Langton Capital – 2018-02-05 – Soho House, Cineworld, Whitbread, Brexit, VAT & other:
Soho House, Cineworld, Whitbread, Brexit, VAT & other:A DAY IN THE LIFE: We’re told that pursuit and vulnerability dreams are extremely common. Indeed, we may well have ourselves had bizarre, reality-bending dreams in which we’re being pursued by four-foot-tall aliens or where we’re having to give a world-saving speech at the UN but we haven’t got any trousers on but, when all said and done, such dreams would struggle to be much weirder than the reality in which we now find ourselves. Our politicians are doing what they know to be wrong because voters had a Boaty McBoatface moment, Jacob Rees Mogg is being spoken of as a credible Prime Minister, the ‘dream team’ has Michael Gove in it, Boris is potentially our saviour (on the ‘bad leadership is better than no leadership’ argument) and we find Donald Trump installed in the White House. And the Russians are laughing their socks off, it has to be a dream, doesn’t it? Wake me up someone. Anyway, the good news over the weekend was that the Mighty Hull scored a goal for the first time in about six league matches. The not so good news was that they let in two. On to today’s stories: LANGTON RESEARCH: • 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: • Soho House may be considering a $2bn IPO in New York reports Sky News. Founder Nick Jones owns around 10%, Richard Caring has 32% and US investor Ron Burkle has a majority share. • Sky reports Soho House has appointed Wall Street investment banks Goldman Sachs and JPMorgan to advise it on the IPO. The group made profits of £31.7m in 2016. Sky reports ‘credit ratings agencies have warned about the scale of its borrowings, with huge sums required to finance its relentless growth.’ • EI Group bought back 234k shares for cancellation at 138p on Friday. • Leading figures behind the campaign to cut VAT in the hospitality industry, including spokesperson Chris Guyver and JD Wetherspoon chairman Tim Martin, have met with senior Conservative MPs who support the beer and pub industries. Martin commented: ‘This was an excellent meeting and shows that the campaign to reduce VAT in the hospitality industry is being taken seriously at the highest level. I told the meeting how the industry is responding positively to the opportunities flowing from Brexit. In particular, the opportunity to reduce VAT in pubs and restaurants was now more achievable as the UK leaves the EU, unencumbered by European Commission rules that currently prevents this.’ • New figures from restaurant booking platform OpenTable show that breakfast, brunch, and afternoon tea occasions are enjoying a surge in popularity in the eating out sector. Since 2013, bookings for breakfast increased by 276%, and brunch saw an even bigger rise, at 369%, while afternoon tea bookings grew by 258%. • A pub in York has been told to disconnect its BrewDog lines by the Serviced Dispense Equipment (SDE) after the Scottish brewery reportedly used dispense equipment owned by Heineken UK and Carlsberg UK without purchasing the required lease payments, per PMA. The SDE’s letter read: ‘We have written to BrewDog on numerous occasions and have had refusal to purchase the lease payments which are incurred where their products are being dispensed through our python lines. After careful consideration, SDE has decided that there is no other option but to disconnect the BrewDog products in your outlet.’ • Nielsen CGA research shows that the popularity of brewpubs and taprooms in the US continues to soar in the last few years. Across all legal-aged consumers (age 21 and up), 14% have visited one of these locations in the last quarter—and nearly half (46%) have visited them more in the last year than in the previous 12 months. • The BBPA has welcomed the Government’s consultation on relaxing licensing hours on 18 and 19 May for the Royal Wedding, which could boost trade by some £10m. BBPA Chief Executive Brigid Simmonds comments: ‘Royal weddings are a time of great national celebration, and provide a fantastic opportunity for the nation to get together in the pub. Relaxed licensing hours for pubs will be welcomed by pubgoers and provide a real boost to the pub trade.’ • Camerons Brewery have announced that it will open a further two The Head of Streat venues in Nottingham and Leicester. • Activist investor in Whitbread, Sachem Head, wants to see the company split up. The fund’s plan would see the sale of Costa Coffee, the leaseback of its Premier Inn hotel estate and an increase in the company’s debt levels. • Wesfarmers has announced a £454m pre-tax impairment charge regarding its acquisition of Homebase, with the retailer trading ‘below expectations’. Bunning’s DIY UK and Ireland reported an underlying loss of £97m, reflecting the poor performance of Homebase. • Sainsbury’s is cutting its ties with petrol station operator EuroGarages, shutting its trial stores at its stations. • Record spending on its Singles Day shopping event has seen Alibaba sales increase 56% in the last three months of 2017. The Chinese e-commerce giant reported revenue of 83bn yan (£9.2bn). HOLIDAYS & LEISURE TRAVEL: • The Sunday Times reports that Victor Tchenguiz is to sue Hilton over ten sites that have fallen into administration. • Chief executive of Iata, Alexandre de Juniac, admits global airline passenger demand in 2018 may not reach the +7.6% achieved last year. • Iata reports confidence in the aviation industry at a 10-year high, with 86% of respondent airline CFOs expecting passenger volumes to rise this year. However the association also said ‘rising input costs suggest we are unlikely to see the same degree of demand stimulation’ compared to last year. • Prices of holidays in Florida have been slashed by up to a third cheaper than European equivalents in an effort to combat the ‘Trump Slump’ fall in visitors to the US. Travelsupermarket research claims the typical family could save up to £1,000 by opting for Florida, rather than Spain. • Neilson Active Holidays is up for sale for around £80m with Sky News reporting a transaction could be completed ‘within months’. Risk Capital bought the firm in 2013 from Thomas Cook holidays. • Monarch’s former three-storey Luton airport HQ has come on to the market. Kirkby Diamond, the joint marketing agent for the property, described it as the ideal opportunity for a business to relocate to the airport. • Gimv has acquired a majority stake in France Thermes, a thermal resort operator. • CEO of IAG, Willie Walsh, has attacked the high cost expansion of Heathrow airport, saying the government should instead allow third parties to design, build and run commercial facilities at the airport. IAG owns British Airways, Heathrow’s biggest single customer. OTHER LEISURE: • Cineworld reported on Friday that the resolutions needed to push on with the acquisition of Regal Entertainment were passed. The group further reports that it will issue 1.095bn shares by way of a Rights Issue at 157p. Chairman Anthony Bloom reports ‘there was very strong support from Shareholders for the Acquisition.’ He adds ‘the Board would like to express its appreciation to Shareholders for this support, and to reiterate its confidence in this important development in the Company’s history.’ FINANCE & MARKETS: • UK construction PMI fell to 50.2 in Jan from 52.2 in Dec. Markets were expecting 52.0. Any number over 50.0 implies expansion but the drop means that, with Carillion now in the equation, construction activity is broadly static. • Non-farm payrolls rose by 200k in the US in January. Average hourly wages rose by 2.9% in the year to Jan. The unemployment rate held steady at 4.1%. • The Bank of England meets this Thursday. It is likely to keep rates at 0.5%. Betting is still on two further rises this year • Hopes of a ‘melt-up’ look to have been misplaced. • Bitcoin fell 5.1% on Friday (to take it down by 30% over the week) and by a further 4.6% over the weekend. Having breached $20k late last year, it is down by around 60% so far. • Lloyds Bank will not allow its customers to buy Bitcoins on their credit cards. It is clearly concerned that customers may not be able to pay their bills if the commodity falls (further). Lloyds says ‘we continually review our products and procedures and this is part of that.’ • The DJ Industrial Average had its biggest fall in 18mths on Friday. The index fell by 2.5% or 665pts. • World markets: UK, Europe & US all down on Friday. Far East down in Monday trading. • Sterling down vs dollar at $1.4124 • Pound down vs Euro at €1.1333 • Oil down two bucks over the weekend at $67.96 • UK 10yr gilt yield at new 2yr high of 1.56% (from 1.53% on Friday) • Brexit etc. o Even remainers seemingly in despair re Mrs May’s leadership. One tells BBC perhaps “bad leadership would be better than no leadership”. o Dream team said to be Boris as PM, Gove as deputy and Rees Mogg as Chancellor o Mrs May says transition deal can be agreed within 7wks o Lib Dem Vince Cable says Corbyn should offer second referendum as this would allow him to sweep into power with a radical programme for economic change etc. o Daily Mail says Brexit will happen even if all assessments say it will make the UK worse off o FT reports Downing Street has insisted Britain will leave the customs union after Brexit. There seems to be a lot of flipping and flopping going on. o CBI calls on UK to stay in customs union in order to preserve jobs, wealth and sanity. o FT reports Brexit chaos shatters illusion of unity. It says behaviour is farcical. Irish Times says UK’s humiliation ‘is excruciating’. Civil servants who, love them or loathe them, at least have a 50yr view, have been told to butt out as they try to fill the policy vacuum. Mrs May has postponed a speech in which she was to flirt with the idea of flirting with the idea of telling voters what Brexit will actually mean. o Bank of England warns we should not loosen regulation post Brexit o Barnier & Davis to update on talks by Friday. ADMIN ETC. • Langton is between offices. Please communicate via email. MIFID II is now in operation. PRIOR DAY LATER TWEETS: • Later tweets: Byron to shut 20 stores, SLTA says Christmas disappointing N of the Border. Costs still an issue. • Thomas Cook to bring new prosecutions against holidaymakers in fight against fake illness claims. • Construction PMI falls 52.2 in Dec to 50.2 in January. Estimates were for 52.0. House building, a major government target, moved backwards • ‘Political dysfunction’ (Bloomberg), ‘ungovernable (ditto), ‘political nervous breakdown’ (Irish Times), ‘humiliation excruciating’ (ditto) • Democracy, which is great, but which gave us Boaty McBoatface & got the Birdie Song to no2 in the charts, has struck again with Brexit START THE DAY WITH A SONG: Last Friday’s song was Friday I’m in Love by The Cure. Today who sang: ‘Just what is it that you want to do?, Well, we wanna be free, we wanna be free to do what we wanna do’ RETAIL NEWS WITH NICK BUBB:
• Saturday Press: The Saturday papers were thin pickings in terms of Retail news, although the Telegraph found a fashion model photo opportunity in the Sky News scoop that the Carphone Warehouse co-founder David Ross is piecing together a rescue deal for the Jigsaw womenswear chain, whilst the Guardian highlighted that global smartphone sales fell 9% in volume terms in Q4 and the FT focused on the fact that Apple’s “pricing power” came to its rescue in Q4, notwithstanding Wall Street concern over faltering iPhone sales. The Times had a profile of the boss of the warehousing giant Segro, David Sleath, and the cover story of the FT magazine was about the outlook for Ikea (“Ikea unpacked: how the furniture giant is redesigning its future”). Finally, the veteran City commentator Neil Collins noted in his FT column that the analysts covering the drinks wholesaler Conviviality “could hardly
• Sunday Press: The Sunday papers were much meatier, with the Sunday Times Business section leading its front page with the story that the embattled House of Fraser faces a cash squeeze, after credit cover has been pulled for suppliers to the ailing store chain. The Sunday Times also highlighted that the Steinhoff accounting scandal threatens to entangle the former Asda boss Andy Bond, who heads a number of Steinhoff companies (and who likes running, judging by the accompanying photo). The Sunday Times also had a double-page feature on the problems of the Steinhoff group, flagging that “Profits at Steinhoff seemed to defy reality while it went on a buying spree. But as irregularities emerge in the accounts, was it all smoke and mirrors?” and that South African boss Christo Wiese faces awkward questions over the Steinhoff accounting scandal. Less prominently, the Sunday Telegraph noted
• Tesco: When we saw the separate Tesco announcement headlines today about “Directorate Change” and “Profit and Dividend Forecast” we at first thought something important had happened like CEO Dave Lewis had resigned and that Tesco was rushing to provide reassurance…But all it is is that Tesco is publishing the documentation today on its long-awaited merger with Booker, ahead of an EGM on Feb 28th. Hence the fact that Tesco has said that, since its Christmas update on January 11th, the group’s trading performance has been in line with management’s expectations and that it expects to deliver at least £1.575bn operating profit before exceptional items for y/e Feb and that it plans a final dividend of 2.0p. And, to nobody’s surprise, Booker boss Charles Wilson is to be appointed as CEO of Tesco’s UK Retail and Wholesale operations and the current Tesco UK boss, the estimable Matt Davies, is • News Flow This Week: We get the BRC-KPMG Retail Sales figures for January first thing tomorrow (with strong Food sales likely to again offset the weakness in Non-Food sales, to leave overall LFL sales no worse than flat), quickly followed by the Ocado finals and the latest monthly Kantar/Nielsen grocery sales data. On Wednesday ScS are taking analysts to see their new Chelmsford store and then on Thursday their rival DFS issues a pre-close trading update. |
|