Langton Capital – 2017-08-02 – Gregg’s, Morrison’s, C&C, Easy Hotel & other:
Gregg’s, Morrison’s, C&C, Easy Hotel & 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:
• Vianet has reported that the hot summer weather is putting pub cellars under pressure. It says ‘pub cellars are struggling to cope during this summer’s hot weather with the high temperatures resulting in beer being served too warm to customers.’ Mark Fewster, Product Manager at Vianet, said ‘when tracking the ambient temperature of a cellar, our data reveals a clear correlation with beer being served too warm. As cellar temperatures rise during the summer months then so does the proportion of warm beer being dispensed.’
• Greggs has reported LfL sales in its company-managed stores +3.4% for the 26 weeks to 1 July. The co has refurbished 107 shops during the period. CEO Roger Whiteside says that the group’s drive through units are proving popular
• The ALMR has said that RPI is unsuitable for measuring inflation. CEO Kate Nicholls says ‘the ALMR has repeatedly called for the introduction of CPI for businesses rates and a move away from the current, unworkable system. The Government’s own statistics body agrees that the current system of using RPI is totally discredited and only increases costs on employers.’ She continues ‘the Government’s plan to switch to CPI in 2020 is not soon enough.’
• Morrison’s has agreed a wholesale supply deal with McColl’s
• C&C has announced the appointment of Mr. Jonathan Solesbury as Interim Group Chief Financial Officer for a period of 12 months, effective yesterday. CEO Stephen Glancey comments ‘we are pleased to announce Jonathan’s appointment as Interim Group Chief Financial Officer. Jonathan brings broad, deep sector expertise and provides continuity to our finance function.’
• The MCA reports that Chop’d founder Jasper Wight has opened the first site for his grab-and-go lunch pot concept, HiLo.
• Kona Grill reports Q2 numbers, says sales +8.5% to $47m with a LfL decrease of 5.3%.
HOLIDAYS, LEISURE TRAVEL & HOTEL:
• EasyHotel has announced that Islington Council has said that it has no objections to floors 3 to 5 of its Old St site being extended to provide offices. EZH says ‘the Group will close the third and fourth floors of the hotel, removing those rooms from inventory from 3 October 2017.’ CEO Guy Parsons comments ‘after undertaking extensive due diligence and considering all the options available to it, the Board considers the retention of the 92-bedroom hotel, together with an extension to the upper floors for additional office accommodation, to be the best outcome for shareholders.’
• EZH adds ‘we have been delighted with the performance of our newly opened hotels in Birmingham and Manchester, which are trading strongly, and the refurbishment of Old Street will enable us to improve Revpar in the hotel.’
• Royal Caribbean reports Q2 numbers, EPS up nearly 60% at 171c. CEO Richard Fain reports ‘our brands are executing beautifully, keeping the business in an exceptionally strong position.’ Mr Fain continues ‘strong close-in demand for cruise bolstered the quarter, and we see further uplift for the balance of the year, positioning us well for the Double-Double and beyond.’
• Cruise.co.uk, has acquired a German cruise OTA.
• Gfinity has announced a broadcast partnership with BT Sport. CEO Neville Upton reports ‘we are very pleased to launch this partnership and deliver the Elite Series to our fans on TV, through BT Sport. BT Sport has shown a commitment to be at the forefront of sports broadcasting and this is an amazing opportunity to bring esports to a new audience in the UK, showcasing the incredible engagement and passion of the gamers and fans. We look forward to working with BT Sport to grow esports in the UK through engaging and innovative new content.’
FINANCE & MARKETS:
• Staff at the Bank of England are undertaking their first strike in 50yrs
• Eurozone economy growing robustly, currently making twice the rate of the UK
• Markit has reported that a surge in export orders has lifted manufacturing activity for June. Markit reports ‘although the exchange rate remains a key driver of export growth, manufacturers also benefited from stronger economic growth in key markets in the euro area, North America and Asia-Pacific regions.’ It continues ‘continued expansion is also still filtering through to the labour market, with the latest round of manufacturing job creation among the best seen over the past three years.’
• Oil $51.35
• Sterling $1.3204 and €1.1189
• UK 10yr gilt yield 1.22%
RETAIL NEWS WITH NICK BUBB:
• McColl’s: The share price of McColl’s went notably higher last week, after it announced that its re-tendering of its supply contract had aroused great interest in the industry…but who could have expected it to announce this morning that it has secured the services of no less a wholesaler than mighty Morrisons? This is a big boost to the development of the Safeway fresh food brand by Morrison’s manufacturing arm, which says that “by the end of 2018, we expect total annualised wholesale sales to all our partners to be in excess of £700m (including tobacco)”. CEO Dave Potts says “Wholesale supply will help make us a broader, stronger business”. It is a big blow to the struggling Palmer & Harvey and NISA, as they lose the supply contracts (which throws doubt on NISA’s takeover talks with Sainsbury). And it is a big boost to McColl’s, which flags that “the agreement allows McColl’s to
• Greggs: Yesterday’s interims (for the 26 weeks to July 1st) from Greggs report only modest 2% growth in operating profits (before heavy restructuring costs), despite decent 3.4% LFL sales growth, given margin pressure, but the company says “the business has traded in line with our plans during the first half of the year”. In terms of the outlook, CEO Roger Whiteside says “We have made a good start to the second half of the year and are confident that the strategic investments we are making will enable the business to continue delivering further profitable growth…Over the year as a whole we expect to deliver results in line with our previous expectations”.
• Yesterday’s Press and News: The Telegraph follows up its scoop yesterday that the upmarket North-West supermarket chain Booths (aka “the Waitrose of the North”) is in financial trouble, with an Editorial about M&A in the grocery sector, headlined “Benefits of the Booker deal fall on deaf ears” and flagging that Sainsbury ought to get back to retailing by doing a deal with the fiercely independent but under-pressure Booth family. The Guardian also follows up on the Booths crisis story, quoting one source saying “The family are on top of this”. The main Business story in the Daily Mail is headlined “Get ready for Amazon’s assault on Britain’s supermarkets”, flagging the ambition of Amazon Fresh to dramatically expand its product range. Finally, the news that Selfridges has opened its Christmas Shop in its Oxford Street store gets lots of coverage…
• News Flow This Week: As we head into the “dog days” of August, yesterday brought the Apple Q3 out in the US, Wednesday brings the Travis Perkins interims and the much-awaited Next Q2 update is on Thursday. Thursday also brings the latest MPC interest rate decision, on the back of the Bank of England’s quarterly Inflation Report.