Langton Capital – 2018-01-08 – Discounts, Aspall’s, private co results, Vital Ingredient etc.:
Discounts, Aspall’s, private co results, Vital Ingredient etc.:
A DAY IN THE LIFE:
So, when is a holiday not a rest?
Well pretty much every time you bring the family down to London, have an average of two meals out a day, do a couple of shows, check out Churchill’s War Rooms, trudge around Trafalgar Square, the National Gallery, Leicester Square, Soho, various other museums and the like and clock up over 80k steps on your Fitbit over less than four days.
Then a trip to the hell that is the Harry Potter shop at King’s Cross with a wide-eyed 11yr old and her pocket money and the trip is complete. On to the news:
• Please let us know how Christmas trading was. And how does January feel?
ADMIN UPDATE, RESEARCH ETC.
• Langton is between offices. Please communicate via email.
• We are putting together a compendium of 60-seconds pieces for publication this month at £200 plus VAT, free to clients. Please let us know if you would like a copy.
• MIFID II is now in operation.
PUB, RESTAURANT & DRINK PRODUCERS:
• Café Rouge is offering 40% off food, Las Iguanas has a BOGOF on main meals. Carluccio is offering a second meal for just £1.
• Molson Coors has bought Aspall’s cider for an undisclosed sum. The business was founded by the Chevallier family in the early 1700s. Chairman Barry Chevallier Guild said that discussions had been ongoing for more than a year. The Telegraph reports Mr Chevallier Guild as saying ‘the thing that swung it for me was visiting Sharp’s Brewery in Rock. I met the people who had been there from the beginning.’ Molson Coors has said that it will invest in the group’s Suffolk site.
• Coaching Inn Group has lodged results for the year to end-March 2017 with Companies’ House showing that the group increased turnover by 31.9% to £17.1m and generated group EBITDA up by 13.0% at £1.2m. The group says it ‘enjoyed another successful year’. It says its increase in turnover ‘has largely been driven by the full year effect of a new hotel opening during the prior year as well as three new acquisitions and one major refurbishment’. The group generated a loss before tax of £824k and saw its shareholders’ funds fall from £5.06m to £4.01m.
• Truman Brewery parent Black Eagle has lodged numbers for the year to 31 March 2017 with Companies’ House. The group, which does not have to lodge a P&L account, increased its accumulated losses by around £235k on the year.
• Vital Ingredient has appointed Deloitte as administrators to the group. The company says ‘the majority of the business was immediately sold via a “pre-pack” sale to FCFM, a privately owned investment firm.’ The sale includes 13 of the group’s 20 sites. The remainder will close immediately. Rob Harding, Joint Administrator and Partner in Deloitte’s Restructuring Services practice, said: “Whilst this well-known brand has expanded over recent years, driven by the trend for healthier eating, it has unfortunately experienced the same trading challenges as every operator in the sector, namely rising property and labour costs combined with food inflation. The sale will enable a restructured business to be taken forward, retaining the majority of the Company’s workforce, and we wish FCFM and the management team every success in doing so.’
• EI Group on Friday bought back another 132,300 of its own shares for cancellation at 144.3p per share
• Domino’s Pizza Group plc has announced that ‘further to the announcement on 19 October 2017, its one third owned German joint venture has completed the acquisition of Hallo Pizza.’
• McDonald’s boss Steve Easterbrook has told the Sunday Times that he has recently launched vegan burgers in Scandinavia and kale salads in California. He says there will be no further vegetarian offers in the short term.
• Be at One has reported sales over December up 12.6% in LfL terms. The group, which has 33 bars across the UK including 17 in London, says that it continues to perform ahead of the market with like-for-like sales running at +8.1% in the YTD. COO Andrew Stones reports ‘while December always tends to be a very strong trading period for Be At One as guests seek out a differentiated, high-quality experience to celebrate the festive season, these figures are particularly pleasing.’ He says ‘we experienced great trading across all sites, both inside and outside of London, clearly demonstrating that the specialist cocktail bar market continues to grow and Be At One’s unique experience continues to lead the way. With our award-winning drinks and menu, coupled with our exceptional bar teams, we expect this sector to continue its upward trajectory in 2018, with Be At One front and centre.’
• Constellation Brands reported Q3 numbers on Friday. The group, which said that it was considering entering the legal marihuana market in Canada later this year, reported mixed results saying earnings rose by 2% to $2 (estimates c$1.87) with revenues down 1% at $1.799bn. The group’s shares fell by around 3% on the news.
• The ALMR has announced concerns that a ‘latte levy’ on disposable cups could increase costs for employers and undermine investment without addressing waste. Chief Executive, Kate Nicholls said: ‘Efforts to reduce waste are welcome and steps to tackle environmental damage are laudable, but the major concern here is that a “latte levy” will simply increase costs for businesses without having any discernible effect in tackling the problem’.
• Research conducted by YouGov Omnibus has found that 40% of people are uncomfortable with sending unsatisfactory food back to the kitchen.
• Mastercard’s annual SpendingPulse report on US retail spending between Nov 1 and Dec 24 saw a rise of 4.9% in dollars spent year-on-year. Online retail led the way with an increase of 18.1% during 2017.
• The White Brasserie Company has announced the opening of its 17th pub, The Boot in Histon, Cambridgeshire on the 5th February 2018. CEO of Brasserie Bar Co, Mark Derry commented: ‘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’.
• The House of Fraser department store chain has announced that it is seeking to reduce its rents on some units, asking landlords for their ‘support’ following a tough Christmas.
• McDonald’s is testing fresh beef for its smaller burgers for the first time (as opposed to frozen) as the chain looks to ‘raise the bar’ for customers.
• Accountancy firm BDO said its monthly High Street Sales Tracker (HSST) showed a 2.3% fall in like-for-like sales for British shops in December. This marks the fifth year in a row of declining underlying sales and adds to evidence that consumers are becoming more cautious.
• Friska, the healthy fast food restaurant in Birmingham, has closed its only site and will focus on Manchester in 2018.
• Increasingly frequent cases of ‘flight rage’ means that a loophole that allows airside pubs and bars to operate outside licensing laws might soon be closed by ministers. The Times writes that The Home Office is planning to extend the Licensing Act 2003 to cover alcohol being sold to passengers just before they board flights.
• Shares of US book chain Barnes & Noble fell to their lowest point in nearly 24 years last Friday on the back of falling sales figures during the important winter holiday season. The group’s stock dropped by about 15% to $5.52, making for a market cap of $407.6m.
HOLIDAYS & LEISURE TRAVEL:
• We’ve been commenting on the level of discounting in the casual dining market. This was high running up to Christmas & is even higher now. But discounting is also a feature of the holiday market.
• TUI was offering 50% off Friday & Sunday bookings this weekend, Hotels.com is giving 10% off hotel bookings, Expedia likewise. EasyJet is offering £40 off last-minute bookings & Hilton is offering up to 25% off.
• Mark Tanzer, Abta CEO, said ‘an honest discussion’ is needed from the government over the consequences of Brexit. Tanzer continued ‘the government is still saying ‘We can have everything’. At a certain point they have to say, ‘OK, we can’t have it’.’
• Tanzer also reported annual turnover for members at a record high of £37bn for 2017, but also said ‘You can’t just look at the top line. There has been a squeeze on margins.’ Industry leaders claim the 2018 outlook is positive but are saying the mainstream family market could prove to be ‘a battleground’ with margins set to be squeezed in the coming months.
• The ongoing ‘bomb cyclone’ over the US east coast has led to transatlantic travellers being told to expect flight cancellations and delays. Virgin Atlantic said: ‘The adverse weather conditions in New York and the east coast of the USA has caused disruptions to our flights.’ Virgin’s US partner Delta Air Lines grounded an additional 200 flights yesterday and 200 today.
• Thomas Cook Group has acquired a subsidiary of the failed Air Berlin, stating the acquisition would give Condor further options for growth. A person familiar with the deal said the purchase price was a medium single-digit million euro amount, according to Reuters.
• Abta research shows Britons are set to return to Turkey, Egypt and Tunisia this year as concerns over political unrest and terrorism decrease. Bookings for Turkey for summer 2018 were up by 69% year on year and bookings for Egypt were 29% ahead of last year.
• STR reports US hotel performance for the week ending 30 December of occupancy down 5.4% to 51.6%, ADR -1.4% to $131.56 and RevPAR down 6.7% to $67.90.
• Per Hotstats, Europe’s hotels in November showed robust performance with GOPPAR up 9.6%, ADR up 4.4% to €146.12 and RevPar up 5.6% to €101.43 yoy.
• Commuters face up to three days of disruption as workers at five train companies embark on a new round of strikes in disputes over ‘rail safety’. The Rail, Maritime and Transport union said the disputes are over issues including the role of train guards and the extension of driver-only services.
FINANCE & MARKETS:
• US economy adds 148k jobs in December. Unemployment rate remains at 4.1%.
• UK new car registrations were down by 14.4% in December having fallen by 11.2% in November.
• Sterling down a fraction vs dollar at $1.3553
• Pound a little stronger vs Euro at €1,1277
• Oil down 25c or so at $67.73
• UK 10yr gilt yield up 1bp at 1.25%
• World markets: UK, Europe & US up on Friday with Asia mostly up in Monday trade.
• Brexit etc. Reshuffle today.
PRIOR DAY TWEETS:
• Later tweets: Street Queen Portas tells BBC High Street needs to be ‘more communal’. Glad Ms Portas agrees with us.
• Xmas trading. Goodish but nuanced. Need to look at scrimping in Nov & hangover in Jan to get full picture
• Deliveroo to open in India. Tough gig. Times of India says D ‘will find it difficult to compete with the well-heeled domestic players’
• GDP run rate c1.5%. New car sales down 6% & borrowing 4x wage growth leaves some room for consumer spending rises. Is finite, however
• Bears in major ouch. Ocado share price up 80% in a couple of months.
• Unsecured lending +8.5% in year to Dec. That’s 4x wage growth. Based on confidence & not sustainable.
START THE DAY WITH A SONG:
Last Friday’s tune was Pretty in Pink by The Psychedelic Furs. To kick off the first work week of 2018 for many, who sang:
“Say it ain’t so, I will not go,
Turn the lights off, carry me home”
RETAIL NEWS WITH NICK BUBB:
• Saturday Press: The main focus in the Saturday papers was on the Sky News scoop on Friday night that the embattled House of Fraser has asked some landlords for rent reductions, with the Guardian highlighting that it amounts to a sort of “reverse CVA” process. The FT had a big feature on the contrasting performance of Debenhams and Next last week (“a tale of two High Streets”) and its veteran City commentator Neil Collins began his column by noting that January is “the cruellest month in Retailing” and “the classic moment for disgruntled lenders to strike” and that the “grand old dame” Debenhams is in trouble: “Debenhams falls foul of too many shops in age of Amazon and ASOS”. Tempus column in the Times looked in detail at the prospects for Next and concluded that, on their current lowly rating, the shares are “appealing”. The “Hero of the Week” in the Daily Mail was Matthew Barnes of
• Sunday Press: The main feature in the Sunday papers was the Sunday Times scoop that the embattled New Look fashion chain is “on the rack”, after the withdrawal of credit insurance from many of its suppliers, but the Sunday Times also highlighted that “M&S is set for Christmas stumble” and that Marks & Spencer will announce disappointing Clothing and Food sales figures on Thursday. The Sunday Telegraph flagged that “Tesco takes Christmas grocery crown”, highlighting that Tesco will announce the best sales growth amongst the big supermarket chains, although Questor column in the Sunday Telegraph maintained its support for Sainsbury in a detailed review that argued, rather unconvincingly, “Keep buying Sainsbury’s: it should recover when Brexit fears prove ungrounded”. Otherwise, the Sunday Telegraph went to town on the beleaguered Steinhoff empire, with an editorial arguing that
• Mothercare: Another day, another profit warning…and this time it’s in the not totally unexpected form of Mothercare, which has brought forward its scheduled announcement from Thursday, to flag that y/e March profits may be as little as £1m-£5m because of tough UK trading conditions. The International side wasn’t great, with sales down by 3% in the 12 weeks to Dec 30th, but towards the end of the period there were signs of improvement in the struggling Middle Eastern and Russian markets. The UK, however, suffered from poor footfall and website traffic, with both LFL store and Online sales c7% down in the period and gross margins down, after a valiant attempt to trade full price before Christmas ended in heavy discounting in the Sale. Despite stringent controls over capital expenditure, net debt at year-end is expected to be c£50m, and shareholders may be comforted to hear that “at this
• Weather Watch: It felt cold in London over the weekend, but memories about “the weather” are always notoriously short-term and often too London-centric…Despite what Next said about helpfully cold weather, it’s easy to forget that December was relatively warm at times and so we turned to the Retail weather consultants Planalytics and their regular monthly overview of how last month’s weather “should” have affected trading on the High Street…And their overview for December was that the month overall presented better news for retailers, as temperature trends finally flipped from warmer than last year to cooler, but that it was a mixed picture across the month. The first two weeks of the month were significantly cooler than last year, but temperatures warmed back to above both normal in the run up to Christmas. The average temperature across the country in December was only slightly below
• News Flow This Week: The trading announcements will come thick and fast this week, with the Food Retailers in the main spotlight. But before the flood of company news we get the BRC-KPMG Retail Sales figures for December first thing tomorrow (with overall LFL sales likely to be solid, with Food sales/Food price inflation offsetting any weakness in Non-Food sales). Tomorrow 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