Langton Capital – 2017-08-17 – Carlsberg, business confidence, Tasty, Rank & other:
Carlsberg, business confidence, Tasty, Rank & other:
A DAY IN THE LIFE:
Parts of Langton are on holiday. Back properly after the Bank Holiday but, for the meantime (and rural internet permitting), the email will go out in shortened form. On to the news:
PUB, RESTAURANT & DRINK PRODUCERS:
• Carlsberg sales and profits in the first 6 months of the year were boosted by demand for more expensive craft beers, according to the Danish brewer. The firm’s craft and specialty division reported a 25% rise in volumes, helped by extending a distribution agreement with Brooklyn Brewery. However, total beer volumes dropped 4% with costs per hectolitre increasing by 3%.
• A study by Fourth has found that 78.8% of diners who leave a negative review cite poor-quality food as the primary reason. Rude staff and waiting time were the second and third reasons, with the average diner leaving 3.4 reviews a year. 16-29 year olds were twice as likely to leave a negative review compared to 45-59 year olds.
• The ICAEW reports that business confidence has fallen back into negative territory. It says gains made in Q2 2017 have been reversed. The ICAEW says ‘despite being more confident about the economic outlook in Q2, a snap general election, the hung parliament and the hesitant progress of negotiations with the EU has meant British businesses are now adopting a more cautious, wait-and-see approach rather than being proactive in preparing for a post-Brexit future.’
• Trade press suggests the Co-op could be back in the game to buy Nisa as Sainsbury’s exclusivity period has now ended
• IGD reports the food-to-go market could expand to some £23.5bn by 2022
• Per MCA, Tasty will trial a new concept names Centuno which will focus on pizza and pasta. The first site will open in Hampstead Lane, London Highgate.
• Nielsen data shows that wine and spirits sales in the US grew faster than beer sales. In the 52 weeks to June 2017, US on-trade sales of wine grew 1.5% with spirits up 1.6% compared to beer sales down by 2%. Senior vice president of Nielsen CGA, Scott Elliot, said on-trade drinkers were looking for new experiences and style of outlet.
• Per PMA, an All Bar One social media campaign has led to a 28% increase in brunch sales driven by female millennials, according to the company.
• Southern Salads is in administration with the company blaming increased import prices for fresh vegetables after the Brexit vote. ‘All but a handful’ of the 260 staff were laid off said administrators FRP Advisory. The 30 year old company had a turnover of £30m in 2015 and supplied supermarkets, restaurants and travel chains across the UK.
• After a slight slow-down, Lidl has seen its UK wine sales grow by around 37% in the 12 weeks to 16 July, ahead of overall yoy growth of 19.4%.
• In Q2, Papa Murphy’s added two new markets to its delivery test alongside a 4.3% decrease in same-store sales. Jean Birch, former interim CEO, said the Vancouver-based company anticipates increased efforts to sell company-owned sites to franchisees.
• Little & Cull, a Devon-based food manufacturer, has doubled its production capacity via expansion in its Newton Abbot site with the help of a Lloyds Bank funding package which included a £370k hire purchase facility. Lloyds also supported the company’s cash flow with a £1m working capital facility.
• Oakman Inns has opened its 20th site, The Anchor in Hullbridge, with Peter Borg-Neal saying ‘This is a superb pub and a very exciting addition to the Oakman Inns group.’ Across the group, work commenced on the £1.8m development of The Cherry Tree in Olney expected to open Q1 2018, planning permission has been granted for the £5.2m redevelopment of The Royal Foresters in Ascot and work has begun on renovating and extending The Akeman in Tring.
HOLIDAYS, LEISURE TRAVEL & HOTEL:
• According to Travel Trade Gazette, bookings in Spain ‘remain strong’ despite more possible disruption by anti-tourism protesters following a 12% increase in visitor numbers (36.4 million) to the country in H1 2017. A group of activists called Arran held protests claiming tourism was destroying cities and increasing rents.
• Monarch Holidays’ new managing director, Richard Singer, says uniting the group’s airline and operator businesses is crucial to the company’s success. Singer, previously president of Europe at Travelzoo, told Travel Weekly he had been given ‘big number targets’ and ‘that relationship between the two divisions is going to be important to success.’
• Rank FY numbers. Rank reports group LfL revenues for the year to end-June +1% at £754m. UK digital revenue was +15% to £111.5m. Group pre-exceptional EBITDA rose by a fraction from £128.2m to £128.8m.
• Rank reports FY adjusted PBT +2% at £79.3m. Adjusted EPS are up by 4% at 16p with a full year dividend up 12% at 7.3p. The group says it has seen a strong second half operating profit performance. CEO Henry Birch says ‘after a challenging first half of our financial year, we are very pleased with our second half performance, especially with our digital business which delivered 63% growth in operating profit for the year.’
• Rank CEO Henry Birch says ‘we are excited about the roll-out of our new Luda bingo concept following the opening of the first venue on 7 August 2017. Additionally, the Group has put in place a number of digital, product and venue-based initiatives launching in the current financial year which we expect to drive top line revenues. The new financial year has started well and the Board looks to the future with confidence.’
• Apple is said to have put aside some $1bn in order to produce blockbuster shows to rival Games of Thrones & compete with Netflix and HBO.
FINANCE & MARKETS:
• Unemployment in the UK has fallen to a new 42yr low of 4.4%. The number out of work fell by 57k in the 3mths to June.
• Average incomes grew by only 2.1% in the year to end-June. CPI is currently 2.6% meaning that real incomes are falling
• Eurozone growth forecasts have been increased to 0.6% for Q2. The annual estimate for this year is now 2.2% against 2.1% earlier
• Fed minutes show the FOMC split on whether to raise interest rates again this year.
• Oil down at $50.45
• Sterling up vs dollar at $1.2904
• Pound down vs Euro at Euro 1.0946
• UK 10yr gilt yield up 2bps at 1.10%
• World markets: UK, Europe & US all higher yesterday with Asia mostly up in Thursday trade
RETAIL NEWS WITH NICK BUBB:
• Kingfisher Today’s Q2 update from Kingfisher (to July 31st) was expected to be pretty mixed and it certainly is…The overall -1.9% LFL sales outcome is an average of -1.0% in the UK, -3.8% in France and +4% in Poland, inter alia. The disappointment in the UK is obviously not Screwfix (which was up a heady 10.8% LFL), but B&Q…which was down 4.7% LFL, with seasonal sales down a hefty 11% (blamed on strong comps and the weather boost to Q1 this year). There is also talk of continuing range disruption from the much-vaunted “transformation programme”, but, fortunately, cost savings have made up for the top-line weakness and Kingfisher remains comfortable with full-year consensus underlying EPS expectations of 26p.
• Investor Relations Watch: It may not feel very “summery”, but the traditional IR summer drinks for Retailing analysts are being held in the City this evening. The event is mainly organised by the hard-working IR people at Marks & Spencer and Kingfisher, but many other companies will be there as well, including Tesco, Sainsbury, Asos, Ocado, Pets at Home, Debenhams, SuperGroup, Halfords, Inchcape and WH Smith.
• News Flow This Week: This morning brings the ONS Retail Sales figures for July and this afternoon brings the Asda/Wal-Mart Q2 update.
• Planet ONS Watch: In the real world, July (the 4 weeks to July 29th) was a reasonable month on the High Street overall, as per the recent BRC-KPMG Retail Sales survey, thanks to the Food Retailers. But we will find out at 9.30am what life was like last month on that bizarre parallel world, the Planet ONS, as per the Office of National Statistics Retail Sales figures for July. Our friends at Capital Economics have pencilled in a 0.8% month-on-month rise in seasonally adjusted sales volume in July, which would leave volume up about 2% year-on-year. We will obviously be focusing on the non-seasonally adjusted sales value figures and the volatile ONS figures for “Small Businesses”…
• Asda PR Watch: The Q2 LFL sales performance of Asda is expected to have been slightly positive, thanks to higher food price inflation and the move of Easter, and the Asda/Wal-Mart PR machine is likely to be trumpeting a great turnaround, but it is worth remembering just how weak the comp was…Q2 a year ago was down 7.5% LFL for Asda (split between a 6.0% fall in “traffic” and a 1.5% fall in “ticket”) and that was on top of a 5.2% LFL sales fall in Q2 2015.