Langton Capital – 2018-03-13 – Tasty, Fevertree, Goals, discounts, coffee shops & other:
Tasty, Fevertree, Goals, discounts, coffee shops & other:
A DAY IN THE LIFE:
Bit of a rush, dashing around etc. On to the news:
TASTY FULL YEAR NUMBERS:
• Tasty reports FY numbers in line with expectations but expects even tougher trading in 2018. Will open no new units.
• Tasty reports FY numbers to end-Dec saying revenues rose 9.7% to £50.3m with adjusted EBITDA of £3.5m
• Tasty says ‘the Company disposed of three underperforming restaurants and opened six new Wildwood restaurants during the period. Post year end, the Company disposed of a further three sites.’
• Tasty says it ‘does not intend to open any new restaurants in 2018, with management focused on restructuring the existing restaurant portfolio of the Company.’
• Tasty reports ‘the financial performance of the Group was in line with the Board’s revised expectation. Market conditions have been increasingly challenging through 2017 and the Board’s expectation is that there will be no improvement in this regard in 2018.’
• Tasty says ‘we identified a number of weaknesses in our operational structure and have begun to implement an eighteen month plan to address these issues. In addition to this, we made the decision to dispose of a number of underperforming sites and suspend expansion whilst we make these operational improvements.’
• Re the market, Tasty says it ‘does not expect market conditions to improve in 2018 and believes that a further deterioration is likely. Underlying input costs will continue to rise and consumer spending will face increased pressures.’
• Tasty concludes ‘the Directors believe that the Group’s brands remain attractive to customers and the Group has the right strategic plan in place to ensure future growth.’
• Langton comment: Tasty has done the right thing by cutting openings & by disposing of sites where it has been able to do so.
• In this regard, it was reasonably early & may have jettisoned sites before the rush of CVAs that we now see upon us.
• For the rest of the market, fewer openings will be helpful but there remains a glut of restaurants. It is as easy to drown in 10 feet of water as it is in a hundred.
• For landlords, the news seems to be unremittingly gloomy. They will be getting keys back and there is less of a crush to open new sites.
PUB, RESTAURANT & DRINK PRODUCERS:
• Deliveroo is to host a series of London food start-ups in its Editions Kitchens for a few weeks, during which they will ‘pop-up’ on the delivery firm’s app. Deliveroo founder and chief executive Will Shu said: ‘Starting a business is tough but Deliveroo will be able to help these talented new chefs showcase great food over the 12 weeks they are with this.’ The move comes after a group of restaurants bosses wrote to the Chancellor warning over ‘damaging closures and job losses’ amid tough market conditions.
• Canadian doughnut and coffee chain Tim Hortons plans to open another Manchester branch on Oxford Road, making it the fifth confirmed site for the area.
• Cloud storage company Dropbox filed to go public on Monday at a value of $7.1bn (£5.11bn) — nearly a third below a valuation made three years ago. A series of fundraisings included one in early 2015 valued Dropbox at $10bn. But later that year, the company’s investment bankers warned that it couldn’t match that valuation in an IPO and investor Fidelity Investments slashed the estimated worth of Dropbox by almost 20%.
• High growth tonics maker Fevertree has reported full year revenue up 66% to £107.2m in its preliminary results, while adjusted EBITDA grew 64% to £58.7m despite gross profit margin falling from 55.2% to 53.5%. The group generated diluted EPS of 39.15p (+65%), putting Fevertree shares on some 69 times earnings. Tim Warrillow, Co-founder and CEO of Fever-Tree said: ‘It has been a year of significant progress for Fever-Tree. We have continued to see strong growth across all our regions with the UK once again delivering an exceptional performance culminating in Fever-Tree ending the year as the leading mixer brand at UK retail.’
• Tennents and Magners maker C&C expects operating profit of around €86m for the full year to 28 February 2018, with Admiral Taverns contributing an additional €1.1 million to Group earnings, despite weather-related disruption. Tennent’s in Scotland and super-premium brands grew revenues strongly, while Magners returned to volume growth with momentum building through the first year of its cider distribution partnership with AB InBev.
• C&C said in its outlook for the coming financial year: ‘The introduction of minimum unit pricing of alcohol in Scotland this year may result in some short-term market disruption, but longer term will bring value to the category. While competitive pressures remain in Ireland, we expect performance to improve next year. In the UK, our strengthened route-to-market platforms of Admiral Taverns and AB InBev are now well-embedded. The outlook for the UK high street and consumer spending remains challenging but our brands and the predominantly wet-led, community pubs we serve are proving resilient.’
• Discounts. Jamie’s 40% off mains. Pizza Express 25% off, ASK 30% off and Chimichanga 2-4-1 on mains.
• EI Group bought back another 275,922 shares yesterday for cancellation at 123.9p per share.
• Notes coffee shops has reported numbers to end-June 2017 to Companies’ House implying a loss of around £377k on the year given the movement in its Shareholders’ Funds. The group, which has been expanding, had a negative net worth at the time of its numbers of around £608k. The group reports that, in compliance with Section 476, its accounts have not been audited.
• Notes offered around £600k of stock on crowd funding site Crowdcube in 2015. Its 2017 accounts show £600k of bank and £1.3m of other debt.
• Healthy lifestyles are changing the way consumers eat and drink and the leisure industry is facing a post-Brexit crisis recruitment according to the third edition of Future Shock, which provides insights from CGA and the ALMR (soon to be UKHospitality). Other challenges identified in the report include rising property and people costs. Kate Nicholls, chief executive of UKHospitality said: ‘This has been a very busy year for the sector, with battles on business rates, Living Wage, lease reform, apprenticeship levy and the sugar tax. In the battle for share of voice within government, insight, intelligence and information are king, and that is why the Future Shock series is so important.’
• Cafe Rouge and Bella Italia operator Casual Dining Group (CDG) has posted a sharp increase in losses, which increased 18% to £60m in the year to May 2017 despite a 2.2% rise in like-for-like sales. CDG commented on a ‘significant’ rise in costs and challenging conditions ‘due to consumer confidence levels and the broader impact on discretionary spending’. The £60m loss included an exceptional cost of £24.4m related to additional financing arranged during the financial year.
• Hargreave Hale, Angel CoFund, MMC Ventures, and BGF Ventures have put together £28.5m of funding for six-year-old online meal kit start-up Gousto, bringing the total amount it has raised so far to £56.5m. The company, which currently delivers more than a million meals a month, aims to ‘help UK families serve 400m nutritious home-cooked meals’ by 2025. The meal kit industry is expected to generate $10bn (£7.2bn) globally by 2020.
• Sushi restaurant chain Wasabi has secured a £30m HSBC facility for London expansion, with the first expected to open in Russell Square during the spring. The group currently has 43 branches in London and a further eight across the rest of the country.
• A record 51 million bottles of gin worth nearly £1.4bn were bought in the UK in 2017, up 27% in terms of volume compared to 2016, per WSTA.
• The Wine and Spirit Association reports record-breaking gin sales for 2017, with sales up £104m over the Christmas period yoy.
• The Guardian claims supermarket prices of Prosecco, Pinot Grigio and entry-level Spanish reds could increase by up to 30% due to last year’s poor harvest.
• IRI GIRA Foodservice reports the UK foodservice market growing 6.2% since 2015, to £58.2m of sales in 2017. European foodservice sales in 2017 increased to €335.9bn, up €4.1bn. The study claims the increase has been driven by a larger variety of foodservice options.
• Per MCA, Flight Club is looking to expand to Manchester, with a site currently under talks located in the city’s King Street.
• TDn2K’s latest US restaurant data reports February comp sales down 0.8% yoy, with traffic down 3.1% across the industry. This marks the second consecutive month of falling same-store sales.
HOLIDAYS & LEISURE TRAVEL:
• EasyHotel reports shareholders have approved its £50m placing saying that the new shares will trade from today
• EasyHotel reports 29.9% shareholder ICAMAP has taken stock and will now own 38.7% of the company.
• EasyHotel CEO Guy Parsons reports ‘I would like to thank our existing shareholders and welcome our new investors for their support of this capital raise. Further, on behalf of the Board I would also like to welcome Harm Meijer, founding partner of ICAMAP, as a non-executive member of the Board effective from admission of the new shares, and believe the Company will benefit from his real estate, operational and financial expertise.’
• EasyHotel reports ‘with the addition of this new capital and the confidence of our shareholders, we will continue the acceleration of our owned hotel development pipeline, allowing us to take advantage of the significant opportunities within our markets, delivering enhanced returns for our shareholders and underpinning the long-term growth of the easyHotel brand.’
• STR has shown that London’s hotel industry saw a decrease in occupancy by 0.4% to 77.3% in February, average daily rate climbed 1.2% to £133.84 and RevPAR rose 0.8% to £103.48.
• Which? Travel has found that airport lounges often offer an underwhelming experience and poor value for money.
• Vacation home rental startup TurnKey has raised $31m in Series D funding.
• Goals Soccer reports FY to end-Dec, says statutory revenues down 1.4% at £33.1m but underlying revenues up a shade.
• Goals underlying LfL sales decline of 0.3%. It says ‘the closure of the clubhouses at Ruislip, Beckenham, Glasgow South, Leeds and Wembley during refurbishment impacted like-for-like sales by 0.4%. Underlying Like-for-like salesadjusted for closures was +0.1%.’
• Goals statutory profits more than doubled at £8.2m. Diluted EPS 9.2p vs 4.1p last year. Underlying EBITDA £10m vs £11.2m last year
• Goals will not pay a dividend. Says it is delivering on strategic plan. It comments that its ‘investment and upgrading of the UK estate is delivering improvement and remains ongoing’ and adds ‘248 of our 460 arenas have now been fully modernised and are delivering good returns at clubs where five or more arenas have been upgraded. Declines reduced at clubs with between one and four upgraded arenas.’
• Goals to continue its expansion in the US. Its JV with City Football Group, which is self-funding, is continuing its roll-out. Goals says ‘US trading continues to improve and the rollout of new clubs has been accelerated’ with a second club opening in February last year and a third in January 2018.
• Goals reports new CEO Andy Anson will join the Company on 23 April 2018.
• Goals current trading: Group says ‘for the 8 weeks to 24 February trading has been encouraging with like-for like sales up by 4.0%, benefitting from the investments last year. In common with many businesses Goals was impacted by the challenging weather conditions in weeks 9 and 10 and consequently like-for like sales for the first 10 weeks of our year to 10 March were -3.0%. It is anticipated that with more normal weather patterns sales will revert to positive territory.’
• Goals interim chairman Michael Bolingbroke comments ‘during 2017 we made significant progress towards achieving our strategic plan with investments in the UK making an encouraging start and improving sales. There remains work to do to unlock the potential inherent value within the UK estate and this will be the number one priority for the incoming CEO.’
• The national health club operator, Bannatyne Group, has recorded profit increasing 57% to £14.3m. Chief executive Justin Musgrove said: ‘We are delighted with the 2017 results – 57% increase in profits year-on-year after a 15% uplift in 2016 and very strong cash generation is clear demonstration that our strategy is delivering and that the investment over the past two years is driving strong returns’.
FINANCE & MARKETS:
• Chancellor Philip Hammond will update on the economy at 11.30am today in what is now a downgraded Budget. The main financial speech will be at the now-official Budget in November.
• Hammond expected to say that borrowing was lower than expected last year. He will not announce an end to austerity.
• CBI says that renationalisation of parts of the economy would “seriously harm” the UK’s reputation as a place to invest.
• Brexit debacle may have driven the young and Liberal Elite to Mr Corbyn’s hard left socialist government in waiting. It has said that the re-nationalisation of parts of the economy was an “economic necessity”
• Sterling up at $1.389 and €1.1266
• Oil down at $64.95
• UK 10yr gilt yield up 1bp at 1.50%
• World markets: UK mixed yesterday with Europe mixed and US down. Asia mostly up in Tuesday trade
o Nothing to say, all fixed. No problems with negotiations, permanently slower growth, alienated youth, isolation in standing up to Russia, Trump’s tariffs etc.
o Blair, Major etc. say road back is embarrassing but less damaging than the road ahead.
o Times says Mrs May does not believe what she is doing is in the national interest.
o Tory Brexiteers say Britain, flag etc. whilst hard left government in waiting says thank you very much.
PRIOR DAY LATER TWEETS:
• Later tweets: Visa reports consumer spending fell by 1.1% in February 2018 vs 2017 after 1.2% fall in January. Equates to some 4% below inflation
• NIESR reports GDP growth slowed to 0.3% in the quarter to end-February. ONS reports construction seen biggest monthly fall since 2012
• CSAs continue apace. Some 200+ restaurants either are or soon will be on the market. Capacity remains sticky, however
• Langton has got the keys to its new office. Triumph of persistence over bureaucracy. Most of our furniture has caught up with us. Some has apparently gone to heaven. Telecoms delayed (‘we’re in no rush, mate’). We’ll be occupying rooms 80-81, no65 London Wall, EC2M 5TU. No telephone number yet so for the moment, please communicate via email. MIFID II is now in operation.
START THE DAY WITH A SONG:
We opted for a trickier song yesterday, but one we remember fondly: Alabama 3’s ‘Woke Up This Morning’, aka. the theme tune to The Sopranos. Today, who sang:
Oh, the engineer would see him sittin’ in the shade,
Strummin’ with the rhythm that the drivers made
The people passing by, they would stop and say
“Oh my, but that little country boy could play”
RETAIL NEWS WITH NICK BUBB:
• French Connection: The loss-making fashion group French Connection is, unaccountably, one of Sports Direct’s “strategic investments”, but today’s finals should bring a smile to the face of Mike Ashley, as the veteran boss Stephen Marks says “We have made considerable progress across the Group over the last year and I enter the new financial year with renewed confidence off the back of that success”. Underlying operating loss reduced to -£0.6m, an improvement of £3.1m on 2016/17, before exceptional costs, on flat sales of £154m. But the closing net cash position also reduced (to £9.5m from £13.5m a year ago), which is a far cry from the c£30m of a few years ago, so shareholders will hope that the company is right to say that it is at last close to returning to profitability…
• News Flow This Week: The Spring Budget Statement is being announced by the Chancellor at 12.30, but it is expected to be a very short affair, with updated economic forecasts but no policy measures. Tomorrow brings the Dignity finals, the Morrisons finals, the Inditex finals and the Signet Q4/finals in the US.
• TIPS Watch: The great 4-day Cheltenham Festival jumps racing starts today and our alter ego, “Honest Nick”, will be bringing you his each-way Tips each day. Now, the unusually soft going could cause some upsets, but it should suit the Irish horses, although the Irish won’t win every race…In the first race, at 1.30pm, we’re taking on the Willie Mullins trained favourite Getabird with Kalashnikov (although First Flow is respected). Our banker of the day is the Willie Mullins trained Footpad in the second race, the Arkle Chase, at 2.10pm, but with only 5 runners that will not be much of a betting medium. In the big race at 3.30pm, the Champion Hurdle, we’re taking a chance on the Willie Mullins trained Faugheen, who has been below his best of late, but if back to his top form could surprise the Nicky Henderson trained favourite Buveur D’Air. And in the 4.50pm we’re going with Ms Parfois