Langton Capital – 2018-01-02 – Xmas, Pat Val, confidence, Compass, the weather & other:
Xmas, Pat Val, confidence, Compass, the weather & other:
A DAY IN THE LIFE:
Well it’s 2018. Back to work. It might take a few days to get back into the swing of things so, this morning, let’s move straight on to the news:
• So how was it? Please let us know. And, perhaps more importantly, how does January feel? Results & feedback later in the week.
ADMIN UPDATE, RESEARCH ETC.
• Langton is between offices. The new office (on London Wall) should be functioning shortly. Old phone number doesn’t work. Please use email. Details of phones, address etc. to follow.
• We are putting together a compendium of 60-seconds pieces for publication this month. Suggestions for topics (e.g. delivery, discounting, input prices, cinema attendances, High Street malaise etc.) welcome. The doc will be available for £200 plus VAT, free to clients. Please let us know if you would like a copy.
• Re MIFID II, which will be in force from this week, we’re done talking about it. If you believe you shouldn’t be receiving research that you don’t pay for, then either pay for it or hit the unsubscribe button.
PUB, RESTAURANT & DRINK PRODUCERS:
• Sky has reported that Pat Val is looking to raise £35m from investors to take over Gail’s cafes owner, Bread Holdings. Sky says it understands that Patisserie Holdings ‘is drawing up plans for a placing of new shares to raise about £35m towards the cost of a deal.’ The deal itself could cost nearer £150m. The issue could be via a placing rather than a rights issue. Sky says ‘leading Patisserie Holdings shareholders are likely to be enthusiastic about such a fundraising, given the stock’s performance since it floated and the fact that the company’s executive chairman – restaurant tycoon Luke Johnson – also owns Gail’s parent, Bread Holdings.’
• Gail’s deal ‘unlikely to be agreed until March’.
• Gail’s owners, Risk Capital Partners, run by Pat Val chairman Luke Johnson, hired advisers in the autumn to explore options for a sale, per Sky News.
• YouGov has reported that most Britons believe their job will be safe in 2018. The Times reports the poll as saying ‘undeterred by a turbulent 2017, more than half the population think that their personal financial situation will stay the same or improve over the next year.’ We would comment 1) most (say 90%) of workers keep their jobs in even the worst of recessions and 2) optimism bias is a real thing. Nobody thinks they will get divorces, 80% of drivers think they are ‘above average’ etc. etc.
• YouGov has Labour in a 2pt lead over the Tories. It says 51% of respondents believe that Mrs May is doing either badly or fairly badly. Some 11% don’t know how she is doing.
• Compass Group CEO Richard Cousins & several members of his family were among the six people who died when a seaplane crashed into a Sydney river on 31 Dec. Mr Cousins was due to retire in April. Incoming CEO, Dominic Blakemore, who was due to take over in April, has taken up his position as from yesterday. Compass Group has said in an RNS this morning ‘Richard Cousins retirement was planned for 31 March 2018. As a result of his sad death in a plane accident on 31 December 2017, Dominic Blakemore’s appointment as Chief Executive will be advanced from 1 April 2018 to 1 January 2018.’
• Paul Walsh, Compass Group Chairman, said: ‘We are deeply shocked and saddened by this terrible news. The thoughts of everyone at Compass are with Richard’s family and friends, and we extend our deepest sympathies to them.’ Mr Walsh continues ‘it has been a great privilege to know Richard personally and to work with him for the last few years. Richard was known and respected for his great humanity and a no-nonsense style that transformed Compass into one of Britain’s leading companies.’
• Barclaycard has reported that spending on going to the cinema, theatre, pubs and restaurants grew by last year as other discretionary purchases were cut back. Overall consumer spending grew by 3.6% in 2017. Spending on ‘essentials’ rose by 4.6%. Barclaycard says ‘consumer spending grew 3.6% in 2017, a figure which on the surface looks robust. It masks a story, however, of consumers ‘consciously coping’ with a sustained period of rising prices and stagnant wage growth.’ It continues ‘in a bid to balance essential and discretionary spending, we saw Britons making a series of minor tweaks to everyday expenditure to balance the books.’
• Despite a cold start, the Met Office has provisionally reported that December was slightly milder than average
• Technomic has reported that prepared foods continue to present a major opportunity for retailers, including convenience stores.
• BrewDog says its Equity for Punks V has ‘just smashed £7.5m’
• In a move that goes against the trend, the Co-op is to open 100 new stores across the UK this year.
• Low-earners are being told by The Money Advice Trust to start saving money now for Christmas 2018.
• Eataly, is set to open its first UK site at 135 Bishopsgate (London) this year. The Italian food emphoria and restaurant group is understood to be on the verge of signing a lease for the 40,000 sq ft site.
• Retailers have stated that they expect to receive £2.5bn worth of unwanted presents over the Christmas period. Online purchasing of shoes result in the highest return rate, with as many as 28% being sent back.
• A new independent Italian film ‘As Long as There is Prosecco, There is Hope’, is placing Prosecco at center stage as the drink increases in popularity.
• Bulgarian wine exports have increased by around 13% in 2017 to €17.4m
• Millennials are set to receive the biggest ‘inheritance boom’ of any post-war generation, but not in time to solve housing struggles and wealth inequality.
• The Office for National Statistics reports just 0.2% growth in real disposable incomes for Q3 2017. Inflation hit 3.1% in November with average weekly wages only up by 2.3%.
HOLIDAYS & LEISURE TRAVEL:
• Despite the tragedy that befell the CEO of Compass and his family last week, 2017 was the safest year in history for commercial airlines. There were no passenger jets crashes anywhere in the world per consultancy To70 and The Aviation Safety Network.
• In a move ‘to symbolise our national identity’ passports will change from burgundy to blue and gold.
• The growth in long-haul travel is forecast to continue into 2018, with Q1 expected to be up 10.4% yoy, according to the latest analysis.
• Virgin Holidays’ winter sale is offering discounts of up to 47% on holidays to the US, Caribbean, Middle East and Asia. The sale will last till February 8.
• WhatsApp suffered an hour long outage on Sunday, the cause of which was not immediately known according to the company.
FINANCE & MARKETS:
• The fewest mortgages in 15 months were approved by British banks in November per the BBA. The EY Item Club reports ‘housing market activity remains under pressure from squeezed consumer finances and fragile confidence, and it may well have taken a further dent in November from the Bank of England lifting interest rates.’
• Pound at $1.3521
• Sterling at €1.1242
• Oil up over Xmas at $67.17
• UK 10yr gilt yield 1.19%
• The cabbies’ & shoe shine boys’ favourite topic of conversation, Bitcoin, was down at $13.1k from $13.5k yesterday.
• World markets: UK hit records last Friday. Europe down, US also lower. Asia up in Tuesday trading.
PRIOR DAY TWEETS:
• Later tweets: CGA says ‘Britain’s number of licensed premises has stayed level in the last year’. Restaurant numbers up 1.6%, pubs down 2.3%
• CGA says increased number of restaurant units shows confidence. But does it? Really? Says central London numbers +3.1% in a year
• Public sector borrowing down but it’s still a job half done. Tax receipts higher.
• Shoddy & ill-thought-out? Impact papers accused of repetition, plagiarism etc. But our passports will be blue so no worries
• BDO High St Tracker hit by snow week to 10 Dec. Nonetheless, fashion 2yr declines of c12% with homewares (2yrs) down 10%. Online 2yr +25%
START THE DAY WITH A SONG:
The last song of 2017 was, perhaps inevitably, ‘Merry Xmas Everybody’ by Slade. Today who sang:
A year has passed since I wrote my note,
But I should have known this right from the start
Only hope can keep me together
RETAIL NEWS WITH NICK BUBB:
• New Year Press Tips Watch: The Business journalists on the Daily Mail unveiled their 2018 Tips on Saturday and, interestingly, after its recent share price dip, Boohoo.com was one of the eight selections. The Retail correspondent of the Sunday Telegraph (who did well in 2017 with Fevertree) shrewdly went for B&M Retail as a safe bet for 2018. The Retail correspondent of the Sunday Times went for an Online delivery play for 2018 in the form of Clipper Logistics. There were no 2018 Tips in the Observer or the Sunday Express and the Midas column in the Mail on Sunday confined itself to a review of its winners and losers in 2017, but the “Inside the City” column in the Sunday Times tipped Mulberry as a Buy.
• Saturday Press: The main focus in the Saturday papers was on the continuing stockmarket boom in 2017, although the Times highlighted that Dixons Carphone was one of the big laggards. The Telegraph highlighted that the photogenic Chrissie Rucker of the White Company (along with her husband Nicholas Wheeler of Charles Tyrrwhitt Shirts) has been awarded an OBE in the New Year Honour’s List, for their services to the Retail industry. The “Hero of the Week” in the Daily Mail was Edwin Booth of the embattled Booth’s supermarket chain (for his brutally frank letter of reply to a customer complaint) and the Daily Mail also flagged that the boss of the struggling Bunnings/Homebase DIY chain, Peter Davis, is taking a 3 month holiday with his family back in Australia.
• Sunday Press: The outcome of Christmas spending was the main theme in the Sunday papers, with the front page of the Business section of the Sunday Times flagging that the Next trading update on Wednesday is set to disappoint, whilst the main Business story in the Mail on Sunday was that hedge funds have bet £3.6bn that Christmas trading will be generally poor, via short positions in retailers, and the paper also had a column by its Retail correspondent headlined “Shops…they’re so last century”, highlighting that old M&A ideas are being dusted off (“Supermarkets could merge: or buy a Next or even a Marks & Spencer”). The main Business story in the Sunday Express was that “High Street Sales are losing their allure”, although its News pages carried a story that a record £50bn has been spent by shoppers since Black Friday. In other News, the Business Person of the Year in the