Langton Capital – 2017-08-01 – Revolution, Starbucks, Paul, financial distress & other:
Revolution, Starbucks, Paul, financial distress & other:
A DAY IN THE LIFE:
Welcome to the world of Mediterranean internet where a morning email can go out at 1pm, 2pm, you name it.
Indeed, the internet works well during the night but, as people wake up and begin to use it, it seems to fall over.
Today, it went off at 9am (Greek time) & came back on at midnight. Hence the late hour.
Anyway, this week Langton will be either on, on the way to, or on the way back from a beach. Internet connectivity is patchy to say the bloomin’ least. Timing re sending out might be a problem. The email may be a bit shorter. On to the news:
PUB, RESTAURANT & DRINK PRODUCERS:
• Revolution Bars Group has received a conditional proposal from Stonegate Pub Company to acquire the group for a price of 200p per share. Revolution says that discussions are ongoing and Stonegate is undertaking due diligence, therefore there is no certainty that an offer for revolution will be made or on what terms an offer may be made.
• Revolution shares rose by 56p on the news to over 180p. The group floated its shares at 200p two years ago.
• Nation’s Restaurant News in the US suggests that Starbucks may have lost up to $620 on its Teavana venture
• The 36-strong French bakery and café chain Paul UK reported an increase in sales of 12.3% to £32.3m for the year ended 31 December 2016. Sales were up 3% on a LfL basis with group EBITDA at £3.2m. Over the course of the year the group opened 2 new sites and 11 sites were refurbished. The group has opened a new kiosk format at Tower 42 with 2 more planned to open before the end of the year.
• Research from Begbies Traynor shows that 329,834 UK companies were experiencing ‘significant’ financial distress at the end of Q2 2017, a 25% increase yoy. This is the largest annual increase since Q2 2014. The volume of bars & restaurants in financial distress was up 16% yoy.
• Moët Hennessy-owned Dom Pérignon has launched a one-hour champagne delivery service in Miami and New York
• Despite tough trading conditions for US casual diners as a whole, Texas Roadhouse reports Q2 numbers saying revenues rose by 11% to $566m with EPS also up by 11% at 53c.
• Texas Roadhouse says Q2 LfL sales rose by 4.0% at company restaurants and 3.6% at domestic franchise restaurants. It says that margin was down 28bps at 18.9% ‘primarily driven by wage rate inflation, partially offset by the benefit of lower food costs.’ Kent Taylor, CEO, comments ‘we are pleased with our results for the second quarter highlighted by double-digit growth in both revenue and diluted earnings per share.’ He concludes ‘the strength of our balance sheet and cash flow allow us to internally fund our new restaurant growth and return excess capital to shareholders through dividends and share repurchases.’
• Re the outlook, Texas Roadhouse says LfL sales rose by 4.6% in the first 4wks of Q3. The company says it expects ‘positive comparable restaurant sales growth’ for the rest of the year.
HOLIDAYS, LEISURE TRAVEL & HOTEL:
• Wyndham will buy LoveHomeSwap for £40m, 2 years after Wyndham invested in the British sharing economy start-up.
• UK OTA Loveholidays has brought in PwC to either float or sell the company for £100m as the founders look for an exit, according to The Sunday Times. In 2016 the company saw turnover of £23.3m with profits of £2.5m. The company was founded in 2012 by Alex Francis and Jonny Marsh.
• Spanish hotel chain Melia saw profits for H1 2017 increase by 34% to €60.4m, boosted by travellers mixing business with leisure. Global RevPAR rose by 7.7% compared to 15.7% growth in Spain.
• Hollywood Bowl has invested £300k into refurbishing its Ashford Centre site, with work being completed on 14th July. CEO, Steve Burns said it ‘represents our ninth major investment this year’.
• Snap Inc experienced volatile trading on Monday after the expiration of a share lockup allowed early investors to sell. The stock fell by as much as 5.1% during the day but mostly recovered, closing 0.1% down to $13.79, well below the IPO price of $17.
FINANCE & MARKETS:
• Eurozone unemployment has fallen to its lowest since February 2009 per official figures. Unemployment stands at 9.1%, down from 9.2% last month.
• The NIESR has said that it is time to consider getting away from ‘the low interest rate trap’.
• Bank of England reports softening consumer demand for debt.
o UK will not be a corporate tax haven post Brexit says chancellor Phillip Hammond.
o Boris Johnson is reported to have denied that he will quit his job as Foreign Secretary over the timing of migration curbs.
o Reuters reports HSBC is to spend up to $300m moving jobs from Britain post Brexit
o Mitsubishi Finance is reported set to move its UK operations to Amsterdam
o Wall St Journal reports UK businesses suffering from labour shortages as European workers return home
o EU countries had until midnight last night to submit bids to host the European Banking Authority and the European Medicines Agency once they are moved from the UK post Brexit
o PM Theresa May has said free movement will end in March 2019. As things stand, that implies that the UK will also leave the common marketplace at the same time
• Oil $52.79
• Sterling $1.3223 and €1.1174 (but as low as €1.0050 in resort, we regret to inform)
• UK 10yr gilt yield 1.23%