Langton Capital – 2018-02-12 – Jamie’s Italian, Imbiba, Deliveroo & Others
Jamie’s Italian, Imbiba, Deliveroo & Others:
A DAY IN THE LIFE:
I think it’s always interesting when a stock market slide is called a ‘healthy correction’.
That’s because, until it’s well and truly in the rear-view mirror, there’s no discernible difference between a correction and a staggered collapse.
Meaning that, whilst the odds favour a rebound, when you’re living through a ‘correction’ in real time, all you can really say is that it’s three to one on (or whatever the odds are) that it’s just a mild irritant, a 10% chance that it’s a real buying opportunity and a 25% chance that it’s the beginning of something much more serious.
And, even taking the above view, you have to acknowledge that you’re using the past to predict the future, which brings with it a series of problems all of its own.
I mean a turkey could predict with a 99% degree of certainty that, when it sees the farmer in the morning, the latter will feed it. There is, of course, an unspoken 1% chance that the farmer will murder the bird and a 0% chance that the feathered idiot will live much beyond 100 days of age. On to the news:
PUB, RESTAURANT & DRINK PRODUCERS:
• Creditors of the Jamie Oliver Restaurant Group have voted on a proposed CVA that is likely to see at least 12 restaurants close. The group is also seeking to cut its rent in a further eight sites by 30%.
• A university student at Durham has died after becoming crushed under a metal barrier as people tried to barge into a nightclub.
• The MCA has reported that Cafe Nero plans to open three Harris + Hoole cafes in the UK in the next four months. Cafe Nero has opened two H+H sites since its acquisition of the business in June 2016.
• The cost of eating out on Christmas day in 2017 rose by 3.7% y-o-y to £52.15 a head, reports the MCA.
• Imbiba has closed its £50m Growth Fund, with £30m having come from the British Business Bank. John Connell, the chairman of Imbiba told the MCA ‘We are pleased to have raised this new fund, with investment from the British Business Bank alongside several of the UK’s most successful leisure entrepreneurs, to provide both capital and operational support to some of most exciting growth businesses in our sector’.
• Amazon is to begin selling Whole Foods through its Prime Now service. The new service will initially roll out across America, with plans to expand further later this year.
• Revolution Bars said turbulency in the UK restaurant market meant it received scores of applications for its CEO vacancy. Keith Edelman, chairman on Revolution, told the Evening Standard that there was ‘carnage’ in the casual dining market for some UK restaurants.
• GlobalData reports 6 million people in the UK are ‘heavy drinkers’ who drink more than half the country’s alcohol stores. Policy makers and NHS Scotland believe that having a floor price for alcohol of around 50p per unit would target only “harmful drinkers”. Setting a 50p-per-unit minimum would mean that a bottle of red wine (9.4 units of alcohol) could not be sold for less than £4.69, while a four-pack of 500ml cans of 4% lager (8 units) need to be at least £4.
• Deliveroo has hired PwC to investigate a possible $2bn float of the company. The delivery group that is yet to make a profit is believed to considering a listing in London or New York in the next 12-18 months.
• Brasserie Bar Co has reported revenues up nearly £6m to £46.8m helping the group to increase pre-tax earnings by c25% to £7.3m, reports the Telegraph. The group however, blamed business rate hikes and an ‘increasingly hostile’ trading environment as the group recorded a pre-ta loss of £3.2m.
• The ALMR welcomed steps from the Government to tackle the illegal use of unpaid interns but called on it to provide additional clarity for businesses.
• Weetabix reports Q4 2017 net sales of $99.7m, EBITDA of $25.6m and profit of $16.8m. Post-Holdings, which acquired Weetabix in 2017, reported overall group net sales of $1.4bn, up 14.7%.
HOLIDAYS & LEISURE TRAVEL:
• American Express Global Business Travel is acquiring Hogg Robinson Group in a deal to merge two of the top three travel management companies in the world. HRG is valued by American Express GBT at up to £410m, with the deal expected to go through in the second quarter of the year subject to regulatory approval. In a separate but related deal, HRG announced the sale of its software as a service business Fraedom to Visa for almost £142m.
• The chief of the European Tour Operators’ Association (ETOA) has warned members of the UK Parliament that Brexit ‘is already harming’ Britain’s inbound travel industry. Speaking to MPs, ETOA CEO Tom Jenkins said: ‘The inbound industry is experiencing a recruitment crisis. The industry needs to recruit poly-lingual graduates, a group of people the UK is not good at producing but other EU countries are… Before the Brexit vote, the UK was seen as the place for young graduates to go. Since then the atmosphere has soured and, owing to the fall in the value of sterling, pay has dropped.’
• Airbnb is teaming up with Siteminder that will allow boutique hotels and B&Bs listed on Siteminder’s platform to list their rooms on Airbnb.
• Eurostar is launching a new service between London and Amsterdam on 4 April, which will transport passengers from one city to the other in just three hours and 41 minutes.
FINANCE & MARKETS:
• The NIESR estimates that GDP grew by 0.5% in the 3mths to end-Jan, unchanged from the 3mths to end-Dec. The NIESR adds ‘we estimate that economic growth was steady at 0.5 per cent in the 3 months to January. Activity picked up in the second half of 2017 after a period of subdued growth in the first half of the year. The recovery was driven by both the manufacturing and the service sectors, supported by a buoyant global economy, while construction output continued to lag.’
• NIESR is forecasting GDP growth ‘of close to 2 per cent this year assuming a soft Brexit scenario’
• NIESR says ‘if instead, Brexit talks fail, the UK economy will in our view suffer a marked slowdown with damaging longer term consequences.’
• The UK’s deficit in traded goods with the rest of the world widened to an 18mth high of £13.6bn in December per the ONS. Oil production fell but manufacturing rose. The ONS reports ‘the headline trade deficit widened in the fourth quarter with the impact of increased oil imports accentuated by rising crude prices.’
• The US government suffered its second shutdown in a couple of months last week.
• Brexit etc.:
• Michel Barnier says he does not yet know what the UK government wants from Brexit. Elements of HMG have said much the same thing.
• Barnier has said that time is ‘very short’ and he adds that an interim deal is not a given. He adds that the UK government asked for a transition period but it has yet to decide what that means.
• Brexit war cabinet kicks can down the road. An away-day at Chequers is on the card where HMG will look to give the can another kick.
• Mrs (I’m not a zombie or even a very lame duck) May has ruled out staying in the customs union. Brexiters have ruled out being poorer. There’s a bit of an issue in squaring that circle – see NIESR above.
• Bank of England governor Mark Carney has urged the government to publish the assumptions behind its leaked Brexit impact assessments. He needs to have such information if he is to manage monetary policy
• David Davis has said that Brussels is being mean. He said it was “discourteous” to threaten retaliatory action if Britain breached any agreements during the transition period
• Langton is between offices. There is some light at the end of the tunnel but, for the moment, please communicate via email. MIFID II is now in operation.
PRIOR DAY LATER TWEETS:
• Later tweets: MCA’s Eating Out Panel says consumers spending less on major occasions. Would make sense if they were maintaining day-to-day lifestyle
• US restaurants swing into LfL negatives again after only one month in the black. Dangers of overcapacity?
• Rates to rise quicker & more than thought as recently as Nov. No slack in economy, higher rates to come…
• Q. What’s a ‘healthy market correction’ & what’s a ‘precipitous drop’? A. In real time, there’s no difference, only time will tell
• DFS OK but it’s telling that Langton is being bombarded with new car & new furniture literature (hard copy) & cheap restaurant deals online
• Debenhams & M&S cutting jobs & stores. SBRY & MRW doing likewise. And Homebase. And Toys R Us. Bit of a trend developing here, hein?
START THE DAY WITH A SONG:
Last Friday’s song was My Generation by the Who. Starting this week off who sang the following:
RETAIL NEWS WITH NICK BUBB: