Langton Capital – 2017-09-12 – Goals, Tasty, Hurricane Irma, JDW, T Cook & other:
Goals, Tasty, Hurricane Irma, JDW, T Cook & other:
A DAY IN THE LIFE:
It’s been said that you often face the choice: you can either remain silent and let other people think you’re a fool or open your mouth and provide them with proof and the same is kind of true regarding various exertions.
I mean you can either watch the Great North Run on TV comfortable in the knowledge that you could do it easily if you tried, or you can have a go at it an prove that you can. Or cannot, more likely, because overconfidence is hardwired, we’re genetically conditioned to be optimistic, to believe that we can do things when, in fact, we cannot.
I mean why otherwise would so many wing mirrors get knocked off? Spaces are always wide enough to get through, aren’t they? And 80% of us consider ourselves to be better than average car drivers, a similar number of university lecturers believe that they are above average and who, realistically, stands at the altar and believes that they have a c40% chance of getting divorced? On to the news:
TASTY REPORTS H1 NUMBERS: TOUGH TRADING TO CONTINUE INTO 2018:
• Tasty reports H1 numbers saying revenues +11.8% to £24.4m with 4 sites opened in the period. Group has 65 units in total.
• Group is taking a £9.5m charge against site impairment. Takes stated loss for the half year to £9.3m.
• Basic loss (after w/downs) is 15.6p per share. Shares currently trading around 42p.
• Tasty reports ‘the sector as a whole has been suffering due to a slowdown in consumer spending since the beginning of 2017 and this is set to continue into 2018.’
• Tasty says ‘this is not unique to the Group or any particular area but appears to be a nationwide problem particularly evident in London and has impacted turnover and profit.’
• Tasty says ‘the Group is facing pressure on sales and margins.’ It says it is ‘taking decisive action to improve its position’.
• Tasty is disposing of sites. It says ‘we are currently in the process of disposing of some sites and are marketing others which have not shown significant signs of improvement.’
• The group has ‘carried out a major review of our menus taking into account customer feedback’. It says ‘we have reduced the number of dishes on the menu’.
• Group says ‘the pace of the roll out has been scaled back in the current climate’ & it will be ‘reviewing its functions to ensure cost savings.’ Tasty says it is ‘currently not committed to opening any sites in 2018.’
• Group has borrowings of £5.4m with a debt ceiling of £12.0m. It says it will reduce debt by the year end.
• Overall, Tasty says ‘the Group recognises the challenging conditions ahead and is taking action to strengthen its position. The Directors are confident that the Group’s restaurants remain appealing to customers and the Group will continue its growth in the future.’
PUB, RESTAURANT & DRINK PRODUCERS:
• As Tasty suggests above, some restaurateurs believe tough trading will continue into next year.
• Above realism will make RTN’s recovery (amongst others) somewhat more challenging. Little happens in a vacuum. RTN was never likely to have been left undisturbed in order to focus on its turnaround either by its competitors or by the wider market.
• One in four chefs working in the UK are EU nationals, which leaves many in the industry concerned about the leaked immigration proposals. The British Hospitality Association has warned ‘The government need to be urgently reminded that so-called unskilled workers in hospitality – the ambassadors for our country – are necessary. It is not just the bankers and the lawyers that are needed to fill the employment gaps’.
• JD Wetherspoons has put another three sites on the market, alongside the 13 other JDW pubs that are currently on offer.
• French exports of wine and spirits have climbed 12% to €6bn in the first six months of this year, according to data from Fédération des Exportateurs de Vins & Spiritueux.
• Chef Marco Pierre-White has caused outrage across the island after insulting English sparkling wine, claiming that only ‘a total numpty’ would buy it. The chef told The Telegraph ‘English wine is nonsense. They are over-priced and not very good. The French make the best wine. The English just play at it’.
• Sales at UK grocery wholesalers rose by 0.3% to almost £30bn in 2016, driven by increases in the foodservice market, per IGD. The retail consultancy also forecast that the wholesale sector would continue to expand for the next four years, reaching £31.3bn by 2021. James Walton chief economist at IGD said: ‘For another year, foodservice has lifted the wholesaling sector, representing the vibrancy of the expanding out-of-home customer. We’re also seeing growth in the chilled and fresh and beer, wines and spirits categories, demonstrating clear investment opportunities for wholesalers.’
• Jeremy Corbyn is to tell the BBC that “unscrupulous bosses” are using technology to disadvantage workers via the ‘gig’ economy. He will say that such moves have harmed workers’ mental health. He will call upon younger people to join trades unions.
• CPI due out at 9.30am. Inflation was 2.6% in the year to July. Oil prices have risen a bit since. Economists are looking for around 2.8%.
• North East-based Proud Inns has invested in four Synergy Grills for its kitchens, believing the grills could cut energy costs by up to 50%. ‘We were looking for quality, innovation and speed and we wanted to buy British,’ said Steve Proud.
• The UK’s Top 30 independent craft brewers saw turnover rise by 44% to £125m in the last year, according to Funding Operations. BrewDog accounts for nearly 60% of the turnover and the industry would have been bigger if not for independent brewers selling to the private sector, such as Camden Town Brewery selling for £85m to AB InBev in December 2015.
• BBPA chief Brigid Simmonds denied that pub companies have been ‘dragging their heels’ over the pub code. Simmonds claimed pubcos needed a resolution to whether a MRO option required a new lease agreement as well as confirmation as to what constituted that agreement.
HOLIDAYS, LEISURE TRAVEL & HOTEL:
• Almost 2,000 Thomas Cook holidaymakers have been evacuated from coastal resorts in Cuba as a result of Hurricane Irma. Thomas Cook reported ‘extensive damage’ in the Cayos in Cuba, with ‘minimal damage’ to Holguin. UK holidaymakers due to travel to Cayo Coco or Cayo Guillermo are being offered free cancellations or amendments on departures up to and including September 30.
• Florida attractions including several Disney theme parks shut down at the weekend in anticipation of Hurricane Irma. Disney closed a number of parks including the Magic Kingdom Park, Animal Kingdom Hollywood Studios, Epcot and its two water parks Blizzard Beach and Typhoon Lagoon. Other Florida theme parks to announce their closure on Sunday and Monday included Universal Studios, LEGOLAND Florida, SeaWorld and Busch Gardens Tampa Bay.
• Phoenix Equity-backed Bridge Leisure has bought three holiday parks for £11m: Ashbourne Heights in Derbyshire, Hedley Wood on the Devon and Cornwall border and Hengar Manor on the North Cornwall coast.
• Heathrow oversaw its busiest ever August this year, with 7.5 million passengers during the month representing a 2% year-on-year increase.
• Thomas Cook Airlines pilots have announced three more days of strike action unless talks due to start today can bring an agreement.
• A nationwide strike in France is likely to disrupt flights and train services, according to Air France and SNCF. The unions are angry with Emmanuel Macron’s plans for labour reforms, which have been called a ‘declaration of war’ by the CGT union.
GOALS SOCCER H1: RECOVERY TAKING LONGER BUT POSITIVE ‘EARLY SIGNS’:
• Goals’ recovery taking longer than hoped. Some positive signs but slower progress than anticipated.
• Goals Soccer Centres has reported H1 numbers saying it has made ‘significant strategic progress in the period’.
• Goals says recovery is slower than expected but there are ‘early signs of turnaround’ being achieved.
• Goals says ‘we are also highly cautious about the pressure on consumer spending.’
• Goals H1 LfL sales +1.6% (vs decline of 2.0% in H1 last year). Total sales £17.4m (vs £17.0m) with underlying PBT of £2.8m vs £3.8m last year.
• Goals reports diluted H1 EPS of 2.7p vs 4.5p last year. There is no H1 dividend (2016: nil).
• Goals cautions ‘the overall turnaround to profitable growth is taking slightly longer than anticipated’ but says ‘there are good early signs of growth from our investments in the Arena upgrade programme and the Clubhouse 2020 pilot sites. The Board remains committed to the strategy announced in 2016.’
• Goals has entered into a 50:50 Joint Venture with City Football Group, the global football business who own Manchester City and New York City Football Clubs amongst others, to rollout the Goals brand in North America.
• Goals says ‘the strategic plan outlined in June 2016 is already showing progress and we are encouraged by the early indicators.’ It says ‘we anticipate growing like-for-like sales in the second half, albeit at a slower rate than originally expected. This is principally due to some clubs underperforming which have not received the required level of arena investment.’
• Goals CEO Mark Jones reports ‘our initiatives to improve performance have returned like-for-like sales to positive territory with growth of 2.5% in H1.’ He says ‘we have begun our journey in turning round the business and there remains considerable opportunity to deliver continued improved performance and returns from the business.’
• The Entertainer reported H1 sales up 6% with profit being 5% ahead of plans. The toy retailer opened six stores during the period, taking its portfolio to 13o stores.
• Endura, the cycling brand backed by Penta capital, is reportedly considering bid approaches after receiving a series of approaches.
• Steve Cooke, CEO of toymaker Hornby, will step down following a strategic review by the company’s majority shareholder Phoenix Asset Management. Last week Hornby issued a profit warning due to increased competition and weaker demand.
• Google has appealed against the €2.4bn fine levied by the European Commission in June.
• Spain levies a €1.2m fine against Facebook for breaking privacy laws.
FINANCE & MARKETS:
• Frances O’Grady, TUC general secretary, has said that workers should not be given pay rises selectively. This on the back of news that ministers will lift the 1% public pay cap for the first time, for police and prison officers only. Ms O’Grady told union members in Brighton ‘all public services deserve a pay rise, and they deserve it now.’ That’s rather a sweeping statement.
• Oil down 25c or so at $53.76
• Sterling unchanged vs dollar at $1.3174
• Pound up a shade vs Euro at €1.1019
• UK 10yr gilt yield up 5bps at 1.04%
• World markets: UK, Europe & US higher yesterday. Far East up in Tuesday trade.
YESTERDAY’S LATER TWEETS:
• Later tweets: Pubs: Sept comps very tough (due to warm weather last year). Means summer pretty much irredeemable. Estimates reduced
• Pubs: Weather utterly rubbish. Thanks for that. Footfall suffering on High St & costs still on the up. Staffing problems to come?
• Discounting to come? Pizza Express 40%, Hungry Horse 33% off mains, Frankie & Bennies’ 25% off meals, Harvester £10 off £30 bills etc.
• Marston’s & Fulham Shore directors buying shares in their companies. Other operators less visible. JDW still buying back stock
• Visa reports 2017 set to be weakest year for UK spending in 4yrs, Telegraph says High St footfall down 22% in 10yrs
• Half of Brits expect their kids to be worse off than they are, London micro-flats approximate shoe boxes etc.
• NIESR says growth was 0.4% in 3mths to August. BCC says ‘no sign on horizon of return to healthier levels of growth’
RETAIL NEWS WITH NICK BUBB:
• JD Sports: The JD Sports share price has been under some pressure of late, with investors worried about Footlocker’s warning in the US of tougher times in the sportswear industry, so it was important that today’s interims cleared the air and…the news is reassuring. In the 26 weeks to end July total sales jumped by 41% to £1.37bn and PBT was up 33% to c£103m, even though LFL sales growth in the core UK Sports business was only 3%, against tough comps. Peter Cowgill, Executive Chairman, says that this shows “our ability to prosper in an increasingly competitive market for athletic inspired footwear and apparel” and has nudged up full year profit expectations.
• The Grocer Watch: The widely followed Grocer “33” weekly supermarket pricing survey in Saturday’s The Grocer magazine was won by Asda, as its £58.54 basket was £3.06 cheaper than Tesco (before a £2.15 instant Price Match discount). Even so, Asda had to dish out a £4.24 voucher for failing to beat its rivals sufficiently on price. Sainsbury was 3rd on £61.73 and Morrisons was 4th on £62.05. Waitrose was a long way off the pace, as usual, on £68.37. The separate Grocer “Mystery Shopper” weekly survey on Store Service and Availability saw the Waitrose store (in Poynton in Cheshire) score zero on stock availability, pushing it into bottom place, with 53 points and the winner was Sainsbury, as its 76,000 sq ft store in Ramsgate scored an impressive 85 out of 100.
• Weather Watch: Memories about “the weather” are always notoriously short-term and after the amazingly good end to August over the Bank Holiday Weekend it felt like summer still had legs, but the month as a whole was, of course, rather autumnal…The Retail weather consultants Planalytics issue a regular monthly overview of how last month’s weather “should” have affected trading on the High Street and their overall headline for August was “A cooler month”, flagging that it was “a good month for transitional products”. London averaged about 1.4 degrees C cooler than last year and in the South-East it was much wetter than last year. Across the country “weather driven demand” for shorts was -5% on last year, but products such as knitwear, boots and lightweight outerwear should all have seen growth on last August, with demand at +9% versus last year. In contrast, Outdoor living had a
• Primark Watch: Yesterday’s pre-close update from the conglomerate ABF (for the 52 weeks to 16 September) flags that mighty Primark has performed “particularly well” in the UK, with full year sales are expected to be 10% ahead of last year on a comparable basis, implying that its share of the total clothing market has increased significantly. After a good first half, third quarter trading was particularly strong in the lead up to Easter, benefiting from weak comps. And “Favourable weather in the fourth quarter and the strength of our consumer offering resulted in markdowns at lower levels than normal. Early trading of the new autumn / winter range has been encouraging”.
• Saturday Press: The profit warning by the windows installation company Safestyle got a fair bit of coverage in Saturday’s papers, given the impact it had on other big-ticket retailers like Kingfisher and Howden, eg it was the lead story in the Telegraph market report and was also highlighted by the Times. Sports Direct remained in focus, with the FT, Guardian and Telegraph picking up the news that 2000 members of staff have shared a £43m bonus, via share incentive schemes. And in the Daily Mail the “Big Shot of the Week” profile was of the embattled Chairman of Sports Direct, Keith Hellawell. The main Business story in the Daily Mail was the news that Asos is to take on Boots etc by launching into the beauty market. The Times and the Telegraph highlighted that former M&S director Laura Wade-Gery has pitched up as a non-exec at the John Lewis Partnership. Finally, there
• Sunday Press: Sports Direct remained in focus after its AGM in Sunday’s papers, with a big feature in the Sunday Telegraph on how the company still divides opinion in the City after yet another turbulent week, whilst the Business Leader column in the Observer highlighted that Mike Ashley won his battle with the big institutional shareholders too easily. The Sunday Times flagged up the Sky News scoop that Sainsbury is looking to replace its Chairman David Tyler, but it had a scoop of its own: that an Indian “fugitive” deal-maker is looking to buy the struggling fashions chains Oasis, Warehouse and Coast. The Sunday Times also had a big feature on how the UK buying spree by the South African retailer Christo Wiese has gone wrong, in the light of the problems of New Look and Poundland etc (“Cape crusader meet his match”). The “In the City” column in the Sunday Times looked at Pets at Home
• News Flow This Week: Things are busy this week… Tomorrow brings the JD Sports interims and the SuperGroup AGM, plus the Apple iPhone 8 launch. On Wednesday we get the Dunelm interims and the Games Workshop AGM. And on “Super Thursday” we get the much-awaited Next interims, the Morrisons interims, the John Lewis Partnership interims and the Booker Q2 sales.