Langton Capital – 2017-07-03 – Deliveroo, Delivery Hero, wages, capacity, Pizza Express & other:
Deliveroo, Delivery Hero, wages, capacity, Pizza Express & other:
A DAY IN THE LIFE:
So I’ve got my laptop back.
But to say it’s back as it was isn’t quite correct as I’ve now got to take half a day or so to load back on the programmes that used to be there and, having decried cookies as intrusive & what-have-you, I’ve now got to reload all of my passwords, user profiles and the like.
Not exactly a productive use of time but, as we come to rely more and more on these (usually useful) bits of kit, it’s worth remembering that we’re only ever three meals from a famine. On to the news:
PUBS & RESTAURANTS:
⦁ Delivery Hero has listed its shares in Frankfurt at $25.50, valuing the online food-delivery service at around €4.5bn (c$5.1bn). Delivery Hero earned around €465m ($530m) from the IPO, which it plans to use to repay loans and invest in growth. The IPO contrasts with Blue Apron’s much rockier start to life on the NYSE less than 24 hours earlier. Delivery Hero remains loss-making, booking a total loss of €202m ($230m) last year. Revenue for 2016 grew 71% year-on-year to reach €347 m ($390m) and overall orders rose by 51%, although these figures were boosted by its acquisition of Rocket Internet’s FoodPanda business, which gives Delivery Hero a presence in 20 new countries across Eastern Europe, the Middle East and Asia (and strengthened its position in many others).
⦁ Honest Burgers has won the tender with Network Rail to operate a unit at the London Bridge Station development set to come online next year, per MCA. The Active Partners-backed chain, which is now on 21 sites, has also been exploring the possibility of introducing its burgers into pubs and is thought to be looking at possible units.
⦁ A report from Cushman & Wakefield has found that global growth in consumer spending on eating out is leading to more food and beverage options in shopping centres. All four global regions examined in the report are forecast to experience growth in F&B expenditure, with emerging markets in the Asia Pacific and the Middle East and Africa set to double spend over the next 10 years. There is also rising demand for more non-mainstream international food hall market place concepts, which combine restaurants with food and beverage counters and bakeries, along with the sale of cooking-related products and even cookery schools to add ‘edutainment’.
⦁ Pizza restaurant Pi has launched a £500,000 crowdfunding campaign via Growthdeck to open three 50-60 cover sites in South London. It is the brainchild of founder Rosie Whaley, who has a background in fashion but worked in pizza restaurants in Florence ahead of launching her project in the UK.
⦁ Typical hourly pay for the under 40s is at least a tenth lower than before the 2008 financial crisis — more than twice the relative hit taken by workers in their 50s and five times the amount lost for workers in their 60s. The findings come from the non-partisan Resolution Foundation, which was established in 2005 with ‘the goal of improving living standards for the 15 million people in Britain on low and middle incomes’.
⦁ Meanwhile, Open University survey showing that some UK employers are now having to pay ‘well above market rate’ to attract staff. UK unemployment is at its lowest level since 1975. The OU suggests that around £2bn in costs are accruing to industry as a result.
⦁ ASDA Income Tracker shows that consumer spending power fell by 1.9% in May 2017 compared with a year earlier. The group reports that the fall is the steepest since September 2013.
⦁ ASDA data suggests that income falls have been steepest for those on low incomes. Squeeze set to continue for next few months. ASDA quotes CEBR economist Kay Neufeld as saying ‘unfortunately, the squeeze in households’ finances is expected to continue over the next months as we see little evidence that wage growth will pick up, and neither have we reached peak inflation just yet.’
⦁ UK savings rate hits record low. ONS says savings ratio now 1.7% in Q1, down from 3.3% as consumers dis-save in order to maintain consumption.
⦁ Companies House data shows that losses at Pizza Express hit £17m in the 18mth period to end-Dec 2016. The group lost £10m in the prior year.
⦁ Pizza Express reports 0.9% fall in LfL sales in Britain & Ireland in the year to last December. Slide put down to the ‘softening casual dining market’.
⦁ Restaurant operators have a significant opportunity to increase wine sales by improving quality, according to a report from CGA Strategy that shows that consumers are three times more likely to recommend a casual dining brand to a friend if the wine is very good.
⦁ SoftBank, the technological fund backed by Apple and the Saudi Arabian state, is in talks with Deliveroo to buy a significant stake in the company. It is believed that the deal would value Deliveroo well over £1bn, but sources at SoftBank have cautioned that a deal could be some weeks from being finalised.
⦁ Tim Hortons plans to increase its presence in Scotland by opening a drive-thru in Falkirk, this comes two weeks after the chain opened its first venue in Glasgow.
⦁ Sam Smith’s pubs have now banned swearing in all their pubs, introducing a ‘zero tolerance’ policy.
⦁ Affinity Bars & Restaurants has shut all four of its venues, one of which has confirmed on Twitter that they ‘are not open anymore for the foreseeable future’.
⦁ German discount grocery chain Aldi North intends to spend more than €5bn to revamp its stores around the world.
HOLIDAYS, LEISURE TRAVEL & HOTEL:
⦁ EasyJet boss Dame Carolyn McCall says she is ‘calm’ about Brexit and positive that the UK’s departure from the EU will not prevent people flying to Europe but has stressed the need for an agreement.
⦁ Tourism to Turkey is on the up after 18 months of crisis caused by terrorist attacks and political instability, with the 2.9 million arrivals in May representing a 16% increase year-on-year.
⦁ President Donald Trump’s revised travel ban has come into force and imposes tougher US entry rules on people from six mainly Muslim countries and all refugees. Travellers from Iran, Libya, Syria, Somalia, Sudan and Yemen without close family or business relationships in the US could be denied visas and barred entry, under the new regulations.
⦁ Nike is partnering with Amazon to release a limited number of its products.
FINANCE & MARKETS:
⦁ ONS data shows that disposable income fell for the third successive quarter last quarter, for the first time since the 1970s. The Bank of England has been making cautious noises about the consumers’ apparent willingness to borrow in order to maintain consumption.
⦁ Deputy Governor Andy Haldane and more recently Governor Mark Carney have been suggesting that interest rates could edge higher in the coming months. The ONS reports ‘the saving ratio has fallen again this quarter to a new record low, partly as a result of higher tax payments reducing disposable income. Some of the fall could be as a result of the timing of those payments, but the underlying trend is for a continued fall in the saving ratio.’
⦁ 10yr anniversary of last rise in interest rates (from 5.50% to 5.75% on 5 July 2007) is this week
⦁ Bundesbank head and ECB member Jens Weidmann has said that the era of ultra-easy monetary policy may be coming to an end
⦁ Telegraph reports on ‘the poisonous mix of rising global bond yields and falling inflation’. It says that officials globally ‘are increasingly nervous about the shock of bond issuance to hit public debt markets as they knock away the prop of quantitative easing and reverse crisis-era policies.’
⦁ US dollar has posted its biggest quarterly decline in 7yrs as Trumponomics questioned
⦁ UK GDP rose by 0.2% in Q1 this year, in line with earlier estimates. GDP rose by 0.7% in Q4 last year
⦁ Oil up another $1 to $48.77
⦁ Sterling down a fraction at $1.2994
⦁ Pound up a shade vs Euro at Euro 1.1385
⦁ UK 19yr gilt yields up 1bp or so at 1.26%. A week ago, the 10yr bond was yielding 1.01%.
⦁ World markets: UK & Europe down on Friday, US market slightly up. Asian markets mostly higher in Monday trade
⦁ Britain may exclude EU countries from fishing between 6 and 12 miles from the UK coastline
⦁ BMW is to make a decision on whether to make the new electric Mini in the UK or elsewhere by end-September reports Reuters
⦁ Various stories of Cabinet rifts etc. as Brexit debacle continues to buoy (the non-committal) Labour Party
⦁ Previously ‘unelectable’ Labour still well ahead in polls as Brexit debacle means Tories ‘doomed’ per Mail on Sunday
⦁ About face on student tuition fees on the cards says Mail as more financial principles are jettisoned
YESTERDAY’S LATER TWEETS:
⦁ Game Group warns profits will be ‘substantially below previous expectations’. Surely people stream games or buy online?
⦁ GfK (lack of) confidence numbers horrible. Say ‘major purchases index plunges 8pts’ & ‘consumers worried’ about next 12mths
⦁ GNK maintains conditions more challenging but ‘affordable treat’ spending tends to hold up. True, to a point.
⦁ Pay growth has stalled says dep. Governor Andy Haldane. He (and boss Mark Carney) suggest interest rates may rise
⦁ Thomas Cook says UK/EU aviation deal is ‘vital’. Says it will be ‘more shy’ about UK growth without one
⦁ ASDA income tracker records steepest fall in 4yrs. Says real wages down, costs up. Says squeeze ‘expected to continue’
RETAIL NEWS WITH NICK BUBB:
⦁ Saturday Press: The Game Digital profit warning got plenty of coverage in the Saturday papers, given the c30% slump in the share price (“Investors switch off Game after new warning” was the Times’ headline), although the only Editorial comment was Lex column in the FT, which thundered that “the company blames boring games and supply issues. The true problems are structural” and highlighted that the Game share sales by Elliott Advisors look well timed. The other main story was the results from the struggling NISA convenience store business, showing that it returned to the black in y/e March, providing a boost amidst its takeover talks with Sainsbury’s. The FT had a profile of the new CEO of Burberry, Marco Gobbetti, flagging that he has a good record of working with creative types like Christopher Bailey (“Burberry enlists business mind to buttress Bailey’s creativity”). The Daily
⦁ Sunday Press: There was a surprising amount of coverage in the Sunday papers, of the lurid legal battle between Mike Ashley and Jeff Blue over his Sports Direct pay deal (the Sunday Times revealed that Peter Cowgill of JD could be called upon to give evidence in court), but the big story was the Mail on Sunday scoop that Sainsburys is now talking to McColls, because of its supply contract with the struggling Nisa convenience store chain (“Supermarket war hots up as giants prepare to swoop”). The Sunday Telegraph also picked up this story about Sainsburys and McColl’s. One of the main Business stories in the Sunday Telegraph flagged that short-selling hedge funds have bet more than £3bn against big High Street retailers like M&S and Debenhams and highlighted the bearish views of the well-known fund manager Crispin Odey on the subject. The Observer had a double-page feature on the
⦁ SuperGroup: The SuperGroup finals were pre-released Thursday afternoon in summary form because of “a random theft”, but today has brought the full release, which is headlined “A further year of brand and strategy progress driving strong financial performance”, with underlying PBT up 18% to £87.0m. The statement is very wordy, particularly the section on CEO Euan Sutherland’s “four pillar strategy” and there is nothing about current trading, given the focus on “long-term sustainable growth”, but everything looks on track and it is comforting to see the FY 2018 guidance that “Sales, Distribution and Central costs will increase slower than revenue”. There is an analysts meeting at 9.30am.
⦁ News Flow This Week: As we head into the first week of July, things are pretty busy. The Sainsbury Q1 update is out tomorrow. Wednesday brings the Ocado interims, the Topps Tiles Q3, the Booker Q1/AGM and the Sainsbury AGM. Thursday brings and the ABF (Primark) trading update, with Friday rounding things off with the Dunelm Q4.