Langton Capital – 2017-08-03 – Craft beers, JDW, new openings, prices & other:
Craft beers, JDW, new openings, prices & 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.
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:
• JD Wetherspoon has spent over £4m buying back a further 400,000 of its own shares for cancellation at a price of £10.20 per share
• Amber Taverns grew LfL sales by 2.5% in its year to 5 February this year
• AG Barr has said ‘we are pleased to report a strong first half sales performance supported by the continued success of last year’s new product launches.’ The group says ‘revenue for the 26 weeks ended 29 July 2017 is expected to be £136m, an increase of c.8% on the same period in the prior year (2016: £125.6m).’
• AG Barr CEO Roger White reports ‘we have delivered a good first half with strong sales growth supported by our successful innovation programme’. He says ‘we are well positioned to deliver against our expectations across the balance of the year.’
• Oakman Inns reports that Bracknell Forest Council has approved its application for planning permission to restore The Royal Foresters on London Road. CEO Peter Borg-Neal says re the £5.2m project ‘we are delighted with the outcome’ and adds ‘we will start the demolitions within a few weeks and be open by Spring 2018.’
• B&M Bargains is to buy Heron Foods in a £152m deal. It intends to open between 10 and 20 Heron stores per annum.
• Sales of craft beer in the US have continued to slow in the first half of 2017 reports the US Brewer’s Association. Volumes nonetheless rose by 5% in H1. The Brewers’ Association reports ‘the growth pace for small and independent brewers has stabilized at a rate that still reflects progress but in a more mature market. Although more difficult to realize, growth still exists.’
• Thwaites has announced that its premier 4-star Solent Hotel & Spa in Fareham ‘is celebrating this summer with a £5m expansion.’
• Loungers has reported like-for-like sales for the 14 weeks to up to the 30th July increased by 7.6% ‘as the group continues to roll-out at pace.’ CEO Nick Collins reports ‘trade at both the Lounges and Cosy Club is holding up well and we’ve posted some respectable like-for-like growth. We’ve also experienced a run of great openings with a number of new sites performing nicely above our expectations. We are also seeing more property opportunities coming through with some excellent sites in the pipeline for 2018 and 2019’.
• The MCA’s latest menu price tracker shows prices to customers rising at 3% per annum. Price rises are said to have been particularly noticeable for side dishes & for desserts.
• Euro Garages is to roll out its expansion of Gregg’s stores
HOLIDAYS, LEISURE TRAVEL & HOTEL:
• The ALMR reports that hotels in the UK ‘maintained steady occupancy in June despite recent terror threats, up 0.2% compared to last year, and thanks to rapid inflation, RevPAR increased by 5.5%.’ The ALMR says ‘we are delighted to see that hotels in the UK are continuing to perform strongly. Hotels make up a significant proportion of the UK’s diverse eating and drinking out sector, represented by the ALMR, so we’re pleased to be able to share this information with our members operating in this segment.’
• Blackstone has sold a portfolio of 45 French hotels to Mata Capital. JLL advised on the sale
• Airport delays are being described as the price necessary to ensure security
• FT reports Chinese tourists are spending less on shopping and more on dining and sightseeing
• William Hill has reported H1 ‘momentum continues with wagering growth across all four divisions’. The group yesterday reported net revenues +3% at £837m with PBT down 7% at £93.5m. CEO Philip Bowcock says ‘the first half of 2017 has seen good progress against our three strategic priorities and wagering growth across all four divisions.’ Mr Bowcock concludes ‘we are confident about delivering a good outturn in 2017 and beyond.’
FINANCE & MARKETS:
• The NEISR has forecast that UK GDP will grow by 1.7% this year and by 1.9% next.
• NIESR says CPI in UK will peak at 3.0% in Q4.
• NIESR expects first UK rate rise in Q1 next year
• NIESR sees world GDP +3.6% in 2017 on the back of stronger growth in the Euro area amongst other regions. Suggested growth rate would be the highest in 6yrs
• Britain plans a new body to investigate unfair trade post Brexit according to details of jobs now being advertised on a government website
RETAIL NEWS WITH NICK BUBB:
• Apple Watch: The Apple Q3 results were a bit ahead of Wall Street expectations, with overall revenue growth of 7% and EPS growth of 17% (hence the 5% jump in the share price after hours). The official press release was, as usual, scandalously short on detail, but the accompanying data sheet showed that Services revenue growth of 22% was the main driver, although iPhone sales were up, by 2%/3%, in both unit and revenue terms (despite the fear that consumers would hold off ahead of the next big 10th anniversary launch in the autumn, which is rumoured to have wireless charging!). On the analyst’s conference call, CEO Tim Cook would not be drawn on the plans for the next iPhone, but did say that he was encouraged by the Q3 results in China, with constant currency sales up by 6%.
• Travis Perkins: Given the recent weak trend in housing transactions, it’s worth looking at what the big builder’s merchant group Travis Perkins said yesterday in its interims about the economy. The inelegant headline of the press release is “Executed well against a challenging market backdrop”, but adjusted PBT was 5% down at £175m because of problems in the Plumbing & Heating Division. The Consumer Division (ie Wickes and Toolstation) did well in sales terms (up 4.7% LFL), but interim operating profits were only 2% up. And in terms of the outlook, the company doesn’t give much away, simply saying “we remain cautious on the macro-economic outlook for the second half”.
• Pendragon: Given the excitement over the Morrison’s/McColl’s tie-up we missed the interims from the UK’s leading motor retailer, Pendragon (aka Stratstone’s and Evans Halshaw), but the near 10% growth in underlying PBT was slightly better than expected, driven by the very strong growth in used car market share, and the veteran CEO Trevor Finn said “While we are expecting harder comparatives in the second half we still anticipate our performance for 2017 will be in line with expectations as we enhance our profitability streams further”.
• John Lewis Partnership Sales Watch: Last week saw the first half of the financial year end on a quiet note…At John Lewis sales were up by 2.5% up in gross terms (about 1% up LFL) in w/e July 29th and, interestingly, the business said that “both Online and branches saw an uplift, with online sales up 7.2%” (albeit even that modest level of Online sales growth would not imply more than nominal Store sales growth, even including new store openings). On a cumulative basis over the last 26 weeks, John Lewis was up by 1.6% gross (broadly flat LFL). Over at Waitrose the changeable weather in w/e July 29th was not amenable to selling picnic and barbecue fare and total sales were only 0.6% up gross (over 1% down LFL). Over the last 26 weeks combined Waitrose was up by 1.9% gross (broadly flat LFL).
• Yesterday’s Press and News: The McColl’s/Morrisons tie-up battle with Greggs for coverage in today’s papers, but the FT takes the opportunity to run a photo of somebody eating a salad…to flag that “Healthier food push bolsters Greggs sales”. The Guardian and the Telegraph both highlight the development of drive-through outlets for Greggs. And the Times and the Telegraph highlight the revival of the Safeway brand by Morrisons (with McColl’s to get 12 months of exclusivity for it next year). And there is plenty of coverage of the better than expected Apple Q3 results last night.
• Seb Watch: The estimable and highly quotable Seb James, CEO of Dixons Carphone, gave a wide-ranging interview to Reuters and was on good form. He was quizzed about the lowly share price…and said that he was in a state of “Zen-like calm” about it: “The market is worried, and particularly Overseas investors are very worried, that the UK economy is going to take a very nasty knock…But if we continue to grow profitability and do that in a very sustainable, long term and recurring way I think we’ll get our share price back and more”. He was also asked about his German rival Media Saturn, aka Ceconomy, which has just been demerged from Metro and has said that it wants to pursue industry consolidation (having just agreed to buy the 24% stake in FNAC Darty owned by Artemis). Seb James said “We do see industrial logic for a European consolidation…You could imagine a world in which we and Fnac