Langton Capital – 2018-02-19 – Jamie Oliver, Dart Group, Coke, weather, staffing & other:
Jamie Oliver, Dart Group, Coke, weather, staffing & other:
A DAY IN THE LIFE:
Persistence may be a virtue, but it can be irritating too.
Because when it comes to attempting to sell to you things, I do sometimes wonder if some vendors will ever stop because, if you take Amazon for example, now that they’ve worked out how to put adverts on your Kindle even when it’s turned off, if they’re not trying to push Valentine’s Day authors or whatever on you, they’re after you to buy a Kindle cover or another machine that’s exactly like the one you’ve got but presumably comes wearing an attractive hat.
All of which is inevitable, I suppose, because, I would imagine within days of the postage stamp being invented, vendors were looking for address lists of potential customers for saddle grease, arsenic-based face powders and moustache wax and little has changed. The fact that advertising (via the internet) is now virtually free, just makes the situation worse.
And here’s a thought for you, when you get those ‘it’s your lucky day’ emails, why do they always involve money traveling in one direction rather than the other? On to the news:
PUB, RESTAURANT & DRINK PRODUCERS:
• Jamie Oliver’s Barbecoa chain is reportedly close to collapse and is struggling to meet rent bills and other liabilities, per The Telegraph. Should the chain fail, another 160 jobs would be lost from the celebrity chef’s empire following the 450 being culled as a result of the Jamie’s Italian company voluntary arrangement.
• Jamie Oliver has confirmed that a disposal is being considered. The group says ‘we have instructed a firm of real estate experts to ascertain the potential value and market suitability of two of our sites.’ A rise in business rates is said to be one of the main reasons behind the group’s problems. The Telegraph goes so far as to say that Barbecoa may cease trading this week.
• Weather. The Met Office has said that we may be in for prolonged cold conditions. It says ‘there is increasing confidence that the recent Sudden Stratospheric Warming above the North Pole could lead to prolonged cold conditions over the UK, increasing the risk of easterly wind and significant snow.’ There is, apparently, a c70% chance of the weather being colder than usual from the end of this week.
• Coca Cola has reported strong Q4 numbers despite the fact that net revenues were down 20% in the quarter on what it calls ‘structural headwinds’. These are essentially refranchising initiatives. GAAP organic revenues were +6% for the quarter and +3% for the year as a whole. The group made a loss per share of 66c in Q4.
• Coke says ‘the Coca-Cola Company delivered strong fourth quarter operating results and achieved or exceeded the Company’s full year guidance in 2017. While reported net revenues continued to be impacted primarily by ongoing refranchising initiatives, the Company delivered broad-based organic revenue (non-GAAP) growth across all operating segments, as well as profit growth.’ CEO James Quincey reports ‘I am pleased with our accomplishments and results in 2017. We achieved or exceeded our full year guidance while driving significant change as we continued to transform into a total beverage company. While there is still much work to do, I am encouraged by our momentum as we head into 2018.’
• EI Group bought back another 310,900 of its own shares for cancellation on Friday at a price of 124.3p per share
• Staffing problems, particularly re chefs and waiting staff, continue to feature with the Press now saying that vacancies are proving hard to fill. The ONS reports that there are 810k vacancies across the UK economy at present.
• Sky reports that Funding Circle is looking to IPO at a valuation of £1.5bn using Morgan Stanley.
• Speaking to MCA, Adam Breeden revealed that he is aiming for 75 sites across his Bounce, Flight Club, and Puttshack brands over the next five years. The first Puttshack is set to open in Westfield London in April, with two further sites lined up (Intu Lakeside in Essex and No.1 Poultry in the City) set to open in Q1 2019. Breeden said: ‘We have multiple negotiations going on for sites, in the UK and internationally.’
• Greene King is being increasingly targeted by short sellers, with some 16% of the pub company’s shares out on loan to investors compared to 12% at the start of the year. According to IHS Markit, this is the highest level in three years. Greene King said it was ‘no secret’ that trading was tough, and this year would see it face £60m of cost headwinds. Greene King has implemented a cost-cutting plan that aims to save between £40m and £45m and is busy putting ‘the pub back into Hungry Horse and investing in the drinks offer.’
• Martin Hayes, the co-founder and managing director of The Craft Beer Co, has bought the virtual freehold of his first pub in London, CASK Pub and Kitchen, from Greene King. The site was opened in 2009 and led many other pubs to focus on craft beers.
• More than £2bn of old £10 notes are still in circulation despite there being less than two weeks until they are no longer accepted in UK shops, on 1 March.
• Individual Restaurants will open at least five restaurants with celebrity chef Gino D’ Acampo. The group will open in Birmingham’s Temple Row ahead of the summer, followed by a new central London restaurant and a minimum of three further openings this year.
• Amber Taverns CEO James Baer has told MCA that co-founder Bryan Wardman is taking a ‘well-earned retirement’ and the group’s head of property, Sam Frankland, is ready to take his place.
• The number of US restaurants has fallen 2% to 647,288 units year-on-year, according to The NPD Group’s 2017 fall census. Most of the decline came from independent restaurants.
• MCA’s Food To Go report suggests that just 31% of food to go decisions are fully pre-planned and 26% are completely spur of the moment.
• Shake Shack Inc. has announced that it will launch a ‘handful’ of kiosk locations in the first half of this year. The chain have been testing the platform since October.
• British retailers have had their worst start to a year since 2013, with sales growth of 1.6% compared to 2.3% last year.
• Toys R Us is facing administration at the end of the month unless it can find new investors to shoulder a £15m tax bill.
• Amazon is reportedly considering merging Amazon Prime Now and Amazon Fresh by the end of 2018.
HOLIDAYS & LEISURE TRAVEL:
• Dart Group has updated on trading saying that profits for the current year should be ‘materially ahead of current market expectations’. It says this is ‘due to the continued success of our growing Leisure Travel business and a more normalised pricing environment after the heavy discounting in the market over the past year.’
• Dart reports ‘looking ahead to the year ending 31 March 2019, forward bookings in our Leisure Travel business for summer 2018 are presently satisfactory. We also remain encouraged by the performance of our two new operating bases at London Stansted and Birmingham airports.’
• Dart concludes ‘it is still early in the leisure travel booking cycle and we remain cautious on pricing. However, given the satisfactory forward bookings and the execution of our growth strategy, the Board currently expects the Group’s trading performance for the year ending 31 March 2019 to be broadly in line with the current financial year.’
• Saga has announced the appointment of Patrick O’Sullivan as Chairman with effect from 1 May 2018. The group says ‘Patrick is hugely experienced in growing businesses in the financial services and insurance industry. He has been Chairman of Old Mutual plc, the FTSE 100 diversified financial services conglomerate, since January 2010. He is also Chairman of ERS (syndicate 218), a Lloyd’s market specialist motor insurer.’
• Center Parcs will no longer advertise in The Daily Mail, which it accuses of a homophobic attitude.
• Platinum Equity’s $1.3bn acquisition of Wyndham Worldwide’s European vacation rental businesses has now been confirmed. The European vacation rental business has entered into a 20-year agreement under which it will pay a royalty fee of 1% of net revenue to Wyndham’s hotel business for the right to use the ‘by Wyndham Vacation Rentals’ brand.
• Hyatt Hotels is making significant progress in selling more than $1.5bn in owned assets, according to company executives. CFO Pat Grismer, believes the company is close to passing the $1bn mark.
• Per The Telegraph, Elegant Hotels investors are being advised to tell Luke Johnson to leave the board due to his ‘sprawling business interests’.
• British tourist numbers to Catalonia were up by 4.9% to 2.16 million last year, making it the strongest performance in the past decade. British tourist spending in the Spanish region was up 1.3% to €1.66m.
• Chairman of the Association of Independent Tour Operators, Derek Moore, claims Tunisia’s tourism revival will be driven by lower prices trumping security concerns. Moore said ‘Tunisia was always good value. History shows concerns are dissolved in a deluge of low prices. It needed someone big, such as Cook or Tui, to go back, but price is the key.’
FINANCE & MARKETS:
• Rightmove reports UK house prices rose by 1.5% in the year to February. In London, it says asking prices in February this year were down 1% on those a year earlier.
• Pound at $1.4014 and €1.1295
• Oil at $65.37
• UK 10yr gilt yield off the top a little at 1.58%
• World markets: UK, Europe & US up on Friday with shares higher in Asia in Monday trade.
• Japan plans to allow workers to defer drawing their state pension beyond the age of 70yrs
• Brexit, government etc.:
o Government looking at tuition fees partly to divert focus from Brexit and the economy
o Times reports UK is divided and the way is open for a second referendum. YouGov reports 60% think Brexit is being handled badly whilst only 22% believe that it is being handled well.
o Cake, eat it. MPs are said to be calling for UK agriculture to be supported post Brexit.
o Guardian reports House of Commons committee warning farming businesses ‘could be wiped out after Brexit transition’
• 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.
START THE DAY WITH A SONG:
Last Friday we finished the week off with the man in black himself, Mr. Johnny Cash and the Ring of Fire. Today, who sang:
‘I took her to a supermarket,
I don’t know why,
But I had to start it somewhere,’
RETAIL NEWS WITH NICK BUBB:
• McColl’s: Ahead of today’s finals for the year to 26 November 2017, the McColl’s share price has been under pressure, despite its leading role in the consolidation of the convenience store industry, and shareholders will groan when they read the disappointing trading update for the 11 week period to 11 February…
• N Brown: As flagged by Sky News last night, N Brown (“the online, specialist fit, fashion retailer”) has today announced the appointment of Matt Davies as a non-executive Director and Chairman Elect with immediate effect. Matt will assume the role of Chairman from 1st May, when he will succeed Andrew Higginson (who is stepping down after 5 years in the job). After the recent news that he was stepping down from running Tesco UK at the same time (to make way for Charles Wilson), it was said that he wanted to build up a portfolio of non-exec roles in the North-West, where he lives, and the Manchester-based N Brown certainly fits the bill. It is not the most successful company in that part of the world, however, with the share price over 30% down since last month’s trading update…
• Saturday Press: The big story in the Saturday papers was the weaker than expected ONS Retail Sales figures for January and these got the usual uncritical coverage, with lots of headlines about “the weakest January since 2013”, as well as the lame comment from the ONS that people were eating less food and buying more “keep fit” equipment. The bumper results on Friday from the warehouse property giant Segro also got lots of coverage, as it is riding on high on the tide of Online shopping. The Business editorial in the Times admired the efforts of US hedge funds to get Tesco to “bump” the price of its offer for Booker, but said “for now you would expect CEO Dave Lewis to tough it out” (“Tesco ignores bump on Booker road”). And the FT had a big feature on the disastrous acquisition of Homebase DIY by the embattled Aussie conglomerate Wesfarmers, highlighting that its management has come
• Sunday Press: The main story in the Sunday papers was another scoop by Oliver Shah, the Retail correspondent of the Sunday Times, that the beleaguered Philip Green is in talks to sell all or part of his struggling Arcadia fashion empire (eg Top Shop) to the Chinese textiles giant Shandong Ruyi. The Sunday Times also flagged on the front page of its Business section that the vulture fund Alchemy Partners is stalking the crisis-hit New Look fashion chain. And it followed up last week’s story that Tesco is hatching a top-secret plan to take on Aldi and Lidl by launching its own grocery discount chain with a background feature on how “Every Lidl helps Tesco go back to its roots”, flagging that despite the obstacles of scale, money, culture and cannibalisation Booker boss Charles Wilson may be driving the idea as the “least bad” strategy compared to doing nothing. The Sunday Times also had
• News Flow This Week: Tomorrow we get the Dunelm interims and the Asda/Wal-Mart Q4 results. Wednesday brings the Hotel Chocolat interims, the CapCo finals (in the world of London property) and the Bunnings interims (in the world of Australian/UK DIY retailing). Then on Thursday we get the Intu Properties finals (in the world of regional shopping centres).