Langton Capital – 2017-08-04 – JDW, Marston’s, Wasabi, Coors, hotels & other:
JDW, Marston’s, Wasabi, Coors, hotels & other:
A DAY IN THE LIFE:
Langton is on its way back from the beach today so the email may be a bit shorter than usual, please bear with us. On to the news:
PUB, RESTAURANT & DRINK PRODUCERS:
• JDW yesterday announced that it had spent almost an additional £7m in buying back 685k of its own shares for cancellation at 1020p. Chairman Tim Martin’s share of the company now amounts to some 31.01%.
• Marston’s is to cut 53 jobs as a result of the Charles Wells integration reports the PMA.
• The WSTA has said that UK government has to “get a grip” on its Brexit strategy if it wants to prevent “Brexit chaos”.
• Wasabi has launched a trial service with Marks & Spencers. In the short term, it will operate sushi counters in five stores
• Tossed has reported revenues +14.2% in the year to end-March. EBITDA was down from £447k to £398k.
• The MCA reports that James Cuthbertson has been appointed as MD of brewer and pub operator, Dark Star. Cuthbertson joined the company in 2004.
• CGA has announced that it is to expand its operations into the festival business with the acquisition of Festival Insights, Festival 250 and the UK Festival Awards. It says ‘the move reflects the changing dynamics of the out-of-home market and consumer tastes – and the growing importance of live events, and the likes of street food and pop-ups, in the market mix as the public seeks out new experiences.’
• MCA research suggests that Japanese cuisine will capture as much as £797m in revenues in the UK this year. The MCA reports that restaurant unit numbers have increased by 16% between 2015 and 2016.
• Molson Coors has reported Q2 net income +4% at $321.7m with sales down 0.6% at $3.1bn. The group’s shares fell on what the market quickly decided was an earnings miss.
• Restaurant Brands (owner of Burger King, Tim Horton and others) has beaten expectations for Q2 on the back of a strong performance at Burger King. Tim Horton & Popeyes performed less strongly.
• Burger King LfL sales rose by 4% in Q2.
HOLIDAYS, LEISURE TRAVEL & HOTEL:
• Wyndham Worldwide is to spin off its hotel business to create two separate, publicly traded companies. Wyndham Vacation Ownership will become the world’s largest publicly traded timeshare company. CEO Stephen Holmes said the co ‘is confident that a spinoff of the hotel business … is the best structure to retain shareholder value.’ The co says that each co will have a ‘sharper focus on its core business.’
• The Association of Serviced Apartment Providers has said that average rates for serviced apartments in the UK have risen by 3.8% in the last year. The ASAP says London rates are +10.3%. STR, commenting on the data, reports ‘it is encouraging to see that the UK’s hospitality performance growth has extended to the serviced apartment sector, and it is quite clear that London is the driving force.’ The ASAP says ‘London’s performance is particularly impressive with the strong increase in leisure business a key factor in this growth.’
• Ryanair has suggested that the failure by the UK government to clarify post EU-exit flying rights could lead to major disruption before the end of next year. CEO Michael O’Leary says ‘the Europeans will engineer disruption.’ Mr O’Leary adds ‘they’ve realised they can really yank the tail of everyone here by delaying on flying rights. There will be big disruption up to Christmas 2018.’
• Club Med has said that it is hosting as many agent conferences as possible after seeing “staggering” increases in bookings by agents who have attended such meetings.
• STR reports that the US hotel industry increased occupancy by 0.3% in the week to 29 July. Rate was +1.2% and REVPAR was some 1.5% higher
• Hyatt Hotel Corp has increased its full year REVPAR guidance after a stronger-than-expected Q2
• Vitruvian Partners has sold JacTravel for £200m to Webjet
• Cruise.co has bought German company Kreuzfahrtberater in a €25m deal.
• Fitbit reports Q2 revenues ahead of expectations at $353m. The company has confirmed that it intends to launch a smartwatch.
FINANCE & MARKETS:
• The UK’s Bank of England MPC has held interest rates at 0.25%.
• Bank Governor Mark Carney reports ‘it’s evident in our discussions across the country with businesses that uncertainties about the eventual relationship [with Europe] are weighing on the decisions of some businesses.’
• Carney says that a year on from the Brexit vote, households have cut their spending
• Bank of England downgrades UK growth expectations on the back of Brexit concerns. Sterling has fallen as a result
• Markit reports the UK economy is seeing “steady but sluggish” growth in Q3. Markit says ‘while the current picture remained one of an economy showing overall resilience in the face of concerns about the outlook, the subdued level of business optimism suggests it’s likely that growth will at least remain modest and could easily weaken in coming months.’
RETAIL NEWS WITH NICK BUBB:
• Next: Ahead of the much-awaited Next Q2 update yesterday, the gloomsters in the City had pencilled in another 3.0% decline in full-price sales (to mirror the Q1 performance) and in May the trend did indeed remain at -3.0%, but June was up by 3.0% and July was up 3.9% to give a Q2 outcome of +0.7%. Next attribute the better than expected June/July sales to the much warmer weather, but also say “We believe there has been some improvement in our product ranges and our Online functionality during this period”. Interestingly, Next Directory had a particularly good second quarter with sales up +11.4%, which was driven by strong sales in both the UK and Overseas, but Next Retail remained dire at -7.4% (implying horrendous LFL sales). On the back of the better Q2, Next has edged up its full-year sales guidance, but as “the improvement in full price sales has been offset with lower clearance
• DFS: After the Sky News scoop, DFS confirmed yesterday morning that it has bought its struggling Lancashire based rival Sofology for an initial £25m, for which it gets 37 stores and a transactional website. The rationale is that “the acquisition of Sofology will add a strong distinctive brand and business to the Group’s current portfolio, building upon the success of the Dwell and Sofa Workshop acquisitions”. DFS has also announced a refinancing. Ahead of the post-close trading update on 10 August next week, CEO Ian Filby says “While the UK furniture retail market continues to be very challenging, we remain focused on making strategic progress to strengthen our position in living room furniture”.
• B&M: News that B&M has bought the discount food chain Heron Foods for £152m came out at the unusual time of 8.16am (just after we’d sent out “The Daily Retailer”). At first we thought the idea would be to move the Heron Foods business into B&M (like Argos and Sainsbury), but the plan is in fact to keep Heron as a separate business and roll it out even faster, with 10-20 openings a year on top of the existing 251 convenience stores: to “bring an attractive new customer value proposition in an expanding sector of the grocery market”.
• Yesterday’s Press and News: The bullish headline of the lead Business story in the Times is “Apple sends Dow soaring over 22,000”, but Lex column in the FT (“Apple: pips squeak”) thunders that “Even as Apple’s market value soared above $800bn, it reported a trifecta of decline: China, iPhones’ contribution and operating margin”. The big Retail story is that “Asda profits tumble amid ‘intense’ competition” (the Telegraph), after Asda filed some weak results for 2016 at Companies House: the Guardian flags that “Asda posts worst annual figures since Walmart takeover”, but the FT highlights that Asda still paid out a £450m dividend to its parent (“Walmart in raid on troubled Asda’s cash”). In other news, the Telegraph picks up on the B&M move into convenience store retailing, via the Heron Foods deal, and City AM notes that Argos distribution staff are planning a 3 week strike.