Langton Capital – 2017-11-14 – Consumer spending, Euro Disney, Jackpot Joy & other:
14 Nov 17 – Consumer spending, Euro Disney, Jackpot Joy & other:
A DAY IN THE LIFE:
It’s reasonably fine today but one thing that’s been troubling me recently is, where do all the taxis go when it rains?
I mean it’s a somewhat academic question for me as I tend to either walk or get the Tube (provided it’s not the Central Line heading west between eight and nine a.m.), but I can’t help noticing that a lot of miserable people seem to be impotently waving vaguely at traffic in the hope of hailing a cab when the weather’s bad.
Maybe they, that’s the taxis rather than their would-be passengers, huddle under trees or skulk under bridges when the heavens open? Or perhaps they just turn off their For Hire lights for a laugh and drive around feeling particularly warm and dry?
Or maybe they’re working on how to build in ‘surge pricing’? They could be calculating just how much higher they could jack their fares when it rains and be working on some sort of firm dividing line between rain and drizzle? That would make sense but, anyway, that’s enough of that. On to the news:
PUB, RESTAURANT & DRINK PRODUCERS:
• Visa / Markit consumer spending survey for Oct shows 2% fall in spending, the fastest drop since September 2013
• Whilst the fall looks disturbing, real incomes are currently on the slide and, with borrowing unable to plug any spending gap permanently, lower expenditure is likely over time.
• CPI for October is released this morning. Some observers are suggesting that inflation could peak this month. Others, such as the Bank of England, maintain that the labour market is tightening & suggest that, unless interest rates rise a little further, inflation could get baked into the system.
• Visa says High St sales fell by 5% (steepest since 2012) in Oct vs same month last year with clothing sales down 9%. The warmer weather in October could have delayed clothes purchases. Spending on out of home leisure held up relatively well.
• Visa reports spending dropped in October for the fifth time in six months.
• Visa says ‘the pre-Christmas trading season got off to a poor start for retailers with October spending falling at the fastest rate in over four years. The figures are a stark indicator of the strain on household budgets even before the Bank of England’s recent interest rate rise.’ It continues ‘retailers will now be pinning their hopes on strong performance around Black Friday and Cyber Monday. November’s data will, therefore, provide the first real clue on how Christmas is shaping up.’
• Markit says ‘the data add to evidence that falling real wages, muted consumer confidence and lingering uncertainties over the direction of the UK economy are having a substantial impact on spending.’
• Concerns that it may be about to make an acquisition in Africa sent Coca-Cola HBC lower yesterday in its sharpest drop in nearly two years. The group may take a majority stake in bottler Coca-Cola Beverages Africa.
• Red Robin Gourmet Burgers in the US is to test its first delivery-only restaurant in downtown Chicago. It says ‘as the demand for non-traditional dining and off-premise services continue to grow, downtown Chicago presented the perfect location for us to test our new delivery-only concept.’
• PE house Roark Capital has made a $2.3bn offer to take over Buffalo Wild Wings.
• Old tenner to cease to be legal tender on 1 March next year.
• The MCA has reported that the rapidly growing noodle bar chain, Chopstix Group is looking for further acquisition, following its purchase of nine-strong Yangtze for an undisclosed sum. The 84-strong chain told the MCA: ‘We will judge each potential acquisition opportunity on its merits however it is fair to say that, as our expertise lies within the food to go/fast dining arenas, future acquisitions in the short to medium term are more likely to be within this sector’.
• One of the UK’s largest petrol station operators, Lone Star Funds, has hired Citi, JPMorgan and Numis Securities to oversee its £1.5bn floatation, Sky News has reported. The group trades about 450 forecourts across the UK, largely branded under BP, Esso, Shell and Torq.
• London restaurant values have fallen more than £43,000 during the last year, according to data from BizDaq. The value of the average London restaurant was believed to be £140k in 2016, with BizDaq blaming both rising costs and a drop in demand.
• Ikea reported sales of £1.8bn in the UK for the year up to 31 August 2017, representing growth of more than 5.8% yoy.
HOLIDAYS & LEISURE TRAVEL:
• Phoenix Equity Partners is understood to be leading the bidders for Forest Holidays, which owns luxury wood cabins. Competing bidders for the holiday parks, which are part-owned by the Forestry Commission, include Caledonia Investments and Center Parcs.
• Passenger growth at Manchester airport was affected by Monarch’s closure in October, with year-on-year growth down from 7.4% in September to 3.1%.
• Thomas Cook is to fly to eight new destinations next summer from Luton airport, where Monarch used to be based.
• Euro Disney has said that it should have fully recovered from terrorist attacks in France by 2012, some 5yrs after the attacks actually took place. Some 49% of visitors to Euro Disney are French with 17% coming from the UK.
• The budget hotel site operated by Travelodge by the Tower of London has changed hands for £47.1m
• Uber-rival Lyft is to begin operating in Toronto
• In the aftermath of last month’s attack, international flight bookings to Las Vegas are down 16%, with domestic reservations slumping by 21%. The data from ForwardKeys show Australia and Brazil as the only source markets were flight bookings have increased.
• Jackpotjoy has reported Q3 numbers saying revenues rose by 14%. The group reports adjusted net income of £18.3m, down from £21.2m last year.
• Jackpotjoy reports ‘no change to full year 2017 outlook, management confident of meeting recently increased market consensus’.
• Jackpotjoy reports ‘the strong trading momentum seen over the first six months of the year continued into Q3 and into the early stages of Q4. As previously flagged, there will be an impact on profitability from Q4 onwards from the introduction of the UK point of consumption (“POC”) tax on bonuses. Likewise, and also as previously highlighted, marketing spend is weighted towards the second half of the financial year. Management, however, remains confident in meeting the upper end of market expectations for FY17.’
• Jackpotjoy Executive Chairman Neil Goulden says ‘the third quarter has seen a continuation in the strong underlying momentum that we saw during the first six months of 2017.’ Mr Goulden concludes ‘against a positive operational backdrop and given the new management structure in place, I have full confidence that Jackpotjoy plc will continue to go from strength to strength and generate attractive returns for our shareholders.’
• Manchester City has now broken 1m subscribers on YouTube
• Softbank has taken up to a $10bn stake in Uber
FINANCE & MARKETS:
• Oil down half a dollar or so at $62.97
• Sterling down vs dollar at $1.3117
• Pound weaker vs Euro at €1.1235
• UK 10yr gilt yield down 1bp at 1.33%
• World markets: UK & Europe down yesterday with US markets higher. Far East mostly up in Tuesday trade
• Brexit, politics etc.
o Paddy Power is offering 5/2 that PM Theresa May is gone by the end of this month.
o Sterling down on political concerns
o CBI DG Carolyn Fairbairn says certainty is essential in order to protect jobs.
o HMG says it will allow a vote on the terms of the final deal struck when leaving the EU. The choice will be either approve whatever deal is on the table, or leave the EU with no deal.
PRIOR DAY’S LATER TWEETS:
• Later tweets: Langton forecast. Christmas will happen. But it will be late. Where have we heard that before. Some keys could come back in Jan.
• NIESR etc. say UK economy may ‘rebase’ away from consumer, towards exports. Good stuff but will lead to disruption in short term
• More businesses on offer. Luke Johnson selling Laine. Hopes for 2x sales but says advisors inundated by would-be vendors
• London hotels blighted by capacity increase. REVPAR still up (higher rates) but occupancy down on 4% increase in supply
• Michel Barnier: UK has 2wks to come up with divorce offer. Says he is preparing for a breakdown in talks & others should too
• BRC says High St footfall down 2% in Oct. UK could be in for ‘constrained’ Xmas, it says. See our email.
• Alibaba took $1bn per hour on lipstick, mobile phones & shoes during its record-breaking Singles’ Day
START THE DAY WITH A SONG:
Yesterday’s song was The Tracks of My Tears by Smokey Robinson. Today who sang:
I’m so tired, of playing,
Playing with this bow and arrow,
Gonna give my heart away