Langton Capital – 2017-06-20 – IPOs, UK growth, restaurant footfall, Center Parcs & other:
IPOs, UK growth, restaurant footfall, Center Parcs & other:
A DAY IN THE LIFE:
When trying to find hats, I’ve been told that I have a big head.
And it might also be misshapen and dysfunctional but now, armed with the vocabulary of our times, I can say no, I don’t have a big, ugly mess of a head, I have a strong and stable head that is simply getting on with the job.
And everything’s relative, I’ll be able to say.
I can point to the other heads around me, which are even more hideous, and ask which you would rather have bossing your body around at this most important of times?
Would you rather have that crackpot head over there or the other nut-job or one of the legion of swivel-eyed loonies at my back or would you rather stick with the head you’ve got which, though it’s become the poster boy for getting things wrong over the last year or so, is at least, well, already in situ.
And it offers strength. And stability. On to the news:
PUB, RESTAURANT & DRINK PRODUCERS:
• The MCA’s Eating Out Panel says restaurant ‘visit frequencies had taken a marked turn for the worse and this had resulted in extrapolated analysis for the total eating-out market showing value growth falling by 3% year on year.’
• MCA’s Eating Out Panel suggests lower restaurant visitor volumes were across all day parts.
• Delivery Hero, which is selling its UK business Hungry House to Just Eat, has published the price range for its upcoming IPO. The co aims to sell shares at between €22 and €25.50 per share, implying an offer size of €927m.
• FT reports that HelloFresh, which is controlled by Rocket Internet & which called off an IPO in 2015, is thought to be considering a further attempt at sale.
• CBI reports growth in UK will ‘shift down a gear’ over the next few years as Brexit impacts the economy.
• Honest Burger are considering acquiring pubs in order to roll out a version of its burger concept. The 21 strong Active Partners-backed chain plans to open ten new restaurants this year.
• The ALMR has congratulated MP Sajid Javid on his reappointment and pushing for action on business rates as a matter of urgency. Chief executive of the ALMR, Kate Nicholls said ‘ This General Election has not provided much in the way of stability, but one thing the Government can do to help support businesses is push ahead with much-needed reform of a broken business rates system’.
• WSTA says a no-deal Brexit must be avoided. It says it is ‘imperative to secure a full negotiated divorce’
• Euro Garages has purchased over 1,000 service stations in Italy
• Sainsbury’s has entered into exclusive discussions with Nisa with regards to acquiring the convenience store chain This follows other sector consolidation such as Tesco’s £3.7bn takeover of Booker earlier this year.
• Two in three consumers say they want nutritional information on their menu when eating out, according to new survey data from software firm Fourth. The survey also went on to find that one third of consumers do not trust what is in a menu item.
• McDonald’s has been working hard to shift its supply chain to improve living conditions for livestock and to remove artificial ingredients.
• Subway will be serving free mini sandwiches at five music festivals this summer in its interactive lounge ‘The Green Room, baked by Subway’.
HOLIDAYS, LEISURE TRAVEL & HOTEL
• Riviera Travel, a river cruise specialist, is being tipped for sale at around £250m, with majority owner Pheonix Equity Partners hiring PwC to find new investors. Riviera made a £9.2 million profit in 2015 on turnover of £126 million, according to its most recent set of available accounts.
• British Airways faces a two-week cabin crew strike by Unite union members on 1st July, after fresh talks over pay and benefits broke down.
• Center Parcs UK has reported a jump in profitability, from a pre-tax loss of £6m (caused by one-off financing costs) to a pre-tax profit of £70.5m helped by average occupancy rates of more than 97%. Sales for the 12 months to April 20 grew to £440 million from £420 million a year earlier.
• Airbnb is making efforts to encourage its hosts to start acting more like hotels and has created new tools and policies for its hosts, who are not obligated to follow them but feel ‘pressured to comply’. The disruptor wants to expand into different fields, but to get there ‘Airbnb needs to provide guests with a reliable experience. That has been a challenge, given the idiosyncrasies of hosts.’
• Marriott still sees growth potential for full-service hotels despite the rise of select service alternatives.
• A merger between Australian gambling giants Tabcorp and Tatts Group has been approved which will form a business worth A$11.3bn. The merger will help the firms compete against online betting and some believe it could turn Australia into on the of the most profitable gambling markets. UK consultancy H2 Gambling Capital reported Australians as having the world’s highest gambling loss per head at £918 a year.
FINANCE & MARKETS:
• NIESR highlights need ‘for flexible, affordable and straightforward immigration system to prevent skill and labour shortages damaging UK economy’
• NIESR says ‘the main reason employers recruit EU nationals is because they cannot fill low or semi-skilled jobs with UK-born applicants’
• NIESR says ’employers don’t recruit EU migrants in preference to British workers, but because they attract too few British applicants.’
• Oil down a quarter or so at $46.92
• Sterling down a shade vs US$ at $1.2738
• Pound up a fraction vs Euro at €1.1417
• UK 10yr gilt yield up 1bp at 1.03%
• World markets: UK, Europe & USA all higher yesterday with Far East mostly lower in Tuesday trading
o David Davis says talks between UK & EU have got off to a ‘promising start’.
o Davis says it is ‘not how the talks start, but how they end’.
o Talks will focus on expat rights & financial settlement. Talks on a trade deal will only happen once the European Council decides ‘sufficient progress has been made’.
o CBI reports growth will be 1.6% in 2017 and 1.4% in 2018. CBI expects UK economic performance to be ‘steady but subdued’. The trade body is looking for higher exports but it sees domestic demand as sliding as consumers continue to feel the pinch. It says ‘tighter purse strings mean slower household spending growth.’ The CBI has said ‘the less likely a Brexit deal starts to look, the harder it will be for firms to recruit and retain talent as well as push the button on big investment decisions. We must get Brexit right.’
o Tim Martin has said that remaining under EU law is not Brexit
YESTERDAY’S LATER TWEETS:
• Later tweets: Coffee & sugar prices still bumping along the bottom. Will (slightly) help margins for some operators. But milk price +30% over the year
• Amazon / Wholefoods, SBRY / Nisa, Tesco / Booker. Consolidation ahoy. Prices Friday suggest not unreasonable to consider MRW a target
• Jeremy Corbyn portrayed as cuddly granddaddy of reasonableness as Brexit debacle pushes UK towards Hard Left
• Conservatives in disarray as BBC docudrama portrays Boris as overweight, unprincipled bumbler. He’s not overweight say supporters
• Marxist experiment feared under Corbyn/McDonnell in wake of Tories’ epic fail as unintended consequences of 2016 Brexit vote grind on
RETAIL NEWS WITH NICK BUBB:
• N Brown: The Q1 trading update from the home shopping group N Brown looks good, with Product revenue up by 10.2% in the 13 weeks to June 3rd, driven by strong Ladieswear performance. Financial Services revenue fell by 4.9%, as expected, but Online revenue was up 16%, with as much as 71% of revenue now generated Online. However, all the headlines are likely to be generated by the news that N Brown is to close five loss-making Simply Be and Jacamo dual-fascia stores because of weak High-Street footfall, for an exceptional cost of between £10m and £14m. Ouch…
• Retail Sales Watch: We flagged on Friday that the ONS Retail Sales figures for May were a bit subdued, 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 3.3% last month (ex-petrol), whereas the BRC-KPMG measure of gross sales (which focuses on Large Retailers) was up by only 0.2% (down 0.4% LFL)…So, who was right? Well, the new consultancy group, Retail Economics (RE), which is run by Richard Lim (who used to run 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 0.7% last month, year-on-year (non-seasonally adjusted, ex-petrol), which is, as usual, much closer to the BRC figure than the ONS. RE estimate that Food sales grew by 2.7% last month, but Non-Food sales were down by 0.8%, despite
• News Flow This Week: There is no more scheduled Retail company news this week (apart from the Boohoo.com AGM on Friday), but Royal Ascot gets under way this afternoon, the delayed Queen’s Speech is tomorrow morning and the prestigious BRC Annual Lecture is on Thursday evening, with Richard Pennycook in the spotlight this year.