances), you only have to work for about 10hrs every 5yrs and you get to sit down.

You also get to meet people and, at quiet points during the day, you get to leave the scout hut or local library or whatever, and take a breath of air.

And you get to chat, shoot the breeze and, whilst you shouldn’t put smiley faces next to the person you would like to vote for and devil’s horns or a clown’s hat next to the others, you get to misdirect those you suspect of voting incorrectly into the loo or the nearest phone box rather than the voting booth.

But the above is currently not to be. And here I am at stupid o’clock. Just like I was yesterday. And the day before, and the day before. On to the news:

COFFER PEACH TRACKER:

• Tracker for May says ‘pub and restaurant groups see sales slip back in May’. LfL sales down 0.4% vs last year

• Tracker has London in May +0.1% with rest of UK down 0.6%. Inflation stands at 2.9% for the same month. CGA Peach’s Peter Martin comments ‘May’s numbers will be a disappointment for operators as they come after a 4.4% increase in April, but the truth is we are seeing an essentially flat market.’ It should be said that the strong April figure was because of the move in Easter (from March) and good weather at the beginning of the month.

• CGA says ‘eating and drinking out has proved resilient, with the public continuing to go out even through the last downturn. Our BrandTrack consumer surveys show frequency of both eating and drinking out-of-home staying fairly constant over recent years.’

• CGA points to declining business confidence. Though businesses don’t spend money on alcohol (very often), the Tracker comments ‘the problem hasn’t been so much consumer confidence but business confidence, with mounting cost pressures on operators from rising wages, business rates and food costs. The latest fall in sterling following the general election result will only add to that.’

• Tracker has restaurants (flat) slightly outperforming pubs (down 0.7%) in the month of May. Food led pubs brought up the rear. The Tracker comments ‘restaurant chains did marginally better than pub groups in May, with flat like-for-likes compared to a 0.7% decline across managed pubs. Drink-led businesses did better than food-led operations, due mainly to the weather, but overall it’s been sluggish across the board.’

• New openings slowing. May Tracker has total sales +2.4% (against LfL down 0.6%) suggesting a 3% gap due to new capacity. This is down from around 5% over the last couple of years or so. The additional capacity is largely here to stay, however, and this is a slowdown in the rate of growth rather than an actual diminution.

• Coffer Corporate Leisure comments ‘like-for-likes in May were below inflation. Pre-election jitters will likely have weighed on consumer confidence. Worries over the uncertainty created by a hung parliament, a fraught Brexit process and fears surrounding terrorist attacks could deter some consumers, particularly from visiting city centre restaurants, although stay-cations may offset this in some parts of the country. A weak pound will also help. There are continued headwinds in the eating-out market and despite these numbers the pub sector is generally trading stronger.’

• RSM comments ‘we expect these factors [new entrants & the need for innovation] to lead to more consolidation in the sector.’

PUB, RESTAURANT & DRINK PRODUCERS:

• Majestic Wine reports FY numbers. Says it is ‘past the tipping point’ with H2 profit up 51% on prior year. The group reports a full year loss of £1.5m ‘largely reflecting acquisition related non-cash charges’ and will pay a total dividend of 5.1p for the year.

• CEO Rowan Gormley reports ‘operationally, we are through the most risky and cost intensive phase of our transformation plan.’ He says ‘we remain confident about the medium term outlook, despite tough economic conditions, as transformation benefits are coming through and our costs are naturally coming down as a result of us reaching the next stage of the transformation plan.’

• Separately Majestic has reported that Phil Wrigley has informed the Board that he will retire as Chairman and step down from the Board at the AGM in August 2017. Greg Hodder, who was appointed Non-Executive Director on 1 October 2015, will be appointed as Chairman-Designate with immediate effect, formally taking over as Chairman at the conclusion of the AGM.

• Average earnings rose by 2.1% in the 3mths to April. CPI in April was 2.7% suggesting a 0.6% drop in real incomes. CPI has risen to 2.9% in May suggesting that the squeeze may go on.

• US retail sales fell by 0.3% in May. Online sales were +10.8% y-o-y.

• BrightHouse, which is being investigated by the FCA, has seen EBITDA drop by 79% in the year to end-March

• The Financial Services Compensation Scheme has suggested that a third of people believe that apps on their smartphones ‘make’ them spend more.

• The number of UK craft brewers has stabilised after years of growth and the UK ended 2016 with 1,544 breweries, according to the latest edition of The Brewery Manual. The majority of these are smaller producers brewing less than 30,000 hectolitres in total. Just 60 new breweries launched during 2016 compared to in excess of 100 every year between 2010 and 2015, while 58 breweries closed.

• Brakspear has appointed Gavin Mansfield as a business development manager. Mansfield has worked in the hospitality sector for almost 20 years, including a six-year stint as an operations manager at McMullens Pubs.

• Today is Beer Day Britain, meaning beer lovers will gather in pubs across the country to champion the varied styles of beer available in the UK.

• Around a third of China’s most popular wines are now imported from six international producers, including France, Australia, the US, Chile, and Spain. The study into the Top 100 best-selling wines in China in 2016 by Nielsen found that wine was proving to be a popular gift for business or special occasions in the country.

• Online grocery is set to rise by 12% to over £11bn in 2017 according to Mintel research, which also shows that 14% of Brits do all their grocery shopping online.

HOLIDAYS, LEISURE TRAVEL & HOTEL

• The  travel industry has been described as facing the worst ‘headwinds’ in more than 30 years due to the political uncertainty surrounding last week’s general election. Managing director of Classic Collection, Nick Munday stated ‘Nobody is punching the air. Election day was supposed to end of the quiet period, normal service was supposed to resume, but it was a complete disaster.’

• Monarch has announced a 50% increase in bookings this summer due to increased trade support. Sales director for Monarch, Gary Anslow said ‘trade sales are really strong. After Abta we put new commercial agreements in place with all our trade partners. Everyone is earning more than they were before.’

• Europcar has taken a 20% stake in SnappCar, a p2p car sharing group. Europcar said it aimed to become a ‘global solutions leader’

• Sweden sees record number of UK visitors. Some 858k Brits visited the country last year, a 43% increase over the last 3yrs. The UK is Sweden’s fourth largest inbound market

• Hotels pipeline: STR reports there are 580k rooms in the hotel pipeline over 4,806 projects in the US. It reports that there are 167.5k rooms in development across 1,074 projects in Europe, up 15.3% on May last year.

• Lifestyle hotels are reported to be performing well across smaller US cities. The NY Times reports that ‘costs have increased dramatically in gateway markets, and many brands need to continue growing, so they are looking outside the typical cities.’

OTHER LEISURE:

• Revenue generated from TV shows and streaming films in the UK is expected to exceed box office taking by 2020, reported in the Global Entertainment & Media Outlook by PwC.

FINANCE & MARKETS:

• Average wages rose by 2.1% in the quarter to end-April. This was well below the then inflation rate of 2.7%. CPI in May was 2.9%. Figures reported in The Independent show that, over the period 2007-2015, the UK had the worst real wage performance of any OECD country except Greece

• UK unemployment has held at a 42yr low level of 4.6%

• The US Fed has raised interest rates by 0.25% in its second such move this year. It will set its key rate between 1% and 1.25%. It expects to raise rates once more this year.

• Oil down a buck and a quarter at $47.05

• Sterling unchanged vs US$ at $1.2745

• Pound down a fraction vs Euro at €1.1356

• UK 10yr gilt yield sharply lower at 0.93%, down some 10bps

• World markets: UK mixed yesterday with FTSE100 down. Europe down, US down and Far East down in Thursday trade

• Politics:

o Theresa May (who is still PM at the time of writing) is said to be inching towards sealing a deal with the DUP. It is widely believed that taxpayers’ money will be used to keep Ms May’s party in power. Reuters says the deal comes ‘after days of political turmoil sparked by her botched gamble on a snap election.’

o Reuters says ‘last week’s shocking British election result and the period of political uncertainty that looks set to follow may have come at the worst o

o Nigel Farage is coming back.

o Tim Farron has resigned.

• Brexit:

o Former UKIP boss Nigel Farage has said that Theresa May’s position in the upcoming Brexit talks with the EU has been diminished

o Farage says the UK is now in a “weak position”

YESTERDAY’S LATER TWEETS:

• Later tweets: Coffee price on the slide. Down around 20% in 5mths. Protein prices relatively strong & milk price steady & c30% off lows

• Inflation up => interest rate rise concerns => Sterling up => FTSE100 down. Were it always that easy…

• CPI a problem at 2.9% with average earnings only +1.9%. Electorate getting poorer & they will make someone pay. Step forward Theresa…

• WH Smith highlights differing fortunes of divisions. High St LfL sales down 4%, transport hubs up 5%. That way, the future lies…

• Tories wearing Brexit & The Economy. Corbyn now humanised, the ill Ms Abbott rehabilitated. Electoral revenge will be something to behold

• Corbyn = new ‘Mr Sensible’. Would laugh but everything’s relative. Macron, Major, Cameron, Blair, Schauble voices falling on deaf ears

• Boris’s electoral antennae twitching. Opening for Mr ‘let’s call this whole thing off.’ If only he could position himself. If only. Hum…

• Corbyn sees keys to no10 within reach. But does he have guts to knife various Hard Left nutjobs that could still kick them away?

RETAIL NEWS WITH NICK BUBB:

• DFS Furniture: We have been noting for a while now that the Electricals market has been quite weak and now the cloud over “big ticket” retailers has increased, with DFS warning that they have seen “significant declines in store footfall leading to a material reduction in customer orders” in recent months. Inevitably, they blame “customer uncertainty regarding the General Election and the uncertain macroeconomic environment” and warn that EBITDA for y/e July will be lower than market expectations and in the range of £82m-£87m. That will go down like the proverbial lead balloon in the City this morning and rival ScS is bound to be hit as well…

• Majestic Wine: Today’s finals from Majestic Wine (for the 53 weeks to April 3rd) look weak and a bit messy on the face of it, with some chunky exceptional charges, but the company highlights the stronger H2 performance and Rowan Gormley, the Group Chief Executive, says emphatically that “We are past the tipping point, both financially and operationally. Financially, Adjusted EBIT in the second half of the year is up 51.0% on prior year. Operationally, we are through the most risky and cost intensive phase of our transformation plan…We are therefore reiterating our £500m sales goal by 2019 and affirming current analyst profit expectations”. In other news, the final dividend is 3.6p, making a total of 5.1p for the year, and the Chairman Phil Wrigley is handing on the baton. Analysts meeting at 9.30am.

• Planet ONS Watch: In the real world, May (the 4 weeks to May 27th) was a bit disappointing on the High Street, as per the BRC-KPMG Retail Sales survey last week. But we will find out at 9.30am this morning what life was like last month on that bizarre parallel world, the Planet ONS, via the Office of National Statistics Retail Sales figures for May. For what it’s worth, our friends at Capital Economics have pencilled in a 1.0% month-on-month dip in “seasonally adjusted sales volume” (to pull the year-on-year growth back to 1.4%), slightly worse than the City consensus. We will, as usual, be focusing on the year-on-year movement in “non-seasonally adjusted sales value” (and the “Big Retailer” versus “Small Retailer” ONS sales split)…

• News Flow This Week: The Morrisons AGM is being held today at 11am at HQ in Bradford, but no trading update is expected. Tomorrow brings the Tesco Q1/AGM.

• “Grocer Gold” Watch Part 2: We flagged yesterday that Tesco CEO Dave Lewis was at the prestigious “The Grocer” Gold Awards for the food industry on Tuesday night to receive the key “Grocer of the Year” Award, but there were plenty of other industry worthies there as well. We bumped into the former Waitrose boss Mark Price on the way in, who said that he’d just been reappointed the Minister of State for Trade and Investment by the embattled Theresa May (having been originally appointed by David Cameron in April 2016). At dinner, he was seated next to Mike Coupe of Sainsbury, who had his former Ops Director Roger Burnley (now at Asda) at his back. And Roger turned out to be a hard-core Huddersfield FC supporter, despite the strong Leeds FC bias of Asda HQ.