Langton Capital – 2018-01-17 – City Pub Group, London restaurants, M&C, Cineworld etc.:
City Pub Group, London restaurants, M&C, Cineworld etc.:
A DAY IN THE LIFE:
How is it that an inanimate object, even a large one like a house, can suck up and lose objects?
Because, be they house keys, cheque books (what are they?), TV remotes or last week’s newspaper with the half-finished crossword, they can be relied upon to focus, laser-like on the thing that you’re most in need of when you’re in a rush in the morning – and lose it.
Hence, we are more familiar than we would like to be with the price of locksmiths (how do you open a window with no key?), replacement car keys, second remote controls for the telly etc. etc.
So, maybe we should promote a new cost of living index, CPI Plus, which includes the cost of the stupid things that we all do, particularly as we get older; pay twice for things, use 0800 numbers on our mobiles, give the pin number for your credit card to various offspring etc. etc. On to the news:
PUB, RESTAURANT & DRINK PRODUCERS:
• 33-strong City Pub Group updates on trading saying LfL sales +3.8% for the year to end-Dec. Total turnover rose 34% to £37.4m.
• City Pub Group says ‘trading over the Christmas period was strong with many of the recent openings trading ahead of management’s expectations and a number of pubs achieving a record result.’ The group continues ‘following a successful December trading period, the Group confirms that it has traded in line with market expectations for 2017 and remains optimistic about its prospects for 2018.’
• City Pub Group ‘now has the funding available to execute the strategy of doubling the size of its estate over the next 3 to 4 years.’ It has exchanged on 2 freehold sites and completed on a third leasehold site ‘which marks significant progress against its plan for 2018.’
• City Pub Group reports ‘David Bruce has today resigned from the Board with immediate effect so that he can focus on his other activities in the pub and brewing industry.’ Neil Griffiths will join the board as independent Non-Executive Director of the Group with immediate effect.
• City Pub Group’s chairman Clive Watson reports ‘trading was robust over the festive period and throughout 2017. Our new openings are performing well and we are excited about our recent high-quality acquisitions. We continue to seek and find a ready flow of acquisitions to build the Group and we are close to exchanging on further units.’
• EI Group bought back another 165,500 of its own shares for cancellation at 140.4p per share yesterday.
• Time Out ranks top 18 restaurant chains in UK. Two pizza chains, five burger & three chicken.
• Time Out ranks MeatLiquor as best burger chain in London, Franco Manca as best pizza offering & Nando’s (chicken) as overall winner.
• Time Out’s overall London favourites. Nando’s number one, MeatLiquor no2 and Chicken Shop no3.
• The Inn Collection Group has registered a record breaking Christmas, with the North East based pub operator reporting a LfL sales increase of 7.5% in the five weeks leading to January 6. Sean Donkin the team’s operations director stated: ‘We are delighted to have exceeded our seasonal sales forecasts with the strongest like-for-like sales achieved yet in the group’s 10-year history. We enjoyed an extended period of festivities as a result of Christmas falling on a Monday, which enabled us to optimise the number of Christmas party events across our units, which has contributed towards a record rise in accommodation sales’.
• TGI Fridays has announced plans to slow down it expansion, with the group planning seven new openings this year, the MCA has reported.Karen Forrester chief executive of the group stated that she still believed the brand could reach 150 UK sites.
• The Galvin brothers’ are set to close their ‘classic French’ restaurant Bistrot de Luxe on Baker Street. The group commented ‘It was ahead of its time, and now it’s time to move on. We never wanted to water down the concept or the quality of food we have been proud to serve to a loyal clientele for 12 years. But in the world’s great cities things do not stand still. Tastes change and also, as creative chefs, we are restless and now want to do new things not just endlessly repeat the same style of cooking’.
• Following the Home Office’s campaign urging young people to stop using their passports as proof of age, a newly designed Proof of Age Standards Scheme (PASS) card has been launched. Kate Nicholls, Chief Executive of the ALMR said: ‘Mandatory licensing conditions make it clear that only approved physical photo-ID can be accepted at the door or at the bar and licensees and door staff should accept PASS cards as valid ID’.
• McDonald’s has announced that all its packaging will come from sustainable sources by 2025.
• Public Health England (PHE) has played down rumours that the UK government is planning to enforce ‘calorie caps’ in restaurants. PHE’s chief nutritionist Alison Tedstone was quoted in the Times saying ‘We will need to set out guidelines and, I suspect, a series of calorie caps’, the government has denied this and has said that the PHE will launch a campaign in March encouraging restaurants to promote meals under 600 calories.
• Marketing week has reported that the big festive winners in the retail sector were offering customers great service and convenience. Data from the British Retail Consortium (BRC) has shown that footfall has fallen 3.5% December, with the high street and shopping centers the hardest hit.
• Nestle is set to sell its US confectionery business to Ferrero for $2.8bn. The deal will make Ferrero the third biggest chocolate company in the US as well as globally. Nestle are in the process of switching from junk and sugary foods to focus on ‘nutrition, health and wellness’.
HOLIDAYS & LEISURE TRAVEL:
• City Developments has said that its offer for Millennium & Copthorne will only be extended if it is unconditional as to acceptances by 23 Jan. And even if sufficient shares have voted in favour of the deal, it may not be left open.
• City Developments, which owns 65.2% of M&C, reports that ‘given the many challenges the Offeree faces today, CDL believes that taking the Offeree private is in the best interests of all Offeree Shareholders.’ Chairman Kwek Leng Beng comments ‘since its listing 21 years ago M&C has been, and will continue to be, an operator of hotels internationally. As its performance shows, it faces a highly challenging trading environment in each of its locations with intensifying competition.’
• Mr Kwek says M&C’s hotels need substantial capital investment. He says this will have a ‘disruptive impact’ on trading.
• City Developments reports ‘the First Closing Date remains 1.00pm (London Time) on 23 January 2018. An announcement regarding the level of acceptances at this time and confirmation of whether or not the Final Offer will be extended will be made as soon as possible thereafter.’
• The UN World Tourism Organisation reported global tourism numbers up 7% in 2017, but the US suffered a fall in foreign tourists despite robust results in Mexico and Canada. Europe recorded ‘extraordinary results for such a large and mature region’ last year, with 8% more international arrivals at 671 million than in 2016. Global growth of 4-5% is predicted for 2018.
• Rio Hotels & Resorts reports revenue of €2.156bn, up 7% yoy, for 2017.The company also unveiled a new image for its brand which will see five existing hotels undertake major renovation as well as four new hotels open this year at a cost of around €650m. The company ended 2017 with 92 hotels across 19 countries representing 43,000 rooms wit 29,000 staff.
• IATA says airline industry revenue increased in November 2017 due to strong global passenger demand. Total revenue passenger kilometres (RPK) was up 8% year on year, the fastest growth rate in five months.
• Sykes Holiday Cottages reported 2017 bookings up 22% due to a ‘Brexit staycation boom’ alongside increasing numbers of international visitors. Last year, the independent holiday home provider handled more than one million travellers for the first time.
• Barrhead Travel recorded its highest ever sales on 13 January, with yoy sales up 28%. Top selling destinations were Majorca, Orlando and Tenerife, with all-inclusive being the most popular board basis.
• Uber is set to introduce a new policy next week stating that drivers must take a six-hour break after 10 hours of driving with a passenger or travelling to pick someone up. The policy aims to increase safety for drivers and passengers.
• Yotel is moving into the extended stay and serviced-apartment sectors with the announcement of its new brand, YotelPad. The company aims to provide flexible accommodation to clients who are commuting between major global cities by focusing on ‘clever cabins’ that are tech-savvy.
• The Waldorf Astoria Edinburgh has been sold to Abu-Dhabi’s Twenty14 Holdings for £85m, according to the Herald Scotland.
• Japan reports record tourist spending of ¥4.4tn ($40bn) in 2017, up 17.8% yoy, driven by a weak yen. Chinese tourists accounted for more than a third of the spending , rising 15% to ¥1.7tn.
• Cineworld announces rights issue to raise £1.7bn.
• Cineworld updates on full year trading saying revenues rose by 11.6% (or 7.9% in constant currency). Box office is +10.3%, retail is +15.6%. Cineworld says ‘admissions in both the UK & Ireland and the ROW increased compared with the prior year. Growth has been driven by the expansion of our estate, the improved results from the ongoing refurbishment programme and the continued roll-out of our premium formats.’
• Cineworld maintains ‘there is a strong film slate for 2018 which includes “Jurassic World: Fallen Kingdom”, “Fantastic Beasts: The Crimes of Grindelwald“, “Avengers: Infinity War”, “The Incredibles 2”, “Mamma Mia! Here We Go Again” “Solo: A Star Wars Story”, “Deadpool 2”, “Fifty Shades Freed” and “Mary Poppins Returns”.’
• Cineworld concludes ‘after a successful outcome in 2017 the Group is positioned well for another year of progress in 2018.’
FINANCE & MARKETS:
• UK CPI fell from 3.1% in Nov to 3.0% in Dec per ONS. Food price growth slowed in the month. Some commentators believe that inflation has now peaked. Wage growth is still almost 1ppt below inflation. Rising oil prices may slow the fall in CPI.
• ONS reports that RPI actually rose in Dec 17 to 4.1% from 3.9% in Nov. RPI includes items such as property costs.
• NIESR says ‘CPI inflation eased to 3.0 per cent over the 12 month period to December from 3.1 per cent in November. We think that inflation has now peaked and will gradually drop back towards the 2% target, provided that monetary policy is set appropriately.’
• NIESR reports ‘economic growth appears to have gathered momentum in the final quarter of 2017 at home and abroad and this strengthens our view that the Bank of England will raise the policy rate again in May and every six months until Bank Rate reaches 2% by mid-2021.’
• Oil price down at $69.09
• Sterling down a fraction vs dollar at $1.3775
• Pound up a shade vs euro at €1.1248
• UK 10yr gilt yield down 3bps at 1.30%
• World markets: UK mixed yesterday with Europe up and the US down. Far East mostly lower in Wednesday trade
• Brexit, government etc.:
o UK government is to fast track an investigation into Carillion. Looking for a smoking gun?
o Carillion collapse. Margins too low, bumpy road, Brexit contract delays, came unstuck. Langton will put a bill into HMG for the above analysis.
ADMIN UPDATE, RESEARCH ETC.
• Langton is between offices. Please communicate via email. MIFID II is now in operation.
• 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.
PRIOR DAY LATER TWEETS:
• Later tweets: Premier Foods updates on trading. Sales +4.0% Q3 & are +2.6% in year to date. Exports +26%. Overall trading in line.
• Greggs updates on good FY17 growth. Says will accelerate store openings in 2018. Says cost pressures will be at ‘lower level’ in FY18 vs 17
• Allegra World Coffee says UK to have 31,400 coffee shops by 2022. Market ‘continues to be robust’ but isn’t that rather a large number?
• All eyes on further potential pre-packs. Particularly before the next rent cheque is due in March. Tough Jan trading continues
• Couple of upbeat trading statements from JD Sports & Dunelm. Athleisure-wearing throw cushion purchasers rescue High Street?
• Time Out top-18 London chains has 5 burger, 3 chicken & 2 pizza. Top burger = Meatliquor, top pizza = Franco Manca. Nando’s overall winner
• UK CPI falls to 3.0% in Dec from 3.1% in Nov. Panic over? Still 1ppt ahead of wages. Sterling stable but oil price higher
START THE DAY WITH A SONG:
Yesterday’s song was Poison Arrow by ABC. Today, who sang:
These people ’round here,
Wear beat down eyes sunk in smoke dried faces
They’re resigned to what their fate is
But not us, (no never) no not us (no never)
RETAIL NEWS WITH NICK BUBB:
• Burberry: Today’s Q3 from Burberry (for the 13 weeks to Dec 31st) looks in-line, with Retail LFL sales up by 2% overall (Asia Pacific saw mid-single digit percentage growth) and the message from new CEO Marco Gobbetti is that “We are making good progress embedding our strategic vision into the organisation and remain on track to meet our full year profit target”. But eyebrows will be raised at the revelation that the London tourist boom has come to an end, with the UK down “by a high single digit percentage, as it annualised exceptional performance of 40% growth in the prior year boosted by tourist inflows”.
• John Lewis Watch: Yesterday’s weekly sales update from JLP (for w/e Jan 13th) flagged that John Lewis continued its quiet time post-Christmas, with gross sales down by 3.8% versus last year or down by c4.5% on a LFL basis. In terms of sales mix, Fashion sales were up by 0.3%, but Home sales were down by 4.4% and Electricals were down by 6.0%. That outcome knocked the 24 week cumulative run-rate back to +1.3% gross (broadly flat LFL), with just 2 weeks left in the second half.
• Waitrose Watch: Over at Waitrose, last week was also quiet, with gross sales down by 0.3% in w/e Jan 6th (broadly flat LFL), so that the cumulative run-rate edged down to +1.5% after 24 weeks of the second half (c1% up LFL).
• News Flow This Week: Tomorrow brings the Halfords Q3 update and the ABF (Primark) update, as well as the Ocado new segmental reporting update. And on Friday we get the Bonmarche update, as well as the ONS Retail Sales figures for December.