Langton Capital – 2018-04-24 – Comptoir, Adnams, Sportech, coffee cups & other:
Comptoir, Adnams, Sportech, coffee cups & other:
A DAY IN THE LIFE:
In the same way that the presence of money (lots of it) will change human behaviour, it’s noticeable that the presence of food (in any quantity at all) will change that of a dog.
And not always for the better, I would suggest.
Although small quantities of food used as treats will make a dog more obedient (at least for a while), the presence of too much of it may lead to a sort of ‘the hell with it’ attitude from the animal, which clearly thinks that he may as well be hanged for a sheep as a lamb and what’s the worst that can happen if he steals a chicken from the dinner table and comes back fifteen minutes later with his belly full and his tail between his legs?
He’s gambling that we wouldn’t drive him 25 miles to a rubbish tip and abandon him and, so far at least, he’s been right.
There are parallels with humans and money but, as we’re trying to make a crust ourselves, we won’t go into too much detail. On to the news:
PUB, RESTAURANT & DRINK PRODUCERS:
• Discounting more acute. Prezzo, Pizza Express, Bella Italia & Jamie’s offering 40%, 25%, 30% and 40% off food respectively.
• Adnams has reported at its AGM that H1 results in 2018 will be behind those of 2017. It says ‘we have focused on our cost base in this quarter and initiated some important savings, though these will mainly affect periods beyond the first half year.’ Adnams says ‘we are expecting a first half result behind 2017 on the back of the less good trading conditions and the costs of completing our investments in the brewery and in implementing new central systems.’
• Adnams says ‘our profit has shifted towards the second half of the year and we anticipate a stronger second half to 2018.’ The group says our ‘focus in the first quarter of 2018 has been on bedding-in the major investments that we made in 2017 and completing the investment that we have been making in dealcoholisation plant.’
• The group says ‘in the first quarter of 2018 we have continued to grow our beer volumes and these were towards 5% higher than in the first quarter of 2017. Spirits volumes were up by approaching 30%. Though we are pleased with these growth rates, they are a little slower than we have seen in many recent periods and this reflects what has been quite a challenging quarter for some parts of the business. The poor weather that we saw in March was a particular challenge for our pub and managed inns business.’
• Comptoir Group yesterday reported full year numbers to end-December saying that revenue was up by 36% to £29.6m with gross profit up 36% at £21.3m and adjusted BEITDA of £1.1m vs a loss last year of £2.7m)
• Comptoir reports PBT of £480k vs a loss of £1m last year. It opened 4 new restaurants in the period. CEO Chaker Hanna comments ‘trading year to date has been in line with Board expectations, and we anticipate strong sales in the second quarter.’
• Comptoir says ‘sales at the new restaurants are gradually building towards the levels anticipated at maturity and the Company is putting in place several marketing initiatives, including a new menu, ahead of the critical summer trading period to promote sales at both existing and new restaurants.’ It says it ‘has secured two further international Comptoir locations, being one in Dubai Airport planned to open in the first half 2019 and a second Comptoir in Abu Dhabi Airport planned to be opened in the second half of 2019. Both are with our current franchise partner HMS Host.’ The group concludes ‘the Directors believe the Comptoir brand has significant international franchise potential.’
• Comptoir chairman Richard Kleiner says ‘the Board is pleased that the financial outcome for 2017 was above our revised expectations.’ He says ‘we continue to see the cautiousness of consumers, that we identified in the early part of 2017, and believe it will continue throughout the year.’ Mr Kleiner concludes ‘the Directors remain confident in the restaurant brands of the Group and its relevance within the eating out market as consumers seek a differentiated food and service experience.’
• Café Rouge co-founder Karen Jones has been appointed executive chair of Prezzo and chief executive Jon Hendry Pickup has opted to leave the company. Jones will take full responsibility for the Prezzo brand, its strategic direction and the execution of the transformation plan alongside the brand’s existing leadership team. She said: ‘I am very much looking forward to building on Prezzo’s proud 18-year heritage to create a group of welcoming Italian restaurants that customers love for their unwavering hospitality and their consistent combination of price, quality and service. Under the stewardship of Jon and the rest of the leadership team, important steps have already been taken to move Prezzo forward.’
• Rent arrears, evictions and food bank use are growing in areas where universal credit has been introduced, according to figures from the National Housing Federation (NHF). The findings show 73% of housing association tenants on universal (UC) credit are in rent arrears, compared to 29% that are not on UC. The number of claimants using universal credit (UC) in the UK is set to double this year, with more than seven million people – both in and out of work – expected to be registered by 2022.
• Around 650 shops and restaurants operated by major chains have been closed since the start of 2018 or are at risk of closure, per research from PwC and the Local Data Company. Of this total, the Mapling and Toys R Us administrations account for roughly half.
• The rise of online shopping is also taking its toll on US brick-and-mortar retail, with 2018 set to be a peak year for store closures on a square-footage basis across the pond, although unit closures are expected to slow by about 59%. Big-box retailers such as the ailing Toys R Us, which recently announced it was closing or selling all of its 700 US stores, will be responsible for much of the closures.
• Times reports some coffee chains are preparing to charge for disposable cups. It says the 21-strong Boston Tea Party will no longer offer disposable cups for free. Customers will either have to bring their own cup or buy one on site. The company says hot drinks in disposable cups currently provide it with around £1m in revenues.
• Research has found that more spirit brands are moving away from Twitter as a means of engaging with consumers. The drinks specialist agent, YesMore found that more than 40% of the 100+ spirits and liqueur accounts surveyed had not posted at all within the past month.
• Technomic has found that sandwiches remain a popular item across the US, with 61% of consumers having eaten one in the last week. The research found, however, a difference between age groups, with Anne Mills senior manager of consumer insights at Technomic stating: ‘While older consumers really hone in on value and convenience when deciding where to order sandwiches, more 18- to 34-year-olds than older consumers consider factors such as healthfulness, special-diet accommodations and the use of sustainably sourced ingredients in their purchasing decisions’.
• Deliveroo has introduced new perks to its websites that will allow restaurants to get money off electric and gas bills as well as provide discounts on job advertisements.
• Prime Minister Theresa May has stated that there will be a consultation on the potential ban of some prevalent single-use plastics, including plastic straws and cotton buds.
• Chapel Down has seen sales boosted by a fifth following a successful entry into the US market. Pre-tax profit for the group declined by two thirds however, to £253,115 as the cost of launching Curious Brew, combined with an increase in staff numbers offset the rise in revenue.
• UKHospitality is appointed Jim Cathcart as Director of Policy and Regulation, joining from the British Beer and Pub Association. Chief Executive of UKHospitality Kate Nicholls said: ‘We are delighted to welcome Jim to the team at an incredibly exciting time for UKHospitality. Jim brings with him a wealth of expertise and experience of working on policy for hospitality businesses’.
• Welcome Break chief executive Rod Mckie is to step down from his role at the end of next month to lead Sticks n Sushi. McKie said: ‘I have enjoyed a wonderful 15 years at Welcome Break, but feel now is the right time to accept a new challenge. However, I will still be directly involved with Welcome Break as an adviser and non-executive director and look forward to contributing to its continued success.’
HOLIDAYS & LEISURE TRAVEL:
• Luton airport faces ‘significant disruption’ this summer should members of the Unite union vote to strike over pay.
• Sportech has reported full year numbers saying that revenues were up 2% at £66.3m but were down 2% in constant currency terms.
• Sportech reports adjusted EBITDA of £6.7m vs £8.5m last year. Adjusted PBT from continuing operations was £1.5m vs £0.7m last year. CEO Andrew Gaughan says ‘2017 was a year of material change for Sportech and 2018 is shaping up to be one of significant opportunity. Our recurring revenue in our Racing and Digital business is further being enhanced by additional sales opportunities and commingling along with the growth in our Bump 50-50 business. We have an enhanced platform for growth in our Venues division. Both should see benefit from a liberalisation of sports wagering in the US.’
• Hollywood Bowl Group has invested £400,000 in its Dunfermline bowlplex. Steve Burns, CEO, Hollywood Bowl Group said: ‘Our investment programme has had a great start to the year with our newly refurbished centre in Birmingham seeing an increase in trade and our new centre in Yeovil seeing strong trade since opening last month. Both centres have received positive customer feedback and we’re expecting Dunfermline to follow the trend.’
FINANCE & MARKETS:
• Sterling down vs dollar at $1.3942 but steady vs Euro at €1.1415
• Oil up at $74.89
• UK 10yr gilt yield up 4bps at 1.53%
• World markets: UK & Europe up yesterday with US down. Far East mostly higher in Tuesday trade
o FT reports on no10 flip flopping on staying in or leaving the customs’ union.
o Bloomberg quotes die hard Brexit ministers as saying that the UK must leave the customs’ union.
o EU suggest N Ireland solution does not work if UK leaves the union.
o Downing St has said that the upcoming vote in the Commons on staying in the Customs’ Union will not be a vote of confidence. This may be taken as a sign that the government believes it could lose the vote. The vote is said to be symbolic and non-binding, rather like the Brexit vote in June 2016.
PRIOR DAY LATER TWEETS:
• Later tweets: Whitbread quoted as suggesting a split is ‘inevitable’. Perhaps. Would perhaps have generated more excitement three or four years ago??
• Marketing Week says JDW right to drop social media as it is ‘almost worthless.’ Others suggested to be disengaging from Twitter
• Deloitte says consumers can afford to spend on utilities bills, transport and food & drink. More reticent when it comes to non-essentials
• Government tying itself in knots over customs union. It will either stay in or leave. Latest is the latter. At least at time of writing…
• Adnams says results in H1 will be down on 2017. Expects ‘a stronger second half to 2018’
START THE DAY WITH A SONG:
Yesterday’s song was a little off our usual patch: Outkast’s (slightly bonkers) Hey Ya! Today, who sang:
With your feet in the air and your head on the ground
Try this trick and spin it, yeah
RETAIL NEWS WITH NICK BUBB:
Marks & Spencer: Following yesterday’s Times article about the all-powerful role of Archie Norman as the new Chairman of M&S (which has included installing his former protege Stuart Machin as the new Marks & Spencer Food MD), it is worth following up on last week’s news that M&S has parted company with its Marketing Director Patrick Bousquet-Chavanne. As Patrick was a protege of ex-CEO Marc Bolland, perhaps his departure was inevitable, despite his sterling work on the Christmas TV ads, but it is interesting that the move announced last Wednesday afternoon was dressed up as “a further step in its programme to reorganise into a family of accountable businesses. As a result, the corporate marketing teams will be devolved into the Clothing & Home and Food businesses”. No doubt some future CEO will decide that this was a dreadful mistake and reverse the Marketing split,
Debenhams: It is perhaps a sign that the City is currently in a more forgiving mood that the market didn’t just shrug off the guff from the new CEO Sergio Bucher about the success and the acceleration of his “Debenhams Redesigned” strategy, on the back of the interim results last Thursday, as the share price actually perked up slightly. And it would have taken a heart of stone not to be moved by the story of the successful downsizing of the Uxbridge store and the plans to do something similar in Wimbledon (another shopping centre anchor store). But the fact is that profits and net debt are moving in opposite directions at present and despite the confident talk of profit recovery in the next financial year we were astonished to hear the FD Matt Smith say, in answer to a question at the analysts meeting about debt covenants, that “profits would have to fall to under £30m for there to be a
Today’s Press and News: There are a few snippets in today’s papers about the news that the CMA has waved through the Co-op’s acquisition of NISA. City AM flags that the fashion chain East will cease trading next week, with the loss of nearly 300 jobs, after the administrators failed to find a buyer. The Times highlights that the US activist fund Elliott has increased its stake in Hammerson from 1.5% to 1.73%.
News Flow This Week: Tomorrow brings the Boohoo.com finals. Thursday brings the N Brown finals, the Carpetright CVA meeting, the French Connection/Toast EGM and the infamous CBI Distributive Trades survey for “April”. Then first thing on Friday we get the monthly GFK Consumer Confidence index, closely followed by the Travis Perkins (Wickes) Q1 update.
Shopping Centre Landlord AGM Watch: Given last week’s sudden volte face on management’s plan to buy Intu Properties (and the criticism of Chairman David Tyler and CEO David Atkins in the weekend press), it will be interesting to see if private shareholders kick up a fuss at the Hammerson AGM this morning, at their HQ near King’s Cross. It will be equally interesting to see if shareholders demand to know what “Plan B” is for Intu’s management, at the Intu Properties AGM tomorrow afternoon, at their HQ near Victoria.