Langton Capital – 2018-01-31 – Britvic, PPHE, GfK confidence, McDonalds & other:
Britvic, PPHE, GfK confidence, McDonalds & other:
A DAY IN THE LIFE:
Bit busy with meetings yesterday with the admin & accumulated housekeeping spilling forward to today. On to the news:
• Langton has put together a compendium of around 3 dozen 60-seconds pieces (c200 words or so each) for distribution at £200 plus VAT, free to clients. Please let us know if you would like a copy.
PUB, RESTAURANT & DRINK PRODUCERS:
• Britvic updates on Q1 saying it has made a ‘solid start to the year’ and is ‘confident of making further progress in 2018’.
• Britvic says it is well-placed to ride out the soft drinks levy.
• Britvic reports Q1 revenue of £337.2m, an increase of 3.3% on the prior year. It says ‘organic revenue, which excludes the Bela Ischia acquisition, increased 0.7%.’ CEO Simon Litherland comments ‘we have delivered a solid start to the new financial year, with group revenue growing 3.3% ahead of a strong first quarter last year. As we said at our preliminary results, the introduction of a soft drinks industry levy in the UK and Ireland brings a level of uncertainty, but we are well placed to navigate this given the strength and breadth of our brand portfolio and exciting marketing and innovation plans. In addition, our continued focus on revenue and cost management and the delivery of the final phase of our business capability programme means we remain confident of making further progress in 2018.’
• GfK’s consumer confidence survey for the UK in January showed that it had improved, though it remains negative. UK consumers are in a slightly less gloomy mood. Confidence ‘improved’ from minus 13 to minus 9. GfK says ‘having survived Christmas, New Year, the January Sales and Blue Monday, bullish Brits report a more upbeat view of their financial prospects for 2018 this month.’
• GfK says January’s ‘good news’ re confidence ‘could be a temporary blip rather than a strong sign of recovery’.
• Visa Checkout, Visa’s streamlined online payment solution, has hit one million customers in the UK in less than a year. The popularity of the option, which was launched in May last year, has been attributed to major merchant integrations. These include collaborations with lastminute.com, AXS, Domino’s, Ebuyer, HMV, Match.com, and Mighty Deals.
• McDonald’s yesterday reported Q4 & FY numbers saying that ‘2017 was a strong year for McDonald’s as customers responded to the many ways we are making their experience more convenient and enjoyable.’
• McDonald’s CEO Steve Easterbrook reported re 2017 ‘we served more customers more often, achieved our best comparable sales performance in six years, gained share in markets around the world and made tremendous progress with growth platforms such as delivery, mobile order and pay and Experience of the Future.’
• Q4 McDonald’s LfL sales +5.5% globally ‘reflecting positive guest counts in all segments.’ Consolidated revenues fell by 11% due to ‘the impact of the Company’s strategic refranchising initiative.’
• McDonald’s systemwide sales increased 8% in constant currencies in Q4 with EPS of 87c, down 40% due to the Trump tax changes. Excluding tax-related impacts, EPS was up 19% at $1.71.
• McDonald’s concludes ‘with the commitment the McDonald’s system has to running great restaurants and maximizing our growth initiatives, we are confident that we will accelerate our momentum by capitalizing on our strong business model and distinct brand advantages in convenience, menu variety and value.’
• Brinker International in the US reported improving numbers in its Q2 leading observers to suggest that there may be early proof that recent traffic-driving initiatives are paying off. The group’s Chili brand had seen traffic figures fall c9% in Q1. Traffic was down by 4.4% in Q2.
• Brasserie Bar Co has announced results for the year ending 2nd July 2017, showing turnover increasing 14% to £46.8m and EBITDA up 23.7% to £7.3m. The 36 site-strong group opened 6 new units this year. CEO for the group, Mark Derry stated: ‘In a difficult year for the licensed retail sector, we are delighted to report another period of considerable achievement. We served some 1.6m guests, collected 40,000 pieces of feedback with an average score of 9 out of 10 and saw eight sites breaking sales records. Financing from OakNorth Bank has enabled our roll-out plans to open 24 new sites in the next five years. We look forward to growing our estate and our team despite industry challenges’.
• Bill’s Restaurant has appointed Duncan Garrood as its new chief executive with immediate effect. Garrood stepped down as chief executive of Punch last year following the completion of the takeover by Patron Capital/Heineken.
• Champagne producers Moët and Dom Pérignon have reported a ‘very strong year’ in 2017, with growth in all regions, per the Drinks Business.
• Jonathan Downey, cofounder of the street food market chain, London Union, has commented to the MCA that the group will make its first move into the regions by the end of this year. Downey also reiterated his intentions to open a site in America in the next few years and to open a flagship site at Smithfield Market.
• A campaign to stop the use of plastic straws and stirrers in pubs and the wider hospitality industry is being backed by the BBPA, ALMR, BII and MA. The campaign lists several alternatives to plastic straws including, biodegradable polylactic acid, metal, straw straws, bamboo, and more.
HOLIDAYS & LEISURE TRAVEL:
• PPHE has updated on full year trading saying that it was in line with the Board’s expectations. 2017 revenue was up by around 19%. REVPAR was up by 10.0%. CEO Boris Ivesha comments ‘whilst we recognise that certain cost pressures and renovation programmes may have an effect on our performance, we are confident about our long term prospect and as we enter 2018, we will remain focused on providing exemplary service to our guests, revenue generation and the delivery of our renovation projects.’
• Safestay (AIM:SSTY) reports revenue up 43% to £10.6m for the 12 months to 31 December 2017 (including acquisitions made during the period). The average bed rate in the UK was stable at £20 and 5 new European properties were acquired in ‘gateway’ cities during the year. Larry Lipman, Chairman, said ‘While our 2017 trading performance has been strong and in line with market expectations, we remain focused on growing the portfolio and our marketing platform, both organically and by acting as a consolidator through the acquisition of individual sites and small chains of hostels, as well as procurement of sites for development.’
• The ‘Business Events Research; Delegate Spend and Trip Extensions’ report found that people who extend their work trip for leisure spend, on average, double the amount of money (£1,942) than if they travelled home immediately after the event (£991). It also found that international delegates stay considerably longer – on average 3.7 nights – when compared to domestic delegates, who stay an average of one night.
• Trade only tour operator Funway has seen its best trading day in its 25 year history, with revenues up by a record 110% year-on-year on Saturday 27 January. Las Vegas was the top-selling destination on the day with sales up 183%. The US made up 65% of sales on the day and Mexico and Caribbean made up the remaining 35%.
• Certify, an expense management software provider, reports that Uber and Lyft accounted for 68% of overall ground transportation spend in the US in 2017. Uber accounted for 56% and Lyft 12%.
• Escape Room operator Escape Hunt has announced a new site opening in Lille, France, in early 2018.
• Shares in video game giant Electronic Arts rose in after-hours trade despite lowering its profit forecasting and admitting that its highly anticipated Star Wars game sold fewer copies than expected following a consumer backlash over the scale of in-game microtransactions. EA said total revenue for the 12 months ended December 31 rose 10.1% to $5.1bn. The company reported a net loss of $186m in the three months ended December 31, weighed down by a $176m of expenses due to the application of US tax legislation.
• Hollywood Bowl Group says trading is good and customer feedback following its £350,000 refurbishment of Hollywood Bowl, Bradford in December has been particularly encouraging. Steve Burns, CEO, Hollywood Bowl Group said: ‘We’ve seen fantastic results following the completion of the refurbishment in December, with an increase in trade and very positive customer reviews. These results set us up nicely for our programme of investments planned for 2018, some of which are already under way.’
• Sunderland-based Kalma Baby, established by Rebecca Riley in 2014 to offer mother and baby yoga classes, has built up a network of 14 franchisees will begin operating throughout Yorkshire in the next 12 months. Kalma Baby is also in discussions to take the business into London.
FINANCE & MARKETS:
• Mark Carney has said that the Bank of England is to once again concentrate on brining down inflation. Carney told the House of Lords ‘the focus is increasingly on returning inflation sustainably to target over an appropriate horizon.’
• The FCA has warned that hundreds of thousands of homeowners could lose their homes if they ignore the potential impact of rising interest rates. In addition, the FCA says ‘we are very concerned that a significant number of interest-only customers may not be able to repay the capital at the end of the mortgage and be at risk of losing their homes.’
• Eurozone economy grew at its fastest rate in 10yrs in 2017. The Eurozone as a whole managed to grow at 2.5%.
• SMMT reports that car manufacturing in the UK fell for the first time since 2009 last year on the back of weak UK demand.
• Eurozone consumer confidence rose in January.
• Net consumer credit increased in Dec in the UK by £1.5bn as consumers borrowed more to consume
• Sterling up vs dollar at $1.4175
• Pound up vs Euro at €1.14
• Oil down at $68.53
• UK 10yr gilt yield unchanged at 1.46%
• World markets: UK, Europe & US all down yesterday with Asia mostly up in Wednesday trading
• Brexit, politics etc.:
o Chancellor Hammond calls for a very modest Brexit. Brexiters call for Hammond to resign.
o Brexiter Liam Fox says fellow Brexiters may not be able to get the deal that they want. Rees Mogg suggests that will cost the Tories the next election and allow in a hard socialist government
o Chancellor Merkel reported to have mocked UK PM Theresa May as clueless.
o May cancels planned speech on Brexit due to internal disagreements. Tory party civil war may lead to implosion.
o Mrs May facing calls to resign over leak of doc saying any Brexit will damage Britain.
o Government refuses to release documents showing any form of Brexit would damage the UK ‘in every way’
o NIESR reports the report saying the UK will be damaged by Brexit whatever happens is nothing new
o Times reports ‘a second Brexit poll looks ever more likely’. Believes Corbyn will change his mind in order to win election
o Guardian suggests Brexit may not even happen. Might be a study in how to upset everyone at once.
o Democracy, which gave us Brexit, Trump and Boaty McBoatface, is said to be an argument-ender
• Langton is between offices. Please communicate via email. MIFID II is now in operation.
• Later tweets: Domino’s Q4. Co resilient, figures will slightly exceed market expectations’. LfL sales +6.1%
• Reuters: UK gov. is ‘swamped by Brexit and weakened at home’ and is falling behind in attracting Chinese investment
• Times has HMG saying Brexit will harm UK in every way. Growing calls for May to quit. Tory civil war erupts. Disquiet or deathwish?!
• Flaky markets as stocks fall, bond yields rise, US has worst day in 5mths & Goldman says to sell equities
• SCS tomorrow will give another insight into big-ticket spending. Cars & mortgage approvals currently down, holidays OK
START THE DAY WITH A SONG:
Yesterday’s song was If I Ain’t Got You by singer and actress Alicia Keys. Apparently Tuesday is the most depressing day of the week — to celebrate its passing, who sang:
I’m gonna go to a disco in the middle of the town,
Everybody’s dressin up I’m dressing down
RETAIL NEWS WITH NICK BUBB:
Consumer Confidence Watch: The widely followed monthly GFK Consumer Confidence index often gets a seasonal boost at this time of year and the overnight survey for January is no exception, with the overall index jumping from -13 to -9. All five measures used to calculate the index rose in January, with the appetite for major purchases, such as furniture or washing machines, seeing the biggest increase, rising by 5 points to +1. Joe Staton, head of market dynamics at GfK said: “Having survived Christmas, New Year, the January Sales and Blue Monday, bullish Brits report a more upbeat view of their financial prospects for 2018 this month”. But he cautioned that the index was still below the -5 reading this time last year “and in the absence of good news about rising wages and declining inflationary pressures, this off-trend number could be a temporary blip rather than a strong sign of
John Lewis Watch: In line with the more upbeat GFK Consumer Confidence survey for January, yesterday’s weekly sales update from JLP (for w/e Jan 27th) flagged that John Lewis ended January in quite good form, with gross sales up by 4.7% versus last year or c4% up on a LFL basis. In terms of sales mix, Fashion sales were down by 0.4% gross, but Home sales were up by 2.9% and Electricals were up by as much as 11.9%. That outcome lifted the 26 week cumulative run-rate a notch to +1.5% gross (slightly up LFL), to finish the second half on a bright note in top-line terms: the bottom-line impact will be revealed in the JLP results on March 8th.
Waitrose Watch: Over at Waitrose, last week was quiet, with gross sales up by 0.7% in w/e Jan 27th (c1% up LFL), to hold the cumulative run-rate at +1.5% after the 26 weeks of the second half (c1% up LFL).
ScS Group: Despite the recent warning from Carpetright, the sofa and carpet retailer ScS has come out with a reassuring trading update today, flagging that over the last 26 weeks LFL orders have edged up by 2.2%, despite a slight drag from the House of Fraser concessions and the overall message is that “the Group has traded in line with the Board’s expectations in the first half of the financial year, including the key winter sales period. We believe the Group’s increasing resilience and value proposition will enable us to manage the continued economic uncertainty and take advantage of opportunities”. No doubt the management team will say more about all this next week when they take analysts to see the new store that opened in Chelmsford on Boxing Day.
Joules: Ahead of today’s interims, for the 26 weeks to 26th November, Joules had already flagged that Christmas trading had been good, with Retail sales up 19.2% year on year, so, on the back of strong 24% profits growth in the first half, the message is that “the Board now anticipates that full year profit will be slightly ahead of the range of analysts’ expectations”, even though “the headwinds facing UK retailers are well documented and show no short-term signs of abating”.