Langton Capital – 2017-12-21 – Confidence, cheese, delivery, clicks & bricks & other:
Confidence, cheese, delivery, clicks & bricks & other:A DAY IN THE LIFE: It’s the shortest day today and I really, really must get down to some shopping. 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. Suggestions for topics welcome. 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: • UK consumer confidence fell by one point in December to a 5yr low per GfK. • GfK reports almost two years of declining confidence, says measure is now at minus 13 in December. GfK reports ‘we need to see several issues move on before the downward trend of the consumer mood changes. We need to have a better sense of how Brexit will pan out, and also of how quickly and how far interest rates will rise. But none of this will be resolved quickly so there’s every likelihood that 2018 will take us lower.’ • GfK reports ‘appetite for making major purchases such as furniture or electrical goods slipped one point to minus 4, down from 12 this time last year. Meanwhile, consumers are switching their attention to saving, with the savings index for December at 4, up from minus 5 in the same period last year.’ • EI Group buys back another 147k of shares at 144.8p per share. • In a move that mirrors those this side of the Atlantic, Technomic reports that breakfast sales in Canada have remained steady but it says that new entrants are increasing the number of offers available to consumers. • Technomic reports ‘technological enhancements that speed up the ordering process, such as order-ahead programs.’ • Michael Gove has conceded that a no-deal Brexit will lead to higher food prices. • Michael Gove has said that people should be more patriotic about their cheese purchases. He told MPs ‘I am deeply concerned about your unpatriotic attitude towards cheese.’ • Some 12m parcels will go missing this Christmas reports Which. • The MCA has reported that the top 10 branded restaurant operators in the UK are using a mixed pricing strategy in order to balance margin pressures and top line growth. The report also found that groups have increased the regularity of seasonal price rise reviews. • Franco Manca is set to open a unit in Cambridge. The group currently operates 42 sites in the UK and one in Salina, Italy. • Deliveroo has reported the best selling restaurants on its app for 2017. Burger operators led the way with Five Guys, GBK, The Meating Room, Byron and MEATliquor all featuring in the apps global top 100 operators. Other UK establishments making the top 100 were; Wagamama, Tortilla, Kenji Sushi and Ahi Poké. • The MCA has reported that the Jasper Wight led salad concept, HiLo, has closed its only site in London to focus on wholesale. • Over two-thirds of UK pubs lack access to goods and services for their business due to poor credit ratings, according to data from Utilita. • Fuller’s CEO and new BBPA chairman Simon Emeny has told PMA that, although the trade faces ‘tough times ahead’, he is optimistic about the future of pubs. • Castle Rock Brewery has opened its first micro pub and wine cellar, The Barley Twist, on Carrington Street, Nottingham. • ThaiBev has won an auction for a c54% stake in Vietnam’s state-owned brewery, Sabeco, for $4.84bn. • The White Brasserie Co is set to open its 17th pub, The Boot in Histon, Cambridgeshire on the 5 February 2018. CEO of Brasserie Bar Co, Mark Derry said: ‘We’re looking forward to opening our 17th site in historic Histon. The pub is full of character and we have gone to great lengths to restore many of the original features in the building as well as creating an impressive new extension. We look forward to welcoming people into the pub towards the start of February.’ • FullClear, a beer line cleaner, has received ‘significant investment’ from Tobin Prior, formerly of SAB Miller, and is closing in on its crowdfunding target. • The Campari Group has acquired Bisquit Cognac from Distell for €52.5m. • Canada’s booming cannabis market has grown so big that the country now spends almost as much on recreational marijuana as it does on wine. In 2015, Canadians consumed about 700 tonnes of pot worth between CA%5bn and CA$6.2bn, compared with 225 tonnes in 1973, according to a report on historic cannabis consumption published in the journal Economic Insights. • Fosun International is taking a stake in Tsingtao Brewery after Japan’s Asahi Group declared it would sell its 19.9% stake for $937m. • UK shoppers are set to spend more than £4.2bn on groceries in the week before Christmas. HOLIDAYS & LEISURE TRAVEL: • With Airbnb said to be close to buying Hoseasons, James’ Villas & a number of holiday cottage sites and Amazon taking Whole Foods, there is some evidence that clicks are buying bricks. Maybe it’s because their ratings are so much higher? • Inbound tourism numbers fell in September reports the BHA. It says numbers fell by 1% compared with last year. • The BHA says the fall in inbound tourism numbers in September is ‘disheartening’. Numbers rose by 9% in H1 this year. The fall was driven by reduced North American traffic, which was down some 8% on the same month last year. • Monarch’s administrators have put the airline’s deficiency for unsecured creditors at £756.6m, with just under £90m available to pay preferential creditors. A KPMG spokesperson said the full creditors’ report would be published next year. ‘We have to publish a Statement of Affairs within eight weeks. Another will be issued in around six months – we are probably looking at the end of April,’ she said. She added that no date has yet been set for a creditors’ meeting. • Peel Hotels has re-financed its nine-strong estate with a £9.9m five-year term loan facility from Allied Irish Bank (GB). The debt will support the Group’s ongoing programme of refurbishments and improvements, as well as branch banking services for the hotels. Trish McNicholas, senior relationship manager at Allied Irish Bank (GB), said: ‘Robert is a very well-respected and well-known hotelier with a proven track record built up over five decades in the business.’ • STR data shows occupancy in the US hotel industry grew by 1.6% to 61.5% in November, with ADR up 2.3% to $122.64 and RevPAR up 3.9% to $75.48. • Train strikes are due in the New Year at five train operating companies, South Western Railway, Greater Anglia, Merseyrail, Northern and the Isle of Wight’s Island Line run by SWR. • Uber has been told that it is a taxi company. The group told UK MPs that around 50k of its drivers work more than 40hrs a week. • Phoenix Equity Partners have acquired Forest Holidays, a domestic self-catering operator, for £110m. The company currently has nine eco-cabin and treehouse sites across the UK and will continue with plans to open five more over the next five years. Phoenix also owns caravan site operator Bridge Leisure. • Data from Kayak.co.uk shows overall demand for travel from the UK to the US continuing to decline with no special mentions of the ‘Trump-effect’. The travel research site said ‘San Francisco is down 12%, Orlando is down 11%, and Las Vegas is down 10%’. Only Houston and Denver recorded year-on-year increases in demand. • Iata has called for Air Passenger Duty to be cut on UK domestic return flights in a bid to expand regional connectivity in the UK. Rafael Schwarzman, Iata’s regional vice president for Europe, said ‘Airlines in Europe are operating on a 5% margin, so any additional costs are critical to the viability of a route.’ • Airbnb has partnered with Brookfield Property Partners in a deal worth $200m to acquire property in Miami, Fort Lauderdale and Tampa to turn into home-sharing sites. OTHER LEISURE: • Rolling Stone magazine is getting a new majority owner in Penske Media. • Canada’s Blackberry Ltd. reported third-quarter results on Wednesday that beat analysts’ forecasts, helped by an increase in business software sales and licensing revenue. FINANCE & MARKETS: • The IMF has cut its economic growth forecast for the UK. It blames Brexit uncertainty. It expects the UK to grow 1.6% in 2017 (was 1.7%) and by 1.5% in 2018. Investment plans were said to be being delayed. • IMF says UK investment should be at 6% of GDP. It is currently 2.1%. • IMF says re Brexit ‘the UK economy is already losing out as a result of this decision.’ • UK may have to raise taxes to cut deficit as growth slows reports IMF. It says ‘deficit reduction since the financial crisis has relied mostly on spending measures.’ Spending on unemployment and other benefits could rise if growth falters. • SMMT reports number of cars built in UK fell by 4.6% last month compared with a year earlier. This was driven by a decline in domestic demand. Output for the domestic market was down by 28.1%. Exports comprise 85% of production. The SMMT says that a Brexit deal is critical saying ‘clarity on the nature of our future overseas trading relationships, including details on transition arrangements with the EU, is vital for future growth and success.’ • ONS data has showed that London’s economy grew at double the rate achieved by the UK as a whole last year. The North East was the slowest growing region, where output per person fell by 1.5%. • US home sales increased more than expected in November. More rate rises are likely in the New Year • Oil up around 50c at $64.49 • Sterling down vs dollar at $1.3362 • Pound down vs Euro at €1.126 • UK 10yr gilt yield up 2bps at 1.25% • World markets: UK markets finished mixed yesterday with Europe down and US also lower. Far East mostly down in Thursday trade • Brexit, lame duck government etc.: o Deputy PM Damien Green was yesterday sacked for lying. Mrs May said to have no choice in sacking dishonest friend. Some commentators saying Mrs May will find herself more isolated in Cabinet o PM Theresa May says she might permit a short delay to Britain’s departure from the European Union in exceptional circumstances o No date for exit now fixed o This problem solved by EU, which says UK must be out by the end of 2020. It’s fixing the transition period at 21mths. This is materially shorter than the 5yrs or so being acknowledged by industry, Westminster & Brussels as necessary to prevent disruption o EU published guidelines for the next phase of Brexit negotiations. Terms are to be agreed before detail is discussed. It says ‘the transition period needs to be clearly defined and precisely limited in time.’ o New York Times says ‘combination of EU inflexibility & British incompetence means that however, and whenever, Britain finally exits, it is likely to be on the European Union’s terms.’ PRIOR DAY TWEETS: • Later tweets: BDO says businesses face dilemma if they try to pass cost increases on to customers. MCA says trade ‘showing signs of breakdown’ • Darden nails it, says delivery costs remain a hurdle in casual dining. Consumers want convenience but reluctant to pay for it • William Hill announces Marston’s chair Roger Devlin will become its chairman from 1 February next year START THE DAY WITH A SONG: Yesterday’s song was a festive classic: Last Christmas by Wham. With just one or two days left for most of us now, who sang: And every mother’s child is gonna spy, To see if reindeer really know how to fly 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: The vast majority of recipients are unaffected by this legislation. MIFID II applies only to FCA registered entities. Please feel free to skip this section if it is not appropriate to you or your firm. FCA registered companies impacted by MIFID II will need to pay for (or stop receiving) substantive research. Langton produces substantive research. Payment is via a pre-agreed Research Services Agreements. If impacted firms haven’t approached Langton already, then we would respectfully ask them please to do so. Firms unwilling to establish a commercial relationship will still be able to receive a version of the email which, though we hope it will be useful, will be reportage (un-substantive research) rather than analysis. RETAIL NEWS WITH NICK BUBB: • Dunelm: Since John Browett walked the plank at the end of August, Dunelm has been without a CEO, with the Chairman, the former Carphone Warehouse boss, Andy Harrison, holding the fort on an interim basis. And today it has announced that former Dixons/Currys stalwart Nick Wilkinson has been appointed as the new CEO. Funnily enough, we last came across Nick when he was running Dixons’ ill-fated mobile phone chain The Link and can vouch for the fact that he is bright and amiable, so we wish him better luck than his predecessors had in dealing with the founding Adderley family…After leaving the Dixons Group at the end of 2006, Nick went off to run the Maxeda DIY chain in Holland and then moved back to the UK to run Evans Cycles, where he has been for over 5 years.
• Consumer Economics Watch (1): The wretched CBI Distributive Trades survey for “December” came out yesterday morning, but we always say that it is not really isn’t worth the paper it’s printed on…As the first survey of monthly Retail Sales, however, it is still followed slavishly by City economists and yesterday’s view of a decent “December” gets the usual uncritical coverage in today’s papers…But the CBI survey is, of course, just a snapshot of industry sentiment (as the survey is completed mid-month) and it only tries to assess movement in sales volume (which is less useful when inflation is high, eg in Food). And just 56 retailers took part this time, so the fact that only 37% of them said that sales volumes were “up” in “December” on a year ago, whilst 17% said they were “down”, giving a percentage balance of +20% (lower than the +30% expected), is really not that interesting. When • Consumer Economics Watch (2): The widely-followed monthly GFK Consumer Confidence survey came out overnight and the overall index slipped to -13, its lowest since December 2013, from -12 in November, bucking expectations in a Reuters poll of economists for it to hold steady and extending a downward trend seen for most of 2017. GfK said Britain’s departure from the European Union and the Bank of England’s first interest rate rise in a decade were weighing on consumers, who felt their personal financial situation had worsened and they were less keen to make big purchases. “We need to see several issues move on before the downward trend of the consumer mood changes,” GfK’s Head of Market Dynamics Joe Staton said, citing Brexit and the path of interest rates in particular. “None of this will be resolved quickly so there’s every likelihood that 2018 will take us lower.” |
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