Langton Capital – 2018-04-11 – EasyHotel, Escape Hunt, coffee, Meatailer, CDG etc.:
EasyHotel, Escape Hunt, coffee, Meatailer, CDG etc.:
A DAY IN THE LIFE:
We’ve recently moved into new offices and, apart from the building work that’s going on next door, which threatens to shake the fillings from my teeth, very nice they are too.
Like their newer tenants they’re understated but professional. Bijoux and affordable (we wouldn’t admit to being small and cheap) and they suit us very well but they’re a bit stark and hence a plea.
We’re after brewing photos and posters. Old or new but old coopers etc. come to mind. Drays, horses, lots of big moustaches and flat hats, Yorkshire squares, mash tuns etc. in order to decorate our walls.
Any offers from those older companies out there?
Anyway, the mighty Hull City managed to crush the footballing giants of Burton yesterday evening 5-0 having beaten London 4-0 at the weekend. And that by my, admittedly northern-biased reckoning, is nine goals scored in the last 180 minutes with none conceded. Go Hull.
On to the news:
PUB, RESTAURANT & DRINK PRODUCERS:
• Pubs and the weather. The Beast from the East will not have helped pub companies. Destination units will have been well down but, over time, the weather in the UK trends towards the mean and a couple of bright Bank Holidays in May (following what looks like weather in the 20s next week) could right a lot of wrongs.
• That said, accounting periods fall wherever they fall and, as a number of companies have September year ends, their H1s, assuming all other things are equal, will include all of the bad weather and perhaps a little bit of the Easter positives.
• Overall little, really, has changed and yesterday’s price moves may not have been warranted. There is no new news and, as the weather was very visible, it should have been reflected in share prices. But the market isn’t perfect and, apparently, it wasn’t.
• Discounting. Prezzo 2-4-1. Looks like 50% off to us. Zizzi 30% off mains, Pizza Express up to 25% off, Jamie’s 40% off.
• Casual Dining Group reports numbers for year to 28 May 2017 to Companies House. Group says revenue for the year rose by 10% to £329m with normalised EBITDA up 6.3% to £17.0m. The group says the ‘management adjusted EBITDA is £29.9m (FY16 £33.5m).’
• Casual Dining Group reports year to 28 May 2017 was a ‘difficult trading environment for the casual dining market’.
• CDG reports statutory losses of £78.6m after £43.4m of finance costs. In the prior year, the group lost £69.3m after finance costs of £41.4m.
• Meatailer, owner of the Meat Liquor chain of burger restaurants, has reported numbers for the full year to 25 June 2017 to Companies’ House showing that turnover increased to £13.4m from £11.2m. Two new restaurants were opened in the year. Headline EBITDA was £703k. EBITDA in the prior year was £842k.
• Meatailer reports it opened in King’s Cross prior to its year end. It also reports that it closed its Bristol restaurant in February this year and closed its delivery only kitchen after a short trial.
• Le Pain Quotidien has reported full year numbers to end-December to Companies’ House showing revenue up 3.5% to £39.5m with PBT up 48% to £1.34m.
• Gas prices to rise by 5.5% to consumers. Dips in the family pocket. Government has said such a rise is ‘unjustified’. Energy minister said ‘customers are already paying more than they need to.’
• Chipotle Mexican Grill in the US has said it intends to divert 50% of its waste away from landfill
• Research from Allegra has indicated that coffee shops will outnumber pubs by 2030. Currently there are 24,000 coffee shops in the UK, with 1,215 opening last year. The sector is believed to be contributing £9.6bn to the economy.
• Restaurant and pub spending grew 7.2% and 7.7% respectively in March, a fall from 9.7% and 10% in February. Data from Barclaycard has demonstrated that dining in restaurants climbed 5.5% while ordering online increased 27.5%.
• UKHospitality publishes interim guidance regarding new legislation that required food businesses to identify potential sources of acrylamide and reduce levels to as low as reasonably achievable.
• BrewDog plans to open 17 bars in 2018, with 6 openings in Scotland, 4 in England and internationally in Seoul, Paris, Barcelona Airport, Norrkoping and Reykjavik – with 2 bars also in Columbus, Ohio.
• The Local Data Company reports the lowest rate of high street store openings in seven years, with the 4,083 openings being dogged by 5,855 closures, a net deficit of 1,772 shops. Beauty salon, coffee shop, ice-cream parlour and bookshop numbers increased whereas clothing and shoe shops closed at the fastest rate.
• Ambiente Tapas, the four-strong restaurant group, is believed to be considering a third site in York.
• Stonegate Pubs has installed smart meters in most of its outlets and has increased the volume of waste cooking oil that is collected from its kitchens and recycled, as the group follow through with a pledge to make a contribution to the environment.
• Spain was the top wine exporter again last year, coming ahead of Italy and France having exported 22.8 million hectolitres last year. Its nearest rival, Italy, exported 21 million hectolitres, while France exported 15 million hectolitres.
• Moet-Hennessey co LVMH beat first quarter forecasts, with revenue up 13% to $13.4bn, thanks in part to a ‘remarkable’ start to the year for luggage brand Louis Vuitton.
HOLIDAYS & LEISURE TRAVEL:
• EasyHotel has updated on trading for the half year to end-March saying it ‘has continued to significantly outperform the budget market over the course of the period.’
• EZH says system sales in H1 were +33.6% to £16.1m. Owned hotel REVPAR was up 11.2% and LfL franchised revenue +13.5%
• EZH says ‘this strong performance reflects the continued impact of easyHotel’s new booking engine and yield management systems, the growing strength of the easyHotel brand and continued expansion of the network of hotels in key UK and European destinations.’
• During H1, EZH opened a new owned 78-room hotel in Liverpool and purchased a 104-room leased hotel in Newcastle. It says ‘both hotels have traded strongly, in line with the performance trend of the hotels opened during the last financial year.’
• EZH says ‘as previously announced, the Board plans to retain a 92-room hotel at Old Street, refurbishing it in line with the new brand format. Planning permission is being sought to add an additional floor to the building and increase the Net Internal Area of the building, for use as office accommodation, which should maximise value from this freehold property.’
• EZH also announces the conditional acquisition of a site for development of a hotel in Chester. It reports ‘today easyHotel announces that it has agreed to acquire the freehold of a central site in the historical city of Chester for the development of a new-build 109-bedroom hotel. The acquisition is subject to planning permission.’
• EZH says that its pipeline is healthy and CEO Guy Parsons comments ‘easyHotel has traded strongly over the first half of the financial year, outperforming the wider market in both our owned and franchised hotels.’ On a note of caution, Mr Parsons adds ‘we are mindful that consumers in the UK will continue to be cautious, given the wider macro-economic and political uncertainty, but believe our super budget offer positions us well, as consumers become increasingly discerning and value conscious.’
• EZH concludes ‘the proceeds from our successful fundraising will enable us to accelerate our growth and take advantage of the significant opportunities within our markets, creating shareholder value and underpinning the long-term growth of the easyHotel brand.’
• Jennifer Fox is joining Millennium & Copthorne Hotels as the group’s new chief executive officer and a member of the board of directors from 19 June 2018.
• The UK has kept its position as the most desirable destination in Europe for hotel real estate investment in 2018 according to CBRE’s European Hotel Investor Intentions Survey, ahead of Germany and Spain. The study by the commercial real estate services and investment firm found 35% of respondents selected the UK as their target market for hotel investment, an increase of 106% compared with 2017. The UK’s number one spot was reinforced by a record year for hotel investment which saw the UK register €6.2bn (£5.3bn), a 39% increase year-on-year, and the highest hotel investment volume of all the European countries in 2017.
• Uber’s acquisition of Jump Bikes has been confirmed, with the acquisition estimated to be at around $200m.
• Strike action over a pay dispute caused thousands of passengers to be stranded at four German airports, including Frankfurt.
• Air France-KLM claim seven one-day strikes since February will cost the company €170m. The airline also reported passenger number up 5.4% yoy to 8m for March 2018.
• Hilton plans to issue $500m in senior notes, confirming the repurchase of 10m shares of ordinary stock from HNA.
• Escape Hunt has produced numbers for the full year to end-December. In themselves, they are not very informative as trading units only opened this year. The group had revenues of £870k and lost 24.8p per share.
• Escape Hunt reports that it had net cash of £10.7m at end-December and it says that its pipeline of openings remains strong.
• ESC CEO Richard Harpham comments ‘the Group will continue to launch new games and other products to meet the changing demands of our global customer base.’ He says ‘initial reception to the repositioning of the brand is very positive although it is still early days and the enhanced brand is yet to be rolled out to the franchisee network.’
• EXC says ‘we have been acquiring sites and are now well under way with the roll-out programme. Three UK owner operated sites were opened in March 2018 and we expect to have a total of eight open by late summer, with a strong pipeline of future sites. While they have only been open for a matter of days overall, the initial customer response to the sites and to the games has met our highest expectations.’
• ESC says ‘the Board believes that the opportunity for the business is larger than initially thought. The repositioning of the brand will enable the Company to forge deals with content providers to differentiate Escape Hunt from its rivals and make its escape rooms “go to destinations”.’ The company concludes ‘we are confident that we can meet the challenges that lie ahead in 2018 and beyond.’
• The BPI reports revenue from music in the form of streaming, downloads, physical sales and licensing was up 10.6% to £839m. Change in the industry was highlighted by the main contributor – streaming – which increased 41.1% to £388.8m. Vinyl sales rose 24%, making it one-fifth of the size of the CD market.
FINANCE & MARKETS:
• Sterling up at $1.4181
• Down a shade vs Euro at €1.1469
• Oil up nearly two bucks at $70.75
• UK 10yr gilt yield up 1bp at 1.41%
• Bitcoin $6,824
• World markets: UK higher yesterday with Europe & US also up. Far East up in Wednesday trading
• Brexit etc.:
o All relatively quiet now. CBI says withdrawing from the EU & tearing up the rule book will cost more than it saves. CBI boss Carolyn Fairburn says ‘it’s vitally important that negotiators understand the complexity of rules and the effects that even the smallest of changes can have. Deviation from rules in one sector will have a knock-on effect on businesses in others.’
PRIOR DAY LATER TWEETS:
• Later tweets: MCA’s re pizza: ‘…dangerous combination of oversupply, weakening demand & accelerating cost increases’ could hurt
• CGA says Prezzo, one of the biggest discounters in the market, is not seen as offering good value. Blind alley? Where’s the road back?
• Conviviality literally achieves the zero bit in ‘hero to zero’. Unlikely to be anything left for equity after sell off, advisor fees etc.
• Did staff sickness really cause Gatwick to shut 4x on Monday? Only one worker turned up our of three. And three seems like a low number!
• Retail sales 5wks to 31 March. Part boost from Easter this year. Total +1.4%, food up 6%, non-food down 3%
START THE DAY WITH A SONG:
Yesterday’s song was Stupid Girl by Garbage. Today, who sang:
There’s the moon asking to stay
Long enough for the clouds to fly me away
Oh, it’s my time coming, I’m not afraid, afraid to die
My fading voice sings of love
RETAIL NEWS WITH NICK BUBB:
• Tesco: Ahead of today’s finals from Tesco, confidence in the continuing recovery of the core business seems strong and the company guidance for full-year EBIT to be “at least £1.575bn” looks likely to be conservative, with Tesco looking on track to hit the 3.5%-4.0% medium-term EBIT margin target. But the Tesco share price has been sluggish, as not everybody is convinced of the wisdom of the Booker acquisition, and any disappointment with progress to date is likely to be badly punished, in the market’s current curmudgeonly mood. So all eyes will be on what the UK CEO Charles Wilson says about the potential Booker merger synergies and the much-mooted move into hard-line discounting, to take on Aldi and Lidl…
• ASOS: Online retailing is all the rage, but not all Online retailers are equal and it is interesting that the share price of ASOS’s rival Boohoo.com has been under a lot of pressure ahead of today’s interims from ASOS. Boohoo report their finals on April 25th and at current levels it looks relatively cheap against ASOS, but we’ll see what happens today. Back In January ASOS impressed the City with c30% revenue growth in the 4 months to end December, even though it warned that the H1/H2 profits split was likely to be skewed in the region of 30%/70%, with H1 progress held back by the continued growth of the promotionally-led “Black Friday” period, as well as by some mix effects on returns rates and branded sales. On this basis, the market is looking for modest growth in H1 PBT (for the six months to end Feb) from £27.3m to a bit over £30m, but confidence seems high that
• Card Factory: Ahead of yesterday’s finals from Card Factory we flagged that the share price has been under a lot of pressure since a modest profit warning back on Jan 11th, but that, at 190p, a lot of bad news seemed to have been priced in, if management could communicate the key issues more clearly and set out a more positive outlook. Fortunately, management grabbed the opportunity and the shares bounced by over 12%. Full-year EBITDA of £94m for y/e Jan was in the middle of the guided range, down from £98.5m a year ago, but the statement was headlined “Strong sales and robust returns to shareholders”. The City was impressed with the 2.6% store LFL sales growth in the year and by the comment from CEO Karen Hubbard that “Whilst the new financial year is just two months old, we are satisfied with the start we have made and particularly pleased with the record seasonal performances
• Today’s Press and News: The Card Factory results get a reasonable amount of coverage, given the scope for witty headlines, including an upbeat review by Tempus column in the Times (“Many happy returns for shareholders”), which notes that “Card Factory’s results yesterday showed a company in reasonably good heart after a difficult year” and concludes that the shares are a Buy (“Generous income stock that should benefit from easing cost headwinds in the coming years”). The FT interviews the new CEO of Ikea and flags that Ikea is vowing a “transformation” of its business model, as it speeds up a shift towards city centre locations and eyes furniture rental. And the stockmarket reports flag the upgrade on Ted Baker by Goldmans yesterday and the downbeat comments about M&S and Debenhams by UBS.
• John Lewis Watch: The Easter distortions have still to fully work through, but John Lewis has found the going a bit easier in recent weeks, with yesterday’s weekly sales update from JLP (for w/e April 7th) revealing that gross sales were 3.6% up (c2% up on a LFL basis, on our calculations), despite the loss of one day of trading compared to last year, because of the Bank Holiday. Fashion sales were down by 3.2% gross, not helped by the cool weather and Home sales were down by 1.4% gross, but Electricals were up by as much as 15.6% gross, on the back of Easter promotions. After the 10 weeks of H1 so far John Lewis is now running up by 2.9% gross (nearly 2% up LFL). The BDO High Street Sales Tracker figures for last week will run to the close of play on Sunday April 8th and, given the bigger Fashion weighting, the overall outcome announced on Friday morning will probably be quite a bit
• Waitrose Watch: Over at Waitrose, momentum has slipped a bit in recent weeks, even though last week definitely suffered from a calendar hit, given the fall of Easter Sunday. Last week saw gross sales down by 16.4% in w/e April 7th and the cumulative outcome for the last 10 weeks is now +3.5% gross, which is under 3% up LFL.
• News Flow This Week: This morning brings the Tesco finals and the ASOS interims. Tomorrow brings the WH Smith interims, the Dunelm Q3 update, the QUIZ pre-close and the Mothercare Q4.