High Street, Xmas, discounts, Deliveroo, Gear4Music etc.:

A DAY IN THE LIFE:

Running around a bit this week. More happening but less time to talk about it. On to the news:

PUB, RESTAURANT & DRINK PRODUCERS:

• Mary Portas has told the BBC that the High Street will have to become ‘more communal’. This may involve residential use. The Telegraph reported in November that the ‘Queen of Shops’’ campaign to save the High Street had failed. Portas told the BBC ‘when we look at maybe 30% of our sales within the next five years [going] online, what are the roles of those spaces that are being left? We have many towns up and down the country that look fairly dismal.’ Langton has asked on a number of occasions ‘if they [department stores & some of the High Street] didn’t exits, would you build them now?’ Portas says ‘what our high streets will become are social places. They are vital to communities so we need the Government to look at the role of high streets in the future and look at the ageing way that we put tax and rates bills on, and the rules of landlords and parking.’

• Oakman Inns at Christmas. The group reports it ‘delivered very pleasing LFL growth of 5.9% during the four-week Christmas trading period ending on 31st December 2017.’ It says ‘the first week of the period was badly hit by the snow that fell on the Sunday – which also impacted negatively on the first half of the second week. The destination sites were particularly badly hit and, accordingly, the business was in 2.5% decline at the half way stage. However, a really strong second half saw a complete turnaround to deliver the +5.9% outcome.’ Commenting on the Christmas sales, CEO Peter Borg-Neal, said ‘although the Like For Like sales were slightly down on our year to date run-rate I am delighted with our performance over Christmas.’

• Be At One has reported LfL sales up 12.6% in December.

• Xmas trading overall seems to be reasonably good. A mid-week, well Monday, Christmas Day will have helped sales but numbers have not disappointed. Admittedly the better-performing private companies may have been keener to speak than would any that had performed poorly.

• January feels tough. It always does and this rump week will be particularly quiet. Trading should ‘normalise’ next week. Credit card bills arrive the week after. By mid-Jan, operators may have a clearer picture as to how trading could look over the near term.

• Oakman Inns has reported full year numbers to 2 April 2017 saying that it made ‘significant progress across the group.’ Oakman reports turnover up 20.4% to £23.3m with LfL sales +3.5%. Average sales per core Oakman site continued to exceed £30k per week net of VAT.

• Oakman reports site EBITDA +31.1% to £4.04m with group EBITDA after head office costs more than doubled to £1.68m.  Oakman opened two new sites in Solihull and Royston bringing the total number of developed site at the year end to 16. Since the year end, the group has acquired three more sites. Oakman reports ‘all three were purchased as going concerns, are currently trading and will receive further development into fully fledged Oakman Inns in due course.’ CEO & founder Peter Borg Neal reports ‘2016/17 was a good year for us. As well as achieving strong sales and profit growth we were able to raise considerable sums and to build an exciting pipeline. Like everybody else we have been negatively impacted by the weakness of Sterling and the ever-increasing burden of taxation. However, we have genuine momentum within the business and the current year is also going very well.’

• An online petition has been launched to add back the crown emblem to British pint glasses. Brexit supporters believe the move will “restore faith” in Brexit.

• Debenham’s shares sank 20% yesterday. Next shares rose 7% the day before. Trading over Xmas has been varied. The internet and an operator’s online presence (or lack of it) may be one of the major defining differences.

• Discounting. It’s a feature across some of the casual diners. In general retail, Debenhams has been discounting saying ‘the market has been challenging and particularly promotional in some of our key seasonal categories and we have responded in order to remain competitive for our customers, which has impacted our profit performance.’

• Bella Italia is offering 50% off mains until 9 Feb.

• EI Group has bought back another 134,531 shares at 143.6p.

• Buddy’s Pizza in the US has announced an investment from CapitalSpring. The latter described the investment as significant but did no details were disclosed.

• Deliveroo is to begin operations in India. The Times of India reports it is ‘setting up a full-fledged team in India’. Deliveroo will compete with local players such as Swiggy and Zomato as well Ola, an UberEats rival. The Times says ‘Deliveroo will find it difficult to compete with the well-heeled domestic players, all of which have scooped up capital from investors and are familiar with the local market.’

• MPs are calling for a 25p ‘latte levy’ on disposal coffee cups to help reduce waste.

• The British public spent £36.4m on gin in a week this Christmas, with supermarket sales rising 45% taking it ahead of vodka for top festive tipple for the first time, the Grocer has reported.

• Aldi increased total UK sales by more than 15% during December, taking the group’s total sales for the year over the £10bn barrier.

• Waitrose has announced its intentions to ban the sale of high-caffeine energy drinks to children aged under 16. British youngsters are among the highest consumers of energy drinks in Europe.

• Upham Group, the brewer and pub operator, increased LfL gross pub sales by 6.5% to £23m in the five trading weeks to 31st December 2017.

• CG Restaurant & Bars has announced that its core Dirty Martini brand increased LfL sales in December by 10.8%. The group said sales were boosted by a 21% increase in pre-booked sales.

• Per MCA, the branded Italian is forecast to slow down from 5.8% in 2014-2017 to c3.8% between 2017-2020. The fastest growing brand during 2017 was Franco Manca, with estimated sales growth of 58% to £37m, whereas more established brands are expecting modest growth.

• Moody Burgers, a burger delivery and collection service, achieved its £150,000 crowdfunding target of with three days to go. The concept is being led by Carl Anderson and Alan Murray, who ran the former Rift & Co estate.

• Fuel Juice Bars has agreed a restructuring plan with its creditors, according to appointed supervisors RSM.

• HIS Markit has reported that UK services companies experienced sharp rises in operating expenses in three months in December

• UK services PMI rises slightly from 53.8 in November to 54.2 in December. Any number over 50.0 implies growth. HIS Markit reports ‘higher levels of business activity have now been recorded for seventeen months running, supported by the resilient economic backdrop and rising consumer spending.’ It goes on to say ‘however, service providers noted that Brexit-related uncertainty continued to hold back clients’ willingness to spend at the end of 2017.’

• Crawshaw has updated on trading for the 15wks to 24 Dec saying that ‘continued progress was made in the period against the group’s strategy to strengthen its position as Britain’s leading value butcher, delivering great quality fresh meat at amazing value everyday.’ Total sales were +0.6%. Group LfL sales were down 6.1% with customer numbers down 2.6%. Noel Collett, CEO, commented ‘on balance, this was a solid core Christmas trading performance against what remains a very tough high street environment.’

HOLIDAYS & LEISURE TRAVEL:

• Specialist in products and services for life after 50, Saga plc, has announced Robin Shaw as CEO of Saga Travel and Gary Duggan as CEO of Saga Services as part of the group’s executive restructure.

• TUI is to reintroduce Tunisia as a destination from summer this year. The FCO lifted its travel ban in 2017 after the 2015 Sousse massacre, which left 30 British holidaymakers dead.

• Almost one million people are expected to visit a Tui travel agency of website to search for summer holidays on ‘sunshine saturday’ this weekend — the busiest day of the year for bookings. Turkey, Montenegro, Halkidiki, Croatia and Cape Verde are expected to be this year’s hot spots with a predicted rise in ‘mid haul’ holidays.

• Didi Chuxing, the Chinese alternative to Uber, has acquired Brazilian company 99 as part of the former’s stated aim of expanding into Latin America. The acquisition extends Didi’s coverage to 1,000 cities globally, reaching more than 60% of the world’s population.

• Heathrow airport has reduced charges on domestic flights by £15, in a bid to promote flights to UK destinations.

• Buyers expecting to have bigger corporate travel budgets in 2018 increased to 40% from 32% last year, a survey conducted by the Business Travel Show has found. David Chapple, Business Travel Show event director, said: ‘This time last year, geopolitical events such as Brexit and the imminent inauguration of president Trump left many concerned for the economy and the widespread feeling of uncertainty about what the future holds undoubtedly leaked into the corporate travel market’.

OTHER LEISURE:

• Gear 4 Music has updated on trading for the 4mths to 31 Dec saying UK sales were +25% with total sales +42%. On a 2yr basis, sales were +120%. CEO Andrew Wass comments ‘we are very pleased with our trading performance over the last four months, with sales growth of 42% building on the 44% achieved in the first half, and trading for the year to date is in line with the board’s expectations.’ Mr Wass adds ‘we are confident that the Group will continue to grow rapidly over the medium and longer term, as we continue our mission to become the best musical instrument and equipment retailer in Europe.’

• Facebook CEO Mark Zuckerberg has promised to ‘fix’ Facebook as one of his new year’s resolutions.Zuckerberg went on to say that he intended to focus on: ‘protecting our community from abuse and hate, defending against interference by nation states, or making sure that time spent on Facebook is time well spent’.

• Aston Martin FY sales increased 58% to 5,117 units in 2017, its highest sales level in nine years.

FINANCE & MARKETS:

• New car sales fell for the first time in 6yrs last year. Sales were down by 5.6% with diesel demand down 17% due to higher taxes and negative government rhetoric. SMMT CEO Mike Hawes has said he expects sales to fall further this year, perhaps by between 5% and 7%. The SMMT has blamed declining business and consumer confidence.

• House price growth slowed in 2017 as a whole to 2.6% reports Nationwide. This represents a small fall in real terms.

• London house prices recorded their first fall in a decade last year reports Nationwide. Prices in the capital fell by 0.5% in 2017 in nominal terms. This represents a drop of around 3.5% in real terms.

• China is reported to be set to issue 10yr visas to highly-skilled workers from abroad.

• Number of mortgage approvals up to 65.1k in November.

• Sterling up vs dollar at $1.3569.

• Pound down vs Euro at €1.1236

• Oil price down slightly at $68 flat.

• UK 10yr gilt yield up 2bps at 1.24%.

• World markets: UK, Europe & US all up yesterday. Asia up in Friday trade.

• Brexit etc.:

o UK farmers will receive UK subsidies to replace those from the EU for 5yrs. This will cost around £3bn per year.

CHRISTMAS TRADING:

• So how was it? There may not be many readers fully back at their desks this week but please take a moment to 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. Please use email with details of phones, address etc. to follow.

• We are putting together a compendium of 60-seconds pieces for publication this month. This will be available for £200 plus VAT, free to clients. Please let us know if you would like a copy.

• Re MIFID II, which was introduced on 3 January, 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.

PRIOR DAY TWEETS:

• Later tweets: Judging Xmas trading. Not too bad at first blush. However, survivor bias means we hear more from the good than the bad…

• Xmas. Next > Debenhams. Diff presumably online & directory. Less visible to the naked eye. Units quieter but trade overall could still be OK

• Next aided by online, Debenhams not so much. F&B don’t really have online option though delivery is booming.

• Discounting looking pretty chronic though West End was busy last night. Admittedly could be peaky & Jan likely tough.

• Experience economy growing as punters hit maximum stuff. Bodes reasonably well for F&B (maybe less so fuel-stop outlets) & holidays

• TUI thinks this weekend could see ‘sunshine Sunday’. There just had to be a name for it, didn’t there? Nonetheless, could be busy

• Credit card surcharges illegal from 13 Jan. Means those who don’t use credit cards will pay for those that do

• Restaurants struggle to keep the buzz as they expand. Many lose fight against facelessness. How’s it working out for Strada, Byron etc.??

• Nationwide says house prices rose 2.6% in year to Dec. That’s a small reduction in real terms as CPI is 2.8%

• UK services PMI shows tick up to 54.2 in Dec from 53.8 in Nov. Companies seeing more cost pressure, however

START THE DAY WITH A SONG:

Yesterday’s song was ‘bizarre love triangle’ by New Order. Today Who sang:

She turns herself ’round,

And she smiles and she says

“This is it, that’s the end of the joke”

RETAIL NEWS WITH NICK BUBB:

BDO High Street Sales Tracker: We flagged yesterday that John Lewis had a quiet time last week and today’s BDO High Street Sales Tracker for small/medium-sized Non-Food chains for last week, w/e Dec 31st, says Fashion Store LFL sales slumped by 7.7%. Including Homewares and Lifestyle chains, total Store LFL sales were down by 3.8%. And overall Online sales were notably weak, after the pre-Christmas boom, at only +6.5% up, with Online Fashion sales 5% up (albeit, given the calendar shift, the 2 Christmas/New Year weeks need to be taken together).

Retailing 2018 Overview:  There is talk of a recovery in consumer spending in the second half of this year, but we think it will get worse before it gets better and if you don’t believe us, then have a look at the recent overview from the prestigious KPMG-Ipsos Retail Think-Tank: http://www.retailthinktank.co.uk/whitepaper/uk-retail-prospects-2018-get-worse-gets-better/

Tip Watch: In today’s edition of the venerable Investors Chronicle magazine, one of their 2018 Tips is JD Sports (which was on our own shortlist). The concept is that it is their “Growth Tip of the Year” and the headline is that “The undisputed ‘King of Trainers’ is primed for a better year of growth”.

News Flow Next Week: The trading announcements will come thick and fast next week, but before the flood of company news we get the BRC-KPMG Retail Sales figures for December first thing on Tuesday. Tuesday morning then brings the Morrisons update, the Games Workshop interims, the Topps Tiles Q1, the Joules update and the Majestic Wine update, as well as the latest monthly Kantar/Nielsen grocery sales data. On Wednesday we get the Sainsbury Q3 update, the SuperGroup interims and Q3, the Ted Baker update and the Shoe Zone finals, as well as the Signet update in the US. “Super Thursday” then brings the Marks & Spencer Q3, the Tesco Q3, the Debenhams AGM, the Boohoo Q3, the John Lewis Partnership update, the House of Fraser update, the Mothercare update, the Moss Bros update and the AO.com update. And then on Friday we get the B&M Q3 and the Booker Q3 update.