Discounting, EasyHotel, Deliveroo, Premier, inflation etc.:

A DAY IN THE LIFE:

Why is it that annoying people have so much stamina?

Because it seems to me that whilst interesting, valuable people tend to get tired & fade away from time to time, really annoying, upsetting, belligerent, rude and selfish and thoughtless people seem to have that Duracell Bunny gene that allows them to remain in your face apparently indefinitely.

I mean look at politics; where have all the nice people gone?

Well, perhaps they’re looking after their families, keeping their heads down, employing people and doing good works rather than parading up and down in front of the cameras lying and cheating and having affairs and fiddling their expenses and adjusting their ‘principles’ whether it be re Brexit or pre-pubescent gender fluidity or whatnot in order to fit in with whatever the fickle public mood of the moment may be. They’ll clearly never get anywhere.

The brilliant but manipulative Cicero was pretty good at that sort of thing two millenia ago. But he ended up with his head on a spike. On to the news:

PUB, RESTAURANT & DRINK PRODUCERS:

• Discounting still apparently on the up in the UK. Pizza Express offering ‘up to 25% off’ with Prezzo and Bella Italia both offering 50% off mains. Not good for margins and, in the run up to Christmas, not perhaps a sign of strength in the market.

• Underlying trends. We have recently commented on: Overcapacity, discounting, over-renting, empty units, delivery, consumer trends and other issues. Other topics of interest include current trading, crowd-funding valuations, margins, costs and labour shortages.

• Technomic in the US has reported that ‘the restaurant industry landscape continues to be challenging for leading operators’. It says; ‘to date, approximately 60 companies have released their third quarter financials and over half have reported declines in comparable quarterly sales.’

• Technomic says ‘on average, publicly-held companies saw their third quarter comparable sales drop by 1.3%. Full service dining operators were the hardest hit with 24 of 32 companies posting negative quarterly comparable sales.’ Analyst Kevin Schimpf says ‘as we look to the fourth quarter, expect modest improvements in comparable sales as operators face easier quarterly comparisons from the prior year and also begin to turn a corner on hurricane-related performance issues.’

• Moody Burger is attempting to raise £250k on Crowdcube in exchange for 25% of the equity in the company.

• Bridgepoint, the PE house behind Pret A Manger and Azzurri Group, is to announce it has agreed to invest in Burger King UK, the MCA has reported. The deal will see Bridgepoint acquire the master franchise rights for the brand in the UK.

• Pret A Manger has partnered with international travel concessions operator, Autogrill, in order to open sites in major airports and train stations across America and Europe. The first shop is set to open in early 2018 at Copenhagen airport.

• The Central Arbitration Committee (CAC) has ruled that Deliveroo riders are to be considered self-employed. The CAC claimed that a rider’s freedom to ‘substitute’ meant they were self-employed.

• FT reports c40% of gin drinkers say they expect to drink more gin and tonic in the next year.

• Premier Foods reports H1 numbers. Sales +1.5% (after tough Q1) with trading profit unchanged at £48m. EPS 2.56p vs 2.54p last year. Premier CEO Gavin Darby reports ‘we are pleased to report a return to revenue growth of +1.5% in the first half of the year. A key highlight was our strong performance in the second quarter, with volume driven revenue up +6.2% after a challenging first quarter.’

• Premier Foods adds ‘our International business continues to go from strength to strength and saw revenue growth of +23% in the first half of the year.’ The company says ‘our Strategic partnerships with Nissin and Mondelez International are working very well, together delivering over 40% of our revenue growth in the second quarter. We completed the signing of the new Mondelez International Global Strategic Partnership in the first half of the year and through our partnership with Nissin, Batchelors is now the fastest growing major brand in our portfolio following the launch this year of convenient pot format products such as Super Noodle Pots.’

• Premier concludes ‘net debt was £21m lower than the same point last year; a little ahead of our plans. Overall, we continue to expect the business to make progress in the second half of the year and our expectations for the full year remain unchanged.’

• In a move to take on Domino’s, Sainsbury’s could roll out a new pizza takeaway service if current trials are successful. Customers will order via phone and pick up a pizza at a time of their choosing with 10-inch (£3.60) and 14-inch (£4.00) the sizes being offered. The scheme will run for 12 weeks in Redhill, Cambridge Eddington and Bradford.

• In the US, Jack in the Box Inc was up 4% yesterday due to Jana Partners LL and Starboard Value LP increasing their holdings. The burger chain has been considering selling its Mexican food arm, Qdoba, amid concerns of overextension.

• UK supermarket prices have grown by their highest margin in four years, up 3.4% like-for-like, according to Kantar Worldpanel data. ‘With the average shop currently costing £18.26, consumers are now paying an extra 62 pence each time and over the course of a year it could add £143.70 to a typical family’s grocery bill,’ said Fraser McKevitt, Kantar’s head of retail and consumer insight.

• The CMA has approved Tesco’s £3.7bn takeover of Booker, without imposing conditions such as the sale of stores.

HOLIDAYS & LEISURE TRAVEL:

• EasyHotel has taken over the Tune hotel in Newcastle. EZH says ‘the property, which opened as a hotel in 2014, is in excellent condition and will open as an easyHotel next month following minor rebranding works to the building.’

• EZH reports ‘as previously outlined, whilst the Board is focused on accelerating the Group’s expansion through owned and franchise hotel development, it will consider specific leased sites, providing they enable the Group to build a footprint in strategic gateway locations.’ CEO Guy Parsons reports ‘this is an excellent opportunity to establish a footprint in the vibrant and popular City of Newcastle. The 104 rooms will require minimal work to bring them in line with our brand and we will open the new easyHotel Newcastle next month.’ Mr Parsons concludes ‘it has been a year of accelerated growth for the Group, validating our strategy of offering comfortable, affordable accommodation in key tourist and business locations in the UK and internationally. The Board looks forward to announcing further opportunities for the easyHotel brand as we continue to expand our development
pipeline.’

• Yesterday’s 10-year anniversary of Eurostar relocating from Waterloo to St Pancras international revealed that passenger numbers increased from 8m to 10m since the move, growth of 25%, as well as reduced journey times. The service is set to expand to Rotterdam and Amsterdam soon.

• Europe’s largest peer-to-peer car rental operator has launched in the UK. Drivy has raised €31m to grow in the UK, which will be its 6th market.

OTHER LEISURE:

• In a deal reported to be worth almost $250m Amazon has secured the rights to make a TV version of Lord of the Rings.

FINANCE & MARKETS:

• UK CPI held steady at a 5yr high of 3% in October per the ONS. RPI, which includes the impact of mortgage rate increases, rose from 3.9% to 4%. Whilst attention is focused on CPI, it will arguably be the RPI that will most closely mirror costs for consumers going forward

• ONS says food prices +4.1% in year to October but the price of fuel fell.

• NIESR comments ‘annual CPI inflation was unchanged at 3.0 per cent in October. Although today’s outturn is just below the level that automatically triggers an explanatory letter from the Governor to the Chancellor, CPI inflation is set to remain stubbornly above the target rate of 2 per cent until at least mid-2019 on our forecast. Household disposable income will be squeezed as a result.’

• ONS data shows that house price growth in the UK was fastest in the North West of England. Prices in the North West rose by 7.3%. The national average was 5.4%. London prices rose by only 2.5%.

• The IPPR has said that HMG should guarantee public sector pay rises

• Oil price down a buck & a half to $61.42

• Sterling up vs dollar at $1.3138

• Pound down vs strong Euro at €1.1144

• UK 10yr gilt yield down 2bps at 1.31%

• World markets: UK mixed yesterday with FTSE100 slightly down. Europe & US lower. Far East lower in Wednesday trade

• St Louis Fed President James Bullard said yesterday that the US Fed should not increase interest rates until or unless there is an upswing in inflation.

• Eurozone economic growth is set to exceed that in the US next year. The Eurozone managed 2.5% in the year to end-September, the block’s best performance in more than a decade.

• Brexit etc.:

o Parliament bemoans its lack of teeth.

o NFU says has seen a 29% shortfall in seasonal workers in September. The shortfall in May was 17%

o Aston Martin says that it may have to halt production if a deal is not struck with the EU. CFO Mark Wilson says no-deal would have the ‘semi-catastrophic effect of having to stop production’.

PRIOR DAY’S LATER TWEETS:

• Later tweets: Visa / Markit consumer spending survey for Oct shows 2% fall in spending, the fastest drop since September 2013

• Visa says ‘the pre-Christmas trading season got off to a poor start for retailers’. Weather will have been a negative

• London restaurant values down £43,000 during last year says BizDaq. Earnings and multiple likely to be lower

• CPI comes in at 3% (slightly below estimates) with RPI at 4%. Latter measure will pick up on mortgage rate increases.

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

RETAIL NEWS WITH NICK BUBB:

• Today’s Press and News: The astonishing decision of the CMA to give the green light for the Tesco bid for Booker, without any remedies, is the big talking point in today’s papers and there is plenty of outraged editorial comment noting the likely impact on suppliers. The decision of former Tesco boss Terry Leahy to step down as Chairman of B&M, on the back of yesterday’s strong interim results, also gets some attention, with Lombard column in the FT highlighting that the decision to get out while the B&M business is still growing could have come his book on “Management in 10 Lessons”. In terms of today’s news, despite the reassuring noises about current trading from Game Digital and Card Factory, the profit warning from Walker Greenbank, the luxury interior furnishings group, is bound to get plenty of coverage.

• Yesterday’s Press and News: The main story in yesterday’s papers was that NISA members had voted on Monday to sell the business to the Co-op, but there was also a lot of coverage of the warning from Dignity on Monday that it was facing more competition from lower-price funeral directors (albeit Tempus column in the Times said that Dignity is “a stable, cash-generative company with the likelihood of fresh cash returns”). The Daily Mail focused on the success of Ikea UK in catering for “Generation Rent” with its ultra-cheap furniture, whilst the Telegraph focused on the scandalous treatment of its sub-contracted delivery drivers by Amazon UK…

• John Lewis Partnership Sales Watch: A week ago, we flagged that, after a terrible October, the great High Street bellwether John Lewis had also started November on a very weak note…But after the helpfully colder weather, notwithstanding reasonably tough comps, we had expected yesterday’s sales figures for last week from JLP to show that John Lewis had seen a pick-up. Alas, things stayed weak…sales slumped by 3.2% in gross terms (c4% down LFL, ex Oxford) in w/e Nov 11th, the sixth bad week in a row. Fashion sales were 4.2% down in gross terms, despite good Beauty sales, Home was 4.6% down gross and gross Electricals sales were 0.4% down, despite good tablet and computer sales. Over the last 15 weeks, John Lewis sales have been cumulatively up by 0.7% gross or c0.8% down LFL. Over at Waitrose, gross sales were up by 0.3% on last year, but on a LFL basis sales were over 1% down. Over the
last 15 weeks Waitrose sales have cumulatively been up by 1.4% gross (down slightly LFL).

• News Flow This Week: Tomorrow brings the British Land interims and the ONS Retail Sales figures for October, plus the Asda/Wal-Mart Q3.