Langton Capital – 2018-02-28 – Consumer confidence, PPHE, Sky, shop prices & other:
Consumer confidence, PPHE, Sky, shop prices & other:
A DAY IN THE LIFE:
Bit busy this morning. Good luck with the trains, roads etc. & on to the news:
PUB, RESTAURANT & DRINK PRODUCERS:
• GfK has reported that UK consumer confidence slipped again in February as people became more pessimistic about their finances. GfK says that the reading fell to minus 10 from minus 9.
• GfK reports optimism bias alive & well. Respondents are minus 5 for themselves but minus 26 for the economy as a whole. GfK reports ‘ongoing concerns about sluggish household income, rising prices paid by consumers in the shops, and the prospect of inflation-busting council tax and interest rate hikes has dented confidence after last month’s surprising rally.’ It continues ‘despite positive news about upgraded growth forecasts, and the promise of higher wage increases this year, confidence will remain subdued until we feel the positive impact on our purses. Consumers have good reason to feel jittery and depressed.’
• The BRC reports that shop prices fell 0.8% in February after a 0.5% fall in January. BRC says ‘this will ease the squeeze on consumer incomes over the coming year, but it’s likely to do little to lift the rate of growth in consumption. Earnings are still falling in real terms, despite wages increasing, and savings are unlikely to provide the same support to spending that they have over the last 18 months.’
• The pace of expansion among the top the 150 eating out operators is anticipated to fall this year to 3%. The MCA has shown that despite the slow down there have been nearly 10 net new outlets opening per week.
• AB InBev is to open a brewpub in London’s Shoreditch, the MCA has reported. The group have purchased The Drunken Monkey site and are expected to reopen it as one of their Goose Island brewhouse format.
• JW Lees has bought two new hotels, The Stanneyland’s Hotel in Wilmslow Cheshire and The Boddington Arms in Samlesbury Lancashire.
• PizzaExpress UK has begun trials of a more contemporary eating style, with small plates and sharing items.
• Deliveroo has announced its intention to create 250 high-skilled new tech jobs in London this year, meaning it is on course to create 600 new tech jobs in the capital in just two years. If Deliveroo continues grow at its current rate, it is projected to create 23,700 jobs in its UK-based partner restaurants and will contribute some £1.5bn to the UK economy by 2018/19.
• Deliveroo CEO and co-founder Will Shu said: ‘I founded Deliveroo in the UK, and five years on, we are building the most exciting technology team anywhere in Europe. These highly skilled new hires will join the incredible team building the technology that motors Deliveroo. This technology is constantly improving, to allow riders to work more efficiently, to allow restaurants to increase their revenues further and to bring more choice and an ever better experience to our customers.’
• The new Darwin & Wallace site in Wimbledon will be names 601 Queen’s Road, taking the company up to 6 sites. Mel Marriott, Founder and Managing Director, Darwin & Wallace says ‘The bar will be light with signature features. We’ll be working with our talented artisans and makers to bring 601 Queen’s Rd to life with bespoke furniture, hand picked artwork, ceramic tiles, unique lighting and so much more’
• Campari reports sales up 6.3% to €1.82bn and an increase in profitability for 2017 driven by strong demand for its Aperol liqueur and Campari bitter.
• PepsiCo has debuted its Drinkfinity soft drink pods in the UK, which allow consumers to create healthy drinks without using single-use plastics.
• Shares in Papa John’s International fell yesterday after the company said it expects earnings to remain under pressure due to higher delivery and other costs. Shares fell by 5.4% in after-hours trading
• Pret a Manger is consulting customers on whether it should introduce a deposit scheme for plastic bottles that could then be refilled.
• The UK arm of Toys R Us may soon enter administration and lose 3,000 staff if no rescuer steps up to inject millions of pounds of emergency funds into the business, per BBC. Maplin’s is said to be also at risk. Some 6,000 jobs in total are said to be threatened.
• The FCA expects that borrowers may avoid £1.3bn in charges as a result of rules it is brining in re credit cards. It admits that, if card companies change their charging schemes, then the net amount saved could be much lower. The level of unsecured debt in the UK has been a growing cause for concern. The changes, which come into effect tomorrow, will regulate the treatment of borrowers in arrears.
• Michael Gove has said that £150m in payment may be moved from rich farmers to environmental schemes post Brexit.
• Food & Drink Federation reports export deals worth £2bn were negotiated on behalf of the UK by the EU.
HOLIDAYS & LEISURE TRAVEL:
• PPHE Hotels has reported FY numbers to end-December saying that revenue rose by 19.3% to £325.1m ‘mainly due to an increase in hotel room inventory following the full opening of two new hotels in London and the first full year contribution of Park Plaza Nuremberg.’
• PPHE says ‘on a like-for-like basis, total revenue increased by 10.3%.’ Reported EBITDA rose by 14.0% to £107.3m.
• PPHE reports normalised PBT rose by 1.1% to £32.1m. It says ‘normalised profit is affected by the first year loss of new openings, which do not have mature trading profiles yet. Normalised profit is further negatively affected by the first time consolidation of the first quarter Croatian operations which, due to its seasonality, are negative.’ Normalised EPS was down 14.4% at £0.58
• PPHE CEO Boris Ivesha comments ‘2017 was another year of significant progress for the Group and a number of milestones have been achieved.’ He continues ‘trading in 2018 to date is in line with the Board’s expectations and we look forward to focusing on a strong pipeline of renovations and developments which will further expand and enhance our hotel portfolio.’
• Accor has signed its long-awaited sale of a majority stake in its real estate business to a consortium of investors including sovereign wealth funds
• STR reports Europe’s hotel industry raised occupancy by 3.4ppts in January versus Jan last year. Rate was +2.2% with REVPAR +5.7%.
• In the US STR says this was the best January on record, with KPIs at all-time highs. US hotels reporting occupancy up 0.9% to 54.5% and ADR up 2%.
• Walt Disney plans to invest €2bn in Disneyland Paris over the coming years. It will expand the park with a lake and areas devoted to films such as Frozen and Star Wars. The investment ‘underscores the company’s commitment to the long-term success of the resort as Disney’s brand beacon in Europe’.
• Starwood Capital has announced that it is to buy 7 Hilton hotel sites in the UK for $188m. Kew Green will manage the hotels under a Hilton franchise agreement.
• Dalata Hotel Group reports pre-tax profits up 75% to €77.3m and revenue up 19.9% to €348.5m for FY2017. Dalata’s occupancy for the UK and Ireland increased to 83.1% and ADR rose €8.88 to €106.48.
• According to a new report for Gatwick, inbound long-haul airline passengers are giving the UK its biggest financial boost. Up to 5.5m passengers arrived through the airport last year, contributing £4.7bn to GDP and supporting 93,000 jobs.
• Iata claims up to one billion passengers could be travelling on aircraft powered by a mix of jet fuel and sustainable aviation fuel by 2025.
• The current weather in the UK led to rail and air travel disruption yesterday with Southeastern cancelling over 100 services and other operators running reduced services.
• Comcast has offered Sky shareholders £12.50 per share, a 16% premium on the offer from Murdoch’s 21st Century Fox in December. Murdoch’s offer has been held up by regulators over concerns that it was not in the public interest. Brian Roberts, CEO and chairman of Comcast, said ‘Comcast intends to use Sky as a platform for growth in Europe. We already have a strong presence in London through our NBC Universal international operations, and we intend to maintain Sky’s UK headquarters’.
• Amazon has bought a US firm that makes high-tech doorbells
FINANCE & MARKETS:
• The ECB may end its bond purchase scheme this year reports Bundesbank President Jens Weidmann
• Sterling down vs dollar at $1.39 but up vs Euro at €1.1366
• Oil down over a dollar at $66.23
• UK 10yr gilt yield up 4bps at 1.55%
• World markets: UK mixed yesterday with Europe down and Wall St also lower. Asia down in Wednesday trade
• Brexit, politics etc.:
o Crunch time as Labour smells blood, EU tells it like it is etc. Buffett – tide going out, who is swimming naked?
o Labour trap closing. Vote on customs union postponed by nervous whips says Times.
o Boris says in letter to PM to introduce a hard border in Ireland if necessary.
o Irish spokesman tells Newsnight that UK if it wants an EU border, it will have to be in the middle of the Irish Sea
o DUP spits cornflakes on its shirt
o Boris says UK & Ireland border in Fermanagh, Armagh etc. is like Camden & Westminster. Others say; no, it’s not.
o Foreign Sec accused of not understanding the world ‘foreign’.
o EU will publish draft treaty today on basis of agreements made with UK last December. Has said Chequers’ comments were based on an illusion.
o Confused metaphor but can kicked down the road is coming home to roost. Cake, eat it etc. No cherry-picking. UK public can’t have what it’s been told it will get and, as in the OJ trial, a confused jury will blame the nearest party to hand. In this case perhaps the Tory Party.
o Going it alone in trade (with a 65m market rather than a half-billion plus market) is like swapping a three course meal for a bag of crisps.
PRIOR DAY TWEETS:
• Later tweets: Mr (call me sensible) Corbyn sees Path to Power with business backing for single market comments. Liam Fox to criticise business for support
• Will RTN cut its dividend when it reports FY numbers next week? One might argue that it certainly should.
• Langton paid £17.40 for 3 beers in a pub on Cornhill last week. That’s £5.80 per pint. It may drive LfLs but is it good business?
• GfK confidence numbers tomorrow. Brexit was fixed at Chequers so should all be smiles all round.
• New Fed boss to speak today, opine on US economy, path for interest rates etc. Betting is on two more rises this year
• Discounts still in evidence. Pizza Express & Prezzo 25% & 30% off food respectively, ASK & Café Rouge 30% and 40% off mains
• Labour & Tories vie to be least ugly girl at Brexit Ball. Not much in it. Swivel-eyed, backward-looking loonies vs financial illiterates…
• Langton has got the keys to its new office. Triumph of persistence over bureaucracy. Decorators in at present. We should be in early next week but, for the moment, please communicate via email. MIFID II is now in operation.
START THE DAY WITH A SONG:
Yesterday’s song was I Need a Hero by Bonnie Tyler. Today, who sang:
All along the Eastern shore,
Put your circuits in the sea
This is what the world is for
RETAIL NEWS WITH NICK BUBB:
• EGM Watch: The eagerly-awaited Tesco and Booker EGM’s are being held in the City this morning. The Tesco General Meeting will be held at 10am at etc. venues near St Paul’s, and the Booker Court and General Meeting will be held at the offices of Clifford Chance on Upper Bank Street at 12 o’clock.
• Travis Perkins: The builder’s merchant giant Travis Perkins has a good record on tracking the outlook for the economy and, not surprisingly, it remains cautious. Today’s finals show profits under pressure: “In 2018, we anticipate that the mixed market backdrop will continue. As a result, we will be focusing capital investment behind our key priorities, and slowing investments elsewhere. The Group will focus heavily on maintaining tight control of the cost base and expects 2018 performance to be similar to 2017”. And there is bad news about Wickes…Elsewhere in the Consumer Division, Toolstation saw accelerating LFL sales growth in the second half, and this strong momentum has continued into 2018, but at Wickes “LFL sales growth slowed through the course of 2017 as the UK DIY market became increasingly challenging and the business had a disappointing autumn Kitchen & Bathroom
• Consumer Confidence Watch: The widely followed monthly GFK Consumer Confidence index came out overnight, with the overall index edging down from -9 to -10. GFK’s Joe Staton (who now has the fancy title of “Head of Experience Innovation UK”) says: “Ongoing concerns about sluggish household income, rising prices paid by consumers in the shops, and the prospect of inflation-busting council tax and interest rate hikes has dented confidence after last month’s surprising rally… Despite positive news about upgraded economic growth forecasts, and the promise of higher wage increases this year, confidence will remain subdued until we feel the positive impact on our purses. Consumers have good reason to feel jittery and depressed”.