Langton Capital – 2018-02-14 – Pepsi, Restaurant Brands, UK Tourism, etc:
Pepsi, Coca-Cola AG, Restaurant Brands, etc:
A DAY IN THE LIFE:
We mentioned yesterday that Langton was receiving an increased number of glossy brochures through the post offering cars ‘at cost’ and furniture at ‘knock down, never-to-be-repeated prices’.
All of which may warrant the attention of the advertising standards people in due course but it’s also worth pointing out that restaurant companies are amongst the major discounters online with offers well into February still promising half price meals (either 2-4-1 or 50% off mains or food or everything) and no obvious road back to full pricing evident, even to the better operators.
And, whilst cars, furniture and the like have been impacted to some extent by factors beyond their control, the reluctance to commit to big ticket purchases, conflicting advice on diesel cars etc., the casual dining industry has no such excuse in that many of its problems have been self-inflicted via over-capacity, over-pricing and its associated addiction to high, some would say ridiculous, margins. On to the news:
PUB, RESTAURANT & DRINK PRODUCERS:
• PepsiCo has recorded 2.3% growth in organic sales, with core EPS up 8% to $1.31 during Q4 2017. Chairman and CEO, Indra Nooyi said: ‘We are pleased with our performance for the fourth quarter and full year 2017. We met or exceeded most of the financial goals we set out at the beginning of the year. We delivered these results in the midst of a dynamic retail environment and rapidly shifting consumer landscape’.
• Coca-Cola AG, a leading bottler of the Coca-Cola Company, has reported revenue up 5.9% and volumes rising 2.2% for the year ended 31 December 2017. The group’s EBIT had risen 20% to €621.0 million. CEO of the group Zoran Bogdanovic, said: ‘I am fortunate to have taken over a business performing well and with a clear strategic direction. 2017 was an exceptional year for us, and we are delighted to have delivered strong growth in volume, revenue and margin, overall demonstrating significant progress towards our 2020 objectives’.
• A sharp slowdown in US craft beer sales growth has sent certain specialty hop markets tumbling. Many hop varieties popular with craft beer makers have almost halved from peaks of $23 a pound in 2015/16.
• Steve Phillips has joined Busaba Eathai as its new operations director, the MCA has reported. The former Gourmet Burger Kitchen and The Restaurant Group man has joined Busaba as the group looks to rebrand as Busaba Bangkok Thai.
• The Paris-based Italian restaurant chain, Big Mama, is set to make its UK debut by securing the former Red’s True Barbecue site in Shoreditch (London), reports MCA. The French chain currently operates six restaurants and bars in the country’s capital.
• Restaurant Brands, the owner of Burger King and Tim Hortons, has announced that it intends to accelerate its international expansion of cafe chain, Tim Hortons. So far the group has opened 13 sites in the UK and have ‘robust pipelines for additional openings in 2018 and beyond’.
• Restaurant Brands has reported LfL sales grew 3.1% at its Burger King stores, however, the group saw Tim Horton LfLs down 0.1%. Chief executive of the group, Daniel Schwartz said ‘We also improved system-wide sales growth at Burger King this year, driven by accelerated net restaurant growth and continued comparable sales momentum. At Tim Hortons, we launched our mobile app and our espresso-based beverage platform in Canada and the U.S. and also opened our first restaurants in Asia, Europe and Latin America’.
• Healthy fast food operator Leon is working on a new Asia-inspired concept ‘using a Leon-type’ kitchen, writes MCA.
• Domino’s Pizza Enterprises, which owns the master franchise for the Domino’s network in Australia, New Zealand, France, Belgium, and others, is currently the third most shorted Australian stock.
• UK pub industry trade show PUB18 has had a record-breaking number of visitors this year, with over 4,000 people attending.
• Camerons Brewery has appointed new property agents as the group look to add 15 new venues a year for its Head of Steam brand.
HOLIDAYS & LEISURE TRAVEL:
• Transport for London (TfL) says that falling passenger numbers could be symptomatic of a wider change in travel, and is forecasting a near-£1bn deficit as a result.
• Tui has seen a ‘return’ for Egypt in bookings so far this January, while Turkey bookings are also ‘strong’ in what the group’s CEO has described as its best start to the year ever. Fritz Joussen commented: ‘January is the strongest trading month in our business. We are up 8% in terms of revenue and 6% in terms of bookings. It’s the best January we’ve had in the company’s history.’
• Eurostar’s new route between London and Amsterdam will run its first train on 4 April from St. Pancras, with one-way fares going on sale on 20 February starting at £35. The new service will begin with two trains a day departing at 8.31am and 5.31pm.
• Thomas Cook is resuming flights to Tunisia for UK customers for the first time since the 2015 terror attack. Three full planes, each carrying 220 passengers, are flying to Enfidha this week after the Foreign and Commonwealth Office eased its travel advice.
• Network Rail will focus on maintenance rather than big projects for the next five year funding period. The company could spend up to £47bn, with the amount set aside for new schemes falling by 33% and the total for current improvements rising by 25%.
• Total visitors to the UK increased 8% for the year to September 2017, with travelers from India and China up 12% and 20% respectively.
• UEFA has been granted a court order to block illegal streams of the Champion League and UEFA Europa League. BT Sport director, Bruce Cuthbert has stated: ‘Fundamentally, for our customers, they want to know that we are taking the issue of illegal streaming seriously and that people who are breaking the law – because that’s what they are doing – are not going to get away with it’.
• Sports Direct has acquired a 50% stake in Game’s esports division for £3.2m, with gaming concessions planned across its store portfolio.
• 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.
FINANCE & MARKETS:
• UK CPI has beaten market expectations remaining at 3% against analysts’ proposed 2.9%. This result has applied further pressure on the BoE to hike rates in May. Food prices rose 4%, the slowest rate in four months.
START THE DAY WITH A SONG:
Yesterday’s song was Papa’s Got a Brand New Bag by James Brown. But today who sang:
Just give him half a chance,
I bet he’ll rob you if he can
Can see it in his eyes,
RETAIL NEWS WITH NICK BUBB:
• John Lewis Watch: We flagged a week ago that John Lewis did not start February that well, but yesterday’s weekly sales update from JLP (for w/e Feb 10th) revealed that last week was slightly better, with gross sales up by 1.7% versus last year or c1% up on a LFL basis. In terms of sales mix, Electricals were up by as much as 9.1% gross and Fashion sales were up by 2.1% gross, but Home sales were down by 6.5% gross (despite solid Upholstery sales). The H2 cumulative sales run-rate to end Jan was +1.5% gross (slightly up LFL) and after the 2 weeks of H1 so far John Lewis is running up 0.8% gross, so it will be interesting to hear what JLP say about the outlook with the final results on March 8th.
• Waitrose Watch: Over at Waitrose, last week was very similar, with gross sales again up by 1.6% in w/e Feb 10th (c1.5% up LFL), very much in line with the cumulative run-rate of +1.5% for the previous 26 weeks of the second half (c1% up LFL), below the rate of Food price inflation, even though “Customers were making early preparations for Valentine’s Day this year with Champagne sales up 24%, strawberry sales up 11%, flowers up by more than 28% and gifting cupcakes up by 91%”…