Langton Capital – 2017-12-19 – Nichols, Admiral Taverns, Escape Hunt, D&M & other:
Nichols, Admiral Taverns, Escape Hunt, D&M & other:
A DAY IN THE LIFE:
So, here’s a tip for you, if you’re out and about doing ever-so-important man-errands, never ring to ask your better half if there’s ‘anything you can pick up from town’ during the month of December.
In fact maybe never do it at all because you’ll find yourself fighting through the crowds at Hawkin’s Bazaar picking up silly-putty and illuminated ‘keep out of my bedroom’ lights as well as having to buy Lego, small items of jewellery, perfume, scarves, selection boxes, daft, it’s Christmas stickers and loads of other junk after which you’ll have overstayed your welcome in the carpark & will have picked up a ticket.
Best just to say you’re off for some chicken feed or popping down to the septic tank supply shop, you’ll get very little interference there. On to the news:
LANGTON RESEARCH, GET IT WHILE IT’S HOT @ £200 + VAT:
Langton is putting together a compendium of 60-seconds pieces for publication early in the New Year.
These are all new (though we may put some historic 2017 efforts in the appendix) & will focus on two areas; companies & themes.
Themes will include discounting, cost pressures, overcapacity, the coffee phenomenon, delivery, the use of apps, Millennials, the grey market and so on and so on. There are more than you might think.
We’ll be busy over Christmas and the doc will be ready in early Jan but, if you would like a copy, please let us know. As mentioned, £200 plus VAT but free to clients.
PUB, RESTAURANT & DRINK PRODUCERS:
• Nichols has updated on full year trading saying ‘we anticipate Group sales for the year ending 31 December 2017 to continue the strong trend reported at the half year. This sales performance is again being delivered from both our UK and international business.’
• Nichols reports UK sales of Vimto are +9.0% on last year. It reports ‘this performance is significantly ahead of the UK market growth of 2.3%.’ Nichols adds ‘as previously reported, this strong sales performance helps mitigate the margin impact from the increased input costs affecting the industry.’
• Nichols reports problems supplying its Yemeni customer. It says ‘as a consequence, management currently expects adjusted Group Profit Before Tax for the year ending 31 December 2017 to be in line with the prior year.’
• Re the outlook, Nichols reports ‘for the year ahead, we are confident that the strong sales trend will continue in the UK with the Vimto brand being supported by a new marketing campaign launching in the spring. In addition, we are well prepared for the introduction of the Sugar Levy with 100% of the Vimto and Feel Good brands portfolio already below the levy threshold.’ The group says ‘our diversified business model is expected to deliver continued sales growth into 2018 and the Group remains highly profitable.’
• Admiral Taverns has reported numbers for the 53wks to 3 June saying it has seen ‘robust trading performance’ and that it has a ‘strong platform for long-term growth.’
• Admiral reports turnover of £69.2m (2016: £69.5m) with underlying EBITDA of £25.1m (2016: £25.2m). The group says this represents a ‘robust financial performance in a year which saw the introduction of sector regulation and growing macro-economic and political uncertainty:’
• Admiral says it has generated a ‘good performance from [its] core estate benefitting from the Group’s proactive investment approach.’ The group has seen its LfL estate valuation rise by 5.6%.
• Since the year end, the group has been sold to ‘C&C Group plc and Proprium Capital Partners, alongside Admiral management who remain invested’. The group has also purchased 17 pubs from Heineken’s Star Pubs & Bars business.
• Admiral reports that current trading is in line with Board expectations. Admiral reports ‘in a year which saw the distraction and bureaucratic burden of sector regulation and the impact of growing economic and political uncertainty in the aftermath of the EU referendum, Admiral has delivered a robust performance with good underlying like for like growth across our core estate.’
• The group says ‘whilst the wider trading environment continues to be challenging, we see evidence that consumers are prioritising affordable, authentic, experiences in their local area which well-invested, community pubs stand to benefit from. As such, trading since the year end has continued in line with our expectations.’ Admiral says ‘we are therefore pleased to report that EBITDA is exactly in line with our expectations.’
• Drake & Morgan reports numbers for the year to March 2017, says revenue +48.8% on back of Corney & Barrow acquisition & positive LfL sales.
• D&M reports revenues +48.95 to £42.9m with EBITDA +39.2% at £5m. Adjusted profit of £2m. Group reports five Corney & Barrow units have been refurbished & relaunched with two sold. The group opened three new sites in 2016/17 in Edinburgh, Manchester and Heathrow.
• D&M CFO James Sherrington comments ‘2016/17 was a transformational year for the business with the acquisition of C&B Bars, three new openings and continued sales and profit growth in the existing business.’ Mr Sherrington reports ‘since the year end, three new London sites have opened, growing the estate to 23 in total – these are The Sipping Room in West India Quay, The Allegory in Principal Place, and The Listing in Cannon Green. Whilst like-for-like sales continue to grow, we remain cautious given the mixed performance across the sector and current consumer uncertainty.’
• Strada continued its £5 per pizza Monday offer yesterday, one week before Christmas.
• Café Rouge offering 30% off food bill every day bar Saturday right to 29 December.
• Sentinel Capital Partners has acquired purchased US quick-service seafood chain Captain D’s from Centre Partners. Capital now has five restaurant chains.
• Forward-ordering app company Ordoo has updated on the mobile ordering market saying over the course of 2017, some 58% of customers ordered a meal either via a website or a mobile app.
• Ordoo reports 1 in 10 apps on a customer’s phone is now a restaurant app. It says ‘pre-ordering systems are now table stakes in the F&B industry.’ Ordoo adds ‘57% of fast-casual customers said pre-ordering is a feature they most want to see from quick-service venue’s mobile apps.’ The operator says that McDonald’s and Wetherspoon have been rolling out their apps during the year with Starbucks now processing over 10% of US transactions through its app, up from just 6% a year ago.
• Allegra reports that UK coffee chains continued to expand both in the UK and in Europe for the third straight year.
• Allegra World Coffee Portal reports there are 22,714 coffee shops across Europe, up by 6% on last year. It says ‘with the expansion matching the previous year, the market has continued to grow at a steady pace, facilitated by a generally positive economic environment.’
• Allegra reports the fastest growing markets in terms of outlet expansion in the last 12 months are the United Kingdom, Turkey and Russia.
• Allegra reports ‘the UK is the most developed market and has long been the model for the branded coffee shop industry in Europe, driving the expansion in 2017 by adding 643 units to reach an estimated 7,421 outlets.’
• Allegra maintains ‘Costa Coffee remains the largest chain in Europe, adding 243 stores in the past 12 months to bring its total to 2,755 outlets. Starbucks added 251 new stores to reach 2,406 outlets and has now overtaken McCafé to become the second largest operator in the market.’
• Artisanal coffee outlets are growing in number. Allegra calls this the ‘influential ‘third wave’ artisan scene’. Allegra says it ‘anticipates the market growth to continue at a steady rate with key opportunities lying in countries where international chains are influencing the expansion of domestic brands.’
• Reports that the UK pensions lifeboat may vote against Toys R Us’s restructuring plans this week. A CVA scheme is currently being prepared.
• NPD Group reports that ‘convenience and value will prevail in 2018’ across the US restaurant market. NPD forecasts little or no growth traffic growth for restaurants in 2018, the same as the current year.
• Ruby Tuesday has kicked back against the ‘highly-conditional and not fully-financed proposal from The Boaz Group’. It says ‘the Board of Directors of Ruby Tuesday continues to unanimously recommend that Ruby Tuesday stockholders vote “FOR” the proposal to approve and adopt the merger agreement with affiliates of NRD Capital.’
• The ALMR is ‘extremely grateful’ that London Mayor Sadiq Kahn has pledged to reduce business rates for hospitality businesses. The trade body added : ‘There have been some positive signals recently with London’s Night Czar Amy Lamé acknowledging the value of the night time economy in the capital and taking steps to protect and nurture it. Business rates rises are a clear threat to investment, growth and job creation in the sector and the Government must act and push ahead with reform.’
• Licensing law firm Poppleston Allen will see Lisa Sharkey take over from Jonathan Smith as Managing Partner from April 2018.
• Sales of English sparkling wine have grown by 50% at Fuller’s pubs following the decision to replace its house Champagne with a homegrown drink. The Guardian writes that the fall in the price of the pound has made English sparkling wine the same price or cheaper than its continental rivals. Speaking to the paper, Fuller’s head of wine, Neil Bruce said: ‘This is an absolute game changer. We are showcasing English wine in a way we have never done before. Our customers get the superb taste and quality and value for money.’
• UK gin sales have increased by some seven million bottles this year to a record 47 million bottles, per new figures from the Wine and Spirit Trade Association. The spirit is benefitting from a boom in demand and has logged another year of double figure sales increases across the on-trade and off-trade.
• Bread Holdings, the bakery group behind Gail’s, enjoyed a 24% increase in revenues to £79m in the year to 28 February. Bread’s wholesale business, The Bread Factory, grew by 7%. The business is reportedly considering a sale for next year.
• Hershey Co is close to buying Tyrrells parent Amplify Snack Brands for $1.6bn, which would value the latter’s shares at a 71% premium to Friday’s closing price.
HOLIDAYS & LEISURE TRAVEL:
• Minoan Group has announced plans to raise £1.3m as it offloads its travel and leisure divisions comprising of Stewart Travel in order to focus on building a major resort complex on Crete.
• Tens of thousands of passengers suffered power outages at Atlanta’s Hartsfield-Jackson international airport, resulting in its partial shut-down. Over 1000 flights had to be cancelled.
• Over 60% of UKinbound members are ‘cautiously optimistic’ about the upcoming 12 months, with the US remaining the main growth market. UKinbound chief executive Deirdre Wells said: ‘It’s been an uncertain year for many of our members due to the economic and political climate, but these latest business barometer results are encouraging’.
• Travellers to Belgium are being cautioned about potential disruption to travel today following several sectors take industrial action.
• Industry leaders in tourism say the sector’s value could grow to £268bn by 2025 as long as the government tackles ‘long-term structural’ problems like transport. In the 12 months to August 40m tourists came to the UK, worth £130bn a year.
• Barrhead Travel says bookings for next summer are up 21%, whereas industry analyst GfK showed just a 7% increase. Barrhead also reported winter bookings up 37% yoy. The agency’s top summer destinations next year are Orlando, Cancun, Dubai, Tenerife and Majorca.
• Gatwick is expecting its busiest Christmas season departure day this Friday, with almost 67,000 passengers expected. Oakland San Francisco is the fastest growing long-haul destination, up 122.6% yoy. A record forecast of 2.1m passengers are expected over the festive period from December 15 to January 3.
• Changes in European legislation has put as many as 25,000 British seasonal holiday jobs at risk. Currently the UK tourism industry can employ British staff as part of the European Union to work in places such as the French Alps, but after Brexit it would be costly or impossible for UK staff to carry out these roles.
• Choice Hotels International is to acquire the WoodSpring Suites brand, which boasts nearly 240 extended-stay hotels in 35 US states, for $231m. The deal, pending regulatory approval and subject to close in the first quarter of 2018, will grow Choice’s extended-stay portfolio to more than 350 hotels. Its current extended-stay brands are MainStay Suites and Suburban Extended Stay.
• Cambridge has extended Uber’s operating license for five years on Monday as the taxi app fights to keep London, its most important European market. York has also refused to renew Uber’s license, citing a data breach and a number of complaints. The US firm has until 5 January to appeal.
• Escape Hunt, the world’s largest escape games company, has updated on its strategy saying ‘the Board is pleased with the progress made as it has continued to develop the approach to growing this early stage business.’
• Escape Hunt says it ‘has adapted its approach to property to target premium, city centre sites with high footfall and close to potential corporate customers.’ The group says it is ‘commencing early stage conversations with regard to licensing partnerships with leading entertainment, content and brand owners for new “Escape the Room” concepts.’
• Escape Hunt reports that it has signed five leases across the UK. Three more are in the final stages of negotiation. Planning issues have led to some delays ‘but the commercial terms of the leases have been within management expectations and the Board is pleased to have secured some excellent locations. In addition, there is a good pipeline of further sites where commercial negotiations are under way.’
• Escape Hunt reports Birmingham will open in early 2018. Other units later in the year. The group reports its ‘international franchise business continues to perform well and Escape Hunt’s EBITDA loss before exceptional costs for 2017 is in line with management expectations.’ CEO Richard Harpham reports ‘we have been putting in place solid foundations to deliver growth of the business and we remain confident about our ambitions over the next three years. All of the work we have completed to date shows us that Escape Hunt has significant competitive advantage and that with the right approach to property, brand and people will deliver exciting Escape Room experiences to customers.’
• Twitter has introduced new rules to tackle abuse, hateful conduct, violence and physical harm, a breach of the new rules could lead to permanent account suspension.
FINANCE & MARKETS:
• Oil up a fraction at $63.52
• Sterling up a touch vs dollar at $1.338
• Pound down a fraction vs Euro at €1.1347
• UK 10yr gilt yield unchanged at 1.15%
• World markets: UK up with Europe & US also higher. Far East a touch lower in Tuesday trade
START THE DAY WITH A SONG:
Monday’s song was David Bowie’s Life on Mars? Today, who sang:
Now there, is this song I wrote,
I hope you learned note for note
LANGTON IS CURRENTLY HOMELESS:
We are between offices. Alie Street no longer works & nor does the phone number shown below. We’re not really set up to pay two lots of rent so, rather than there be an overlap, there is currently a gap. The new office (on London Wall) should be functioning early in the New Year. Details to follow but, for the moment, please communicate via email.
MIFID II – YES, IT IS AS MUCH FUN AS YOU THINK IT IS:
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RETAIL NEWS WITH NICK BUBB:
• Harvey Nichols: The luxury department store business Harvey Nichols has just reported a £6.7m loss for y/e March because of the heavy revamp disruption in its Knightsbridge flagship store. But we can’t help pointing out that Harvey Nichols made exactly the same excuse this time a year ago, when full-year pre-tax profits slid to £2.6m from £5.4m in the previous year, so it’s not clear when the real disruption on the ground floor took place. Sales have now been flat at £194m for 2 years in a row and, given the recent London tourist boom, Harvey Nichols haven’t been very lucky with the timing of the store revamp work, even if it was unavoidable in the long-term. If CEO Stacey Cartwright is still there in a year’s time, she’ll have no excuse if the business hasn’t bounced back into profit…
• John Lewis Watch: Discounting helped that great bellwether, John Lewis, deliver surprisingly good trading at the end of November and early December, but since then trade has been a bit subdued, so it will be very interesting to hear what John Lewis announce for its sales for last week (at about 11am this morning). Notwithstanding the snow disruption on the Sunday, gross sales should be higher than in the previous week, at over £160m, for w/e Dec 16th, but we would expect them to be 3%-4% down on last year. This week should be even busier, as the classic “wild-eyed men” rush to the perfume halls, once it’s too late for Online delivery, but the power of Black Friday may yet further undermine the New Year Sale…
• People Watch: Talking of John Lewis, there was another interesting job move announced there last week, following the recent elevation of Group Productivity Director Andrew Murphy to become Chief Information Officer (CIO). An outsider, Simon Coble, has been brought in from The Body Shop to become Trading Director on Jan 15th and the incumbent, Ed Connolly, is to take the newly created role of Director of Partnership Strategy.
• News Flow This Week: A quiet week lies ahead, with no company news scheduled before Christmas, but the wretched CBI Distributive Trades survey for “December” is out tomorrow morning and then the widely-followed monthly GFK Consumer Confidence Index is out first thing on Thursday.