Langton Capital – 2017-09-25 – Discounts, City Pub Co, Brexit speeches, tourism etc.:
Discounts, City Pub Co, Brexit speeches, tourism etc.:A DAY IN THE LIFE: Why is it that I feel ‘good behaviour’ is just one of many cards that our dog will play from time to time in order to secure food? And it doesn’t seem to be his most natural position either because, and here I believe I’m of pretty firm ground, he seems much more at home with sneak-thievery and skulking. In fact, I think the point at which he sees a good telling off as being definitively worth it is a small biscuit because, if a few chicken bones are thrown in the bin, he’ll happily trade off a period in the dog-house (literally) for the chance to turn the thing upside down and root out a few goodies. His principles are, to say the least, somewhat fluid and, having watched our politicians manoeuvring and scheming over the weekend, I think I know where he gets it from. On to the news: PUB, RESTAURANT & DRINK PRODUCERS: • The latest MCA Eating Out Panel shows further declines in frequency of visits to restaurants in August. It says the fall was ‘less severe than in July and actually with a modest uplift compared with this previous month.’ • MCA reports ‘potentially of concern given ever-rising inflation, is that no year-on-year growth has been recorded in average spend at any day-part.’ • Food offers landing in the digital post-box yesterday; Prezzo 50% off, Bella Italia 50% off, Pizza Express 30% off, Brown’s 20% off. • The Guardian reports that activity-based pubs (ping pong, crazy golf, darts etc.) could offer a new lease of life for the industry. They could help to attract millennials and others. • Telegraph reports City Pub Co has hired advisors in order to prepare for an IPO on AIM. Chairman Clive Watson suggests that rising costs mean ‘there will be less competition for sites and so more opportunities for us.’ He adds ‘we would rather be buying assets at this point in the cycle rather than the top of the market.’ • Imbiba-backed Albion & East has now hosted its formal opening parties for its second site, the Canova Hall, in Brixton. • Leon confirmed a 7.6% increase in like-for-like sales in 2016 as sales jumped up from £36.9m to £58.4m and EBITDA went from £2.7m to £3.4m. The group opened 10 sites during the year. Trading in the new year has not been as strong as 2016 following a weak August and staff retention issues in light of Brexit, while ‘unhelpful taxes such as the recent huge business rates hikes and the apprenticeship levy’ are also having an effect. • Deliveroo has raised another $385m in private funding as it looks to expand and compete with publicly traded rivals such as Delivery Hero and Just Eat. The funding values the business at more than $2bn and will allow Deliveroo to enter new markets, enlarge its technology team and expand its concept of delivery-only restaurants run out of centralised kitchens. • Deliveroo: Raises money, loses it, raises more. It’s the way of the world but where / when are the profits? • Luke Johnson writes that, while conditions in the restaurant and pub sector have become trickier and we are seeing ‘easily the toughest economic climate for a decade or more’, new sites which get it right will continue to be successful. • Indivior is working on a pill that could kill the buzz of alcoholic drinks and help people cut back on problematic drinking. Called Arbaclofen placarbil, it is being developed by Indivior in a £23m facility in Hull that was opened last month. It is derived from Baclofen, which is already in use in France, and is in trials. Arbaclofen could win approval as soon as 2020 or 2021. • MCA’s UK Market Restaurant report concludes that the restaurant market should grow by 4.3% to reach a value of £20bn in 2017. Despite the figures, the report warns of a turbulent period as the market corrects. Simon Stenning, executive director of MCA, said: ‘This will be tough for many, given recent comparatives of 1%, and operators with undifferentiated offers, dated menus and lower calibre management will be most at risk in increasingly turbulent times.’ • JD Wetherspoon chairman Tim Martin has called Tax Equality Day, when Wetherspoon pubs lowered prices by 7.5% to highlight the benefit of a VAT reduction in the hospitality industry, was an ‘outstanding success’. Tim Martin said: ‘Our like for like volumes (excluding new pubs) were up by 17 per cent against the same day last year. Apart from the fantastic sales increase on the day, the overriding benefit of the day was to get the important tax equality message over to the general public, which we achieved in our pubs and across the media.’ • EAT is to make its international debut at Madrid Airport later this year and is also preparing to open two stores with Compass Group Debenhams, per MCA. The c110-strong chain is looking to explore further partnership/concession opportunities to help drive its expansion. • Speaking on Theresa May’s Brexit speech in Florence last week, BBPA CEO Brigid Simmonds commented: ‘Theresa May’s explicit commitment today, to a transition period that retains current single market arrangements, as we have been urging, is very important for business in providing more certainty, as we move towards Brexit. I also welcome the Prime Minister’s clear intent to protect the rights of existing EU nationals in the UK. Our EU employees form a hugely valuable part of our workforce in the beer and pub sector, and a registration system that is quick and easy to complete online is important and welcome.’ • Meanwhile, the ALMR’s Kate Nicholls said: ‘The Prime Minister’s confirmation that she will seek agreement with the EU to implement a two-year transition period is welcome not only as a statement of intent but also as a wider signal of her commitment to safeguarding the interests of industries such as hospitality and avoiding a cliff edge for businesses who employ foreign labour. It is reassuring that the Government appears to be listening to our needs. The Prime Minister’s commitment to tariff-free trade between the UK and the EU in a future agreement is also welcome. Any imposition of tariffs would add to business costs and ultimately lead to higher costs for UK and EU consumers.’ • A third Boxpark is to open in Wembley with a site that will depart from its iconic shipping container roots and have a new and bespoke building design. • Labatt Breweries, in Canada, is planning to invest some $460m over the next three years to meet the growing demand for craft beer and cider. • Lidl’s Oktoberfest promotion this week will see the discounter selling Bavarian beers for as little as 59p. • Tower Hamlets has ratified the implementation of a Late Night Levy to be introduced on 1 January 2018, according to Poppleston Allen. Income from the levy will be allocated through the Community Safety Partnership. • Tesco has pledged to halve its food waste by 2030 and will make food waste data available to the public within 12 months. The supermarket announced a partnership agreement with 24 of its biggest suppliers to adopt its Sustainable Development Goal. • Microsoft is in advanced talks regarding its first UK store, set to be in London’s Oxford Circus. HOLIDAYS, LEISURE TRAVEL & HOTEL: • In July, the UK saw record-breaking tourist numbers with overseas visitors spending £2.8bn, the best month on record. Total arrivals increased 6% yoy to over 4 million. Tourism minister John Glen said ‘these record figures show the continued strength of this important sector and the UK’s global position as a must-visit destination.’ • A second strike by French air traffic controllers will see European travellers face new delays and cancellations. Last weeks industrial action saw at least 300 flights grounded. • Air Malta has introduced a new range of low fares in its first steps to become a ‘hybrid’ airline. The Go-Lite fares start at €39 one-way including taxes. • STR reports that for August 2017 the Asia/Pacific hotel sector saw occupancy increase 3.3% to 75.3%, ADR was up 2.3% to $99.98 and RevPAR rose 5.7% to $75.33. • STR reports that for August 2017 the Europe hotel sector saw occupancy up 2.5% to 77.4%, ADR increased 5% to €116.66 and RevPar up 7.6% to €90.26. • Transport for London (TfL) revoked Uber’s license to operate in London, declaring that the company was ‘not fit and proper’. The ruling means Uber will have to cease operating in London on September 30, but the company has said it will challenge the decision in the courts. Mayor Sadiq Khan backed the ruling saying ‘it would be wrong if TfL continued to license Uber if there is any way that this could pose a threat to Londoners’ safety and security.’ Uber claimed ‘Transport for London and the mayor have caved in to a small number of people who want to restrict consumer choice.’ • Times reports Uber ‘was repeatedly given a clean bill of health by transport bosses before the sudden decision to ban it from London.’ OTHER LEISURE: • Sunday Times reports Ladbrokes has lined up City advisers in order to review its merger options. Separately, the government is expected to curb prizes and stakes on FOBT machines later this year. • Private equity firm KKR is reportedly interesting in buying Pure Gym, according to Sky News. • Moody’s reports that the bankruptcy of Toys R Us is credit negative for toy makers Hasbro & Mattel. Moody’s says ‘although TRU’s objective is to restructure, the process creates the potential for disruption to the normal flow of funds, as well as uncertainty about the ultimate composition of the retailer.’ FINANCE & MARKETS: • CBI warns that manufacturing growth faltered in September after growth over summer. • Moody’s downgrades UK credit rating. It says the UK’s leaving the European Union was creating economic uncertainty at a time when the UK’s debt reduction plans were already missing estimates. o No10 said Moody’s Brexit assessment was “outdated”. • Eurozone activity grows more rapidly than expected in September reports HIS Markit • Oil up 40c or so over the weekend to $56.80 • Sterling down vs dollar at $1.3533 • Pound up a fraction vs Euro at €1.1342 • UK 10yr gilt yields down 1bp at 1.36% • World markets: UK, Europe & US up on Friday. Asia mostly down in Monday trade. • Brexit: o PM May spoke in Florence on Friday. She is going for a ‘standstill transition’ o Times says Mrs May has indicated the UK will pay up to £40bn to secure a transitional deal. It says this ‘means Britain will as good as remain in the European Union until 2021.’ It will pay into central coffers but will have no vote. The position on free movement & the ECJ has yet to be made clear. o Food & Drink Federation says ‘we support the Prime Minister’s intent to move negotiations on.’ It says it needs a transition period ‘if we are to feed the country in the way UK consumers have come to expect and enjoy’. The ALMR & the BBPA have welcomed talk of a transition period o Head of Europe’s centre-right European People’s Party says Mrs May’s speech has left him more concerned than he was already. o UK’s two largest parties in disarray on Brexit. Tories facing both ways at once. o Labour Party big guns say the party must commit to staying in the European Union’s single market. Labour leader Jeremy Corbyn, however, still apparently influenced by the writings of Tony Benn nearly 50yrs ago, has said that single market membership could prevent him using state aid to support (or nationalise) some industries. o Former Labour shadow Business Secretary Chuka Umunna has said that Brexit, as sold to the British public, cannot be delivered. o French President Macron & Polish PM Szydlo say the financial terms of the UK’s exit & Ireland must be cleared up before talks can move on o The CBI has said that Mrs May must clarify the position on trade. Several banking leaders have said that the trade position needs to be nailed down before the end of this year if jobs are not to be moved from the UK to mainland Europe. YESTERDAY’S LATER TWEETS: • Later tweets: Millennial view. E-sports is becoming big, get over it. But still need to know how to play it to make money?? • Colliers suggests ‘Northerners lead UK spending on eating and drinking out, but the market is reaching capacity.’ • Deliveroo loses £129.1m in year to end-Dec 2016. Revenues rise 6-fold to £128.6m. Cash on hand at year end = £180m • Vouchers on the (online) doorstep yesterday. Prezzo: 50% off mains, Harvester: 33% off mains, Chimichanga: 40% off mains. • Ms May to speak in Florence today. BBC says will offer €20bn for 2yrs’ membership. May end up displeasing everyone? • Fed rate rises dubbed ‘The Great Unwinding’. Something to look forward to this side of the pond. • UK government borrowings down in Aug. But was courtesy of spending (VAT receipts up) rather than income (corporation tax receipts down) START THE DAY WITH A SONG: Last Friday’s song was the iconic ‘Blitzkrieg bop’ by Ramones. Today’s instalment is as follows: I, I ‘ll do anything, That you want me to do, And I’ll do almost anything, That you want me to, ooh RETAIL NEWS WITH NICK BUBB:
• Saturday Press: The front pages of Saturday’s papers were full of the reaction to the embattled PM’s speech about Brexit in Florence on Friday afternoon and her proposed 2-year transition period, with the FT headline summing up the general mood: “May’s “constructive” Brexit spirit wins guarded Brussels welcome”. The other big story was the shock news that TFL has revoked Uber’s licence in London on concerns over passenger safety. On the Business pages, the main focus was on the weak consumer response to the launch of the Apple iPhone 8 on Friday, with a distinct lack of queues evident outside its shops, as highlighted by the Guardian. The Times flagged up the poor performance of the Apple share price of late, whilst the FT noted that consumers may be waiting for the launch of the premium iPhone X model in November. In the stockmarket reports it was widely noted that the Pets at
• Sunday Press: The front pages of Sunday’s papers were full of the break-down of the fragile truce in the Cabinet over Brexit, with Philip Hammond and Boris Johnson widely reported to be at each other’s throats…As for Retail News, the cupboard was relatively bare, although the Sunday Times noted that Debenhams has invested £7.5m for a minority stake in the beauty app Blow and that the furniture tycoon Charles Wade is lining up a sale of his struggling furniture chains Feather & Black and Multiyork to turnaround funds. The Sunday Times also had a profile of Euan Sutherland, the CEO of SuperGroup, noting that he has gone native and now wears Superdry clothing all the time: “The boss who slipped into something more comfortable”. The Sunday Telegraph had a big feature on the problems of Toys R Us in the US, with toy suppliers said to be prepared to support it through its bankruptcy • Today’s Press and News: Thin pickings today, although there is plenty of coverage on the front pages of the German Election result, as per the headline in the Times: “Merkel win eclipsed by resurgence of far right”. The main Retail focus is on the news that the much-delayed Tesco accounting scandal trial starts today, as noted by the FT and the Telegraph. The Telegraph also picks up the news about Debenhams and its investment in the Blow beauty business (hence the big photo of its ambassador Alesha Dixon). The Telegraph also has a photo of the founders of a new upmarket sportswear business called Castore, which has received backing from New Look founder Tom Singh. And the Telegraph has a useful “SWOT” analysis of Hotel Chocolat, ahead of its results on Wednesday. • News Flow This Week: There is a SuperGroup Capital Markets Day today. Tomorrow brings the Card Factory interims and the MySale finals. On Wednesday we get the Boohoo interims and the Hotel Chocolat finals. The Moss Bros interims are on Thursday and then the widely followed monthly GFK Consumer Confidence Index is out on Friday morning. |
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