Langton Capital – 2017-12-08 – New openings, US sales, Brexit, Thomas Cook & other:
New openings, US sales, Brexit, Thomas Cook & other:
A DAY IN THE LIFE:
So, with Storm Caroline giving way to a spell of colder weather, I’m reminded of how our youngest used to like bad weather as she believed it would lead to her getting more treats.
This because she thought a Tropical Storm was actually a Chocolate Storm and, when various goodies didn’t fall out of the sky, we had to go out and buy her some.
On a slightly more serious note, I think we may have the same expectations re Brexit. Now that the ‘whole thing’ has been settled, we’re eagerly awaiting a better NHS, lower taxes, higher benefits, more freedom and a return to Empire.
It’s getting a bit quieter out there now, at least in terms of numbers, reports and the like. Still, let’s move on to the news:
PUB, RESTAURANT & DRINK PRODUCERS:
• Brexit deal should enshrine rights of EU workers in UK. Those that want to stay, should be able to.
• Brexit deal should enshrine rights of EU workers in UK. Those that want to stay, should be able to.
• US restaurant overbuilding indigestion may be coming to an end. It took 2yrs and was against the backdrop of a strong economy and high levels of adult-age immigration (of potential consumers, workers etc. ).
• LfL sales’ trends in US restaurants have continued to improve per journal NRN. Whilst LfL sales were flat, that’s better than recent numbers have been. A flat sales number in November ‘was considerably better than the average 1.6-percent sales decline over the first nine months of the year.’
• NRN says US ‘operators and observers are cautiously optimistic that the industry is beginning to show signs of strength after struggling for almost two years.’ Tracking company TDn2K reports ‘our concern is that these improved trends come despite the fact that the industry has not cracked the code on declining guest visits.’
• Pret A Manger is to open more units at motorway service stations after agreeing a deal with Roadchef. Units will be opened at Chester services on the M56 before Christmas and at Clacket Lane West on the M25 early next year.
• EI Group has bought back another 111,297 of its own shares for cancellation at 145.1p per share.
• Rave Restaurant Group in the US has opened a Pizza Inn Express unit. No copyright on words such as Express, it would appear. Or Pizza, for that matter. Unit, to be known as a PIE, will need only between 50 and 100 square feet. Enough for a bank of microwaves and a till, then. Either that or a very, very small stone-baked oven and an asbestos partition to stop the staff and customers from getting frazzled.
• The King’s Park Capital-backed, Fuel Juice Bars has entered into administration, according to the MCA.
• AB InBev has opened a new 1.5m tons of beer a year brewery in China. This will be the largest brewery by capacity in Asia Pacific. CEO of InBev, Carlos Brito said: ‘It was built in record time like everything in China and it’s a very environmentally sound brewery, as most of our breweries are’.
• Ei Publican Partnerships is partnering with a number of brewers to help its publicans increase sales and footfall by offering 45,000 free pints during January. Steve de Polo, Retail Concept Director at Ei Group, said: “We know that pubs are the best place to meet people, so we wanted to run this initiative to encourage consumers to visit new venues and enjoy new experiences. January is generally the quietest time of the year for pubs – we want to motivate consumers to get out the house and battle the winter blues with their friends and family, by heading down the pub for a beer on us’.
• Zizzi has entered into a new partnership with Sainsbury’s to develop a ready-to-pizza offer. Customers will be able to order pizzas wither in-store or via Click & Collect on the Zizzi website. Chief executive Steve Holmes of Zizzi’s parent company, the Azzurri group, said: ‘We are extremely excited about our new partnership with Sainsbury’s. Changing consumer lifestyles have created opportunities within casual dining, we have seen delivery sales grow rapidly behind the increased demand for restaurant-quality food enjoyed at home’.
• Norwich-based Redwell Brewery has been acquired by local investors, working under the name Three Arches Brewing, after going into administration.
• Grillstock, the barbecue operator from Bristol, has announced that it is ‘no longer in administration’ and has ‘exciting plans for the future’. MCA writes that a new company including some of the group’s former directors has bought back the five-strong business and closed the company’s Walthamstow site until further notice.
• The Government has accused 260 companies of not paying minimum wage, including Sports Direct and Primark, and has made them refund £1.7m to workers.
HOLIDAYS & LEISURE TRAVEL:
• Fosun International is believed to be in talks with banks to list its tourism business, which includes Club Med and a joint venture with Thomas Cook, to raise at least $500m. Shanghai-based Fosun is considering spinning off the unit as early as next year and is likely to pick Hong Kong as the listing venue. Thomas Cook recently said it wanted to 10x the number of its Chinese JV’s customers over the next year or so.
• Steve Heapy, CEO of Jet2holidays, has claimed the airline is ‘winning the war’ on fraudulent holiday sickness claims following a ‘significant’ reduction in the number of claims this summer. Heapy said ‘When the whole industry joined the fight [in June] we really turned a corner and gathered momentum.’
• Manchester Airports Group reports record passenger numbers in H1, up more than 9% to 34.9m with Manchester and Stansted up the most. As a result the group saw profits increase 8.6% yoy to £236.6m.
• Bournemouth airport has been sold by Manchester Airports Group to Rigby Group for an undisclosed price.
• The Foreign Office has warned travellers in Jerusalem to avoid large demonstrations taking place in the wake of Trump’s announcement.
• STR reports US hotel occupancy up 1.3% to 56.6%, RevPAR increased 1.5% to $66.71 and ADR up 0.2% to $117.82 for the week of 26 Nov to 2 Dec.
• Sheffield council has suspended Uber’s license just months after London, saying that the ride-hailing firm ‘failed to respond’ to requests from the council. Uber will still be able to operate in the city until 18 December.
• Shares in Ladbrokes Coral leapt almost 30% yesterday as the (potential) deal with GVC was announced
• Ofo, a Chinese bike-sharing startup, has raised over $1bn from investors including Alibaba. Ofo has also launched in Paris this week with a trial of around 100 bicycles.
FINANCE & MARKETS:
• Bitcoin breached $17k yesterday. It was $10k earlier in the week and $400 a couple of years ago.
• IMF says rising levels of debt pose “large risks” to China’s economy.
• Halifax reports the growth in UK house prices continues to slow. It says the annual rate of house price inflation fell to 3.9% in November from 4.5% in October. It suggests that growth will slow further in coming months.
• Oil up 80c or so at $62.22
• Sterling stronger at $1.351 and €1.1482
• UK 10yr gilt yield up 2bps at 1.25%
• World markets: UK down yesterday with Europe & US higher. Asia up in Friday trade
• Brexit etc.:
o Sufficient progress has now been made in Brexit talks for them to move on to trade next year.
o UK will pay €40bn to €60bn to leave the EU (whether it agrees a trade deal or not)
o Rights of citizens (EU in UK or UK in EU) are settled.
o Deal on Northern Irish border agreed. DUP says ‘there is no red line down the Irish Sea.’
o Donald Tusk will release draft trade negotiating guidelines later this morning. What he says may determine how things unfold.
o FT reports ‘even British officials admit the overall terms are closer to opening demands made by the EU, including the size of the financial settlement, the breadth of protected citizen rights and commitments made regarding the Northern Ireland border.’
o Critics and supporters alike seem to agree that the government does not know, and has not tried to find out, what Brexit means for the UK economy.
START THE DAY WITH A SONG:
Yesterday’s song was R.E.S.P.E.C.T by Aretha Franklin. Today who sang:
Get a taste in my mouth,
As desperation takes hold,
Is it something so good,
Just can’t function no more?
RETAIL NEWS WITH NICK BUBB:
BDO High Street Sales Tracker: We flagged on Wednesday that John Lewis had another pretty good time last week, thanks to the Online sales of Electricals around Cyber Monday. But today’s BDO High Street Sales Tracker for small/medium-sized Non-Food chains last week paints a more sober picture of Store sales: w/e Dec 3rd saw Fashion Store LFL sales fall by 4.0% (versus a quite weak comp of -1.5% LFL a year ago). Including Homewares and Lifestyle chains, total Store LFL sales were down by 2.3% last week (mirroring the -2.3% a year ago). But overall Online sales were very strong again, at +26.6% (versus a tepid +9% a year ago), with Fashion Online sales up by 20.8%. Frustratingly, although the Store/Online split is valuable, BDO still doesn’t give a blended sales growth figure or provide an absolute sales figure.
Trade Press (1): The front cover of Retail Week magazine today is a graphic headlined “What 2018 has in store”, flagging up a major 2018 preview feature on “The spending outlook”, “The effect of Brexit”, “The trends shoppers will love” and “Consumer sentiment”. In terms of News stories, RW highlights the news that Tesco and Next have joined forces for a shop-in-shop trial, in the Tesco Extra store in Surrey Quays, and Marks & Spencer could pull the plug on dozens of store building projects, as boss Steve Rowe steps up his turnaround plans. The “Store of the Week” feature on the back page highlights that Carhartt, the workwear-meets-‘heritage’ fashion brand, has opened a UK flagship store on King’s Boulevard behind King’s Cross. And in his column the Editor focuses on the UK implications of the successful legal action by US mall owner Simon Property Group against Starbucks, having
Trade Press (2): In Drapers magazine today the Editor flags up in her column a feature about the Christmas TV ads (which says that M&S has the most effective ad) and thunders that “Christmas ads fail to ignite our emotions”. The main News stories in Drapers is that fashion retailers have been inundated with complaints about delivery delays following Black Friday, which have been compounded by a high level of returns, and that sharing space (like Tesco and Next in the Tesco Extra store in Surrey Quays) could become an increasingly popular move for retailers seeking to save costs.
News Flow Today/Next Week: The ABF (Primark) AGM update wil be on the screens just after 11am today. A busy week kicks off on Tuesday with the Carpetright interims and the Joules pre-close update, as well as the latest Kantar/Nielsen grocery sales figures. Wednesday brings the Dixons Carphone interims and the Sports Direct EGM about the pay of Mike Ashley’s brother. Then on Thursday we get the Sports Direct interims, the Ocado Q4 sales update and the ONS Retail Sales figures for November.