Langton Capital – 2018-05-03 – Weather, vouchers, YUM, waste, EasyFood, N Africa etc.:
Weather, vouchers, YUM, waste, EasyFood, N Africa etc.:A DAY IN THE LIFE: Do you ever find yourself buying stationery as a replacement for actually doing some work? Because I must admit that I maybe do. I might find myself filling the printer trays, sharpening pencils, ordering extra ink and the like when I should be working. I’m ignoring the fact that, in the same way that it’s not the language book in the corner gathering dust that allows you to speak Spanish or whatever, it’s the hours of graft that you should be putting in sorting your genitives from your datives and grinding through those lists of vocabulary etc., a writer writes and a worker should, well work. And I realise the internal hypocrisy that is writing about being distracted whilst writing and being distracted but, at the end of the day, what are you gonna do? Those pencils do need sharpening and gazing out of the window for five minutes just might keep you sane. On to the news: PUB, RESTAURANT & DRINK PRODUCERS: • People are in for a warm Bank Holiday weekend following a bout of unpredictable weather, with Saturday and Sunday set to be dry, warm and sunny in many parts of England and Wales. Chris Bulmer, Deputy Chief Meteorologist at the Met Office said: ‘The best of the sunshine and the highest temperatures this weekend are expected across England and Wales away from the coast. For Bank Holiday Monday itself it is possible that temperatures could be near record-breaking. We’ll keep you updated with the details over the next few days.’ • Bill’s Restaurants Ltd has lodged accounts to 30 July 2017 with Companies’ House. In the year, now rather historic, the company generated turnover of £118.6m (up £8m) and EBITDA or £13.6m (last year £13.5m). • Bill’s says it ‘has continued to grow over the past year and a great deal of change has been delivered to position the business to continue this growth as the market evolves and the impact of the macro political and economic changes of the past year become clear.’ • Bill’s reports ‘despite the focus of the fiscal year 2016/17 being on consolidating the strong position of the Bill’s brand in the market and building solid foundations for future growth, the business opened 4 new restaurants’. • Bill’s comments on costs. It says ‘despite significant increases in underlying costs for food, gross profit margins have remained broadly in line during the period, with a slight decrease from 74.9% in the prior year to 74.5%. In addition, labour costs have been impacted by the two increases to the National Minimum Wage and the impact of the devaluing of the pound following the Brexit referendum.’ • Bill’s comments ‘in the year ahead [which has now nearly ended] further significant investments are being made to further enhance the business for both our employees and guests.’ • Moody’s has reported ‘Sainsbury’s acquisition of Asda is credit negative for rival UK grocers.’ It says ‘if approved, the deal will create the UK’s largest grocery retailer, a credit negative for rivals given that an enlarged Sainsbury’s will limit the extent to which other grocers can improve their profitability and margins after the merger.’ • Moody’s says ‘we do not expect that the merger will lead to a race to the bottom for prices and margins given that doing so would damage major grocers’ goal to increase profitability.’ • YUM Brands has reported Q1 numbers saying Q1 GAAP EPS was $1.27, an increase of 66%. First-quarter EPS excluding Special Items was $0.90, an increase of 38%.’ • YUM CEO Greg Creed says ‘as we begin the second full year of our transformation journey, I’m pleased with our progress towards becoming a more focused, more franchised and more efficient company’ • YUM says it is ‘maintaining all aspects of our full-year 2018 guidance and remain confident that this transformation is building a strong foundation for long-term growth and will deliver increased returns for our stakeholders.’ • YUM reports worldwide system sales excluding foreign currency translation grew 4%, with KFC at 6%, Taco Bell at 4% and Pizza Hut at 2%. The group opened 239 net new units in Q1 to give 3% net new unit growth overall. • YUM reports that there are now 21,644 KFC restaurants worldwide, with sales of $6.3bn in Q1 alone. Some 27% of the division’s units are in China. The group has 16,796 Pizza Hut outlets and 6,883 Taco Bells. • Deliveroo is launching a meal deal offer in London at £4.99 including delivery. A different Flash Deal will be available each day of the week as it targets the office market. The company says this will ‘enable restaurants to bolster orders, serve larger audiences and streamline their in-house operations by prepping food before the lunch rush hour.’ • Deliveroo says ‘our new Flash Deals trial lets restaurants increase operational efficiency, acquire new customers and build their brand through Deliveroo.’ The offer ‘brings Londoners new tastes and restaurants at really amazing prices. It’s never been easier to mix up your lunch, avoid that lunchtime rut of eating the same sandwich everyday and spend less than a fiver in the process.’ • MCA research has found that promotional activity at branded restaurants has increased by 75% in the last five years, while the number of discounts at pub restaurants has increased by 39%. For restaurants, repeat offenders include Prezzo, Frankie & Benny’s and Bella Italia, while Hungry Horse, Sizzling Pubs and Flaming Grill are the pub chains with the most amount of discounts in the five year period. • The BBPA has welcomed Parliamentary approval of the Order which extends pub opening hours for the Royal wedding on Friday and Saturday, 18th and 19th May, until 1am the following morning. • JD Wetherspoon has signed a deal to outsource its waste management to Veolia that could save as much as 11,500 tonnes of annual food waste from landfill. • Brakspear will open the Frogmill near Cheltenham in July. It will be Brakspear’s biggest managed site, with room for 150 guests and a 100 cover restaurant. • Denny’s reports same-store sales up 1.5% in the US with CEO John Miller citing third party delivery partners as the driver of incremental growth. • Shake Shack, Wingstop and Poptata are some of the names opening at the new Boxpark Wembley, per MCA. Roger Wade, founder and CEO of Boxpark, said: ‘There’s a real mix of food offerings that we think both locals and visitors will enjoy – we’re excited to have them as part of the Boxpark family.’ • EasyFood, the EasyGroup-back delivery platform has announced plans to sign up 1,000 restaurants in Birmingham by Christmas. The group offers restaurants a delivery order solution for a flat £100-a-month rate. • Splash, the american direct-to-consumer online wine retailer, is seeking to raise £1.5m in equity through Crowdcube to fund its expansion into the UK. Robert Imeson, Splash founder and CEO said: ‘The Splash model is gaining traction in the marketplace and we are particularly enthusiastic that our offering is now available to investors in the UK because of our plans to expand operations there as early as the second half of this year’. • UKHospitality has stated that it is pleased that the Government has acknowledged the importance of the contribution by EU nationals to the UK’s small businesses. UKHospitality Chief Executive Kate Nicholls said: ‘Around 12% of those employed in the UK’s hospitality sector are EU nationals and any future immigration policy implemented following Brexit needs to ensure that employers do not face any barriers to growth or investment’. • House of Fraser has confirmed a round of store closures as part of a deal which will see the Chinese owner of Hamleys take a major stake. HOLIDAYS & LEISURE TRAVEL: • As Tui resumes flights to Tunisia, officials from the country insist it is safe for holidaymakers. Communications chief Khalifa Chibani told Travel Weekly ‘There is an intensification of security, with the presence of officers in resorts, on beaches, in hotels, in leisure centres, on roads used by tourist coaches and at all places that attract visitors.’ • Prospects for Turkey’s tourism industry in 2018 look good following Euromonitor figures showing 31.6 million inbound arrivals last year, up 24% on 2016. Confidence in the destination had been severely shaken following a series of terrorist attacks, a failed military coup and high-profile political disputes with Russia, Germany and the US. • G Adventures is set to relaunch travel brands Page & Moy and Swan Hellenic ‘within a year’. The Canadian touring and adventure operator acquired the brands in an auction after buying the assets of failed operator All Leisure Group, which collapsed in January 2017. • HotStats reports a 0.7% yoy increase in profit per room in March for Europe’s hotels despite non-rooms revenue declines in F&B (-2.0%) and Conference & Banqueting (-7.1%). Occupancy fell 0.3% to 68.5%, ADR grew 3.2% to €150.12 and RevPAR rose by 2.7%. • AccorHotels UK and Ireland plan to phase out plastic straws in its hotels, restaurants, cafes and bars by June. • Wyndham’s spin-off of its hotel and vacation ownership divisions is ‘progressing rapidly’ according to CEO Stephen Holmes. The company saw Q1 revenues up 4% yoy to $302m, with the $1.95bn acquisition of La Quinta Holdings’ hotel and management business set to complete by the end of Q2. OTHER LEISURE: • Tesla shares fell 5% after it reported a Q1 net loss of $710m and burned through $745.4m of cash. CEO Elon Musk controversially called an analyst from Bernstein a ‘boring bonehead’ when asked about capital requirements. Currently, the company is only producing 2,000 Model T3 cars per week out of its 5,000 target. FINANCE & MARKETS: • UK construction PMI bounced back to 52.5 in April from 47.0 in a Beast from the East impacted March. Analysts had been looking for around 50.5. The beat means that betting is swinging back in favour of a rate rise next Thursday and Sterling reacted accordingly. • Growth in the Eurozone slowed to 0.4% in Q1. This is materially greater than the 0.1% recorded in the UK. • The US Fed left rates unchanged yesterday. It said that inflation was ‘close’ to its targets. • Sterling a shade higher at $1.3595 and €1.1341 • Oil little changed at $73.13 • UK 10yr gilt yield up 5bps at 1.46% • World markets. UK & Europe higher yesterday with US down. Far East mostly lower in Thursday trade • Brexit: o Yesterday’s super-secret cabinet meeting from which there are supposed to be no leaks failed to agree on customs union membership (or not) going forward. o The ‘customs partnership’ idea was derided by Brexiters. o This puts Ireland, where the EU says a solution is needed by next month, firmly back on centre stage. o Practically speaking, leaving he Customs’ Union means a scrap on Ireland and a possible no-deal exit, and staying in broadly amounts to staying in the EU. But on worse terms and with not having a vote. PRIOR DAY LATER TWEETS: • Later tweets: Deloitte says spending in pubs & bars down by 3% & eating out by 2% y-o-y in Q1. It says spending on hols will be ‘significantly lower’ • Construction PMI up post Beast from East to 52.5. Cracks betting on a rise (or not) next Thurs wide open. Much bigger services PMI tomorrow • Liam Fox says House of Lords is getting in his way. Super-secret cabinet meeting today will discuss customs union etc. • Super-secret inner cabinet looking for alternative names to ‘Customs’ Union’. Phil Hammond said to favour ‘Customs Partnership’. Tragic. • Car dealer Pendragon says trading ‘in line’. Leading retail analyst Nick Bubb points out, however, that profits have collapsed • Kantar says food price inflation at 2.1%. Broadly in agreement with Prestige. Puts a little (a very little) back in customers’ pockets • Row over combined market share of SBRY/ASDA as calculators overheat. Is it 32%, 29% or 26%? If after price cuts & disposals, could be latter • John Lewis sales patchy with Waitrose’ halo now around its ankles. 13wk sales up only 0.5% LfL, behind inflation, food inflation, cost growth etc • Eurozone growth rate down to 0.4% in Q1. Reduction on Q3 last year but > which managed only 0.1% in Q1. • Headline from the Met Office just mailed out. Warmer with sunshine for May Bank Holiday weekend. Nice… START THE DAY WITH A SONG: Yesterday’s song was Alfie by Lilly Allen. Today, who sang: Street poetry is my everyday, But yo, I gotta stop when you trot my way If I was working at the club you would not pay RETAIL NEWS WITH NICK BUBB:
House of Fraser: It has been widely expected that the beleaguered House of Fraser would go down the CVA route to dump its worst performing stores, but the landlord’s lobby group, the British Property Federation, still criticised the company for failing to consult landlords properly before going public with yesterday’s announcement and it may yet be that the HoF CVA is the straw that broke the camel’s back…After all, the company clearly fell into loss in y/e Jan and broke its banking covenants, but no such information has been forthcoming from the company and its shadowy Chinese owners Sanpower have clearly not supported the UK business adequately. It is also clearly unsatisfactory that the £70m of new money promised by the next shadowy Chinese company to emerge on the scene, with a 51% stake, C.banner (which is mainly a footwear business, but also owns Hamley’s, which is hardly a picture
Outlet Centre Watch: Sainsbury’s Chairman David Tyler is also, of course, the Chairman of the embattled shopping centre business Hammerson and (as well as dealing with the problems of major tenants like House of Fraser…), he is under pressure to come up with a “Plan B” after the collapse of the plan to buy its rival Intu Properties. With activist investors like Elliott prowling around, one issue is the spin-off value of Hammerson’s highly successful Premium Outlets division (which includes a big share stake in Value Retail, which runs Bicester Village, inter alia). It would help if there was a quoted business to compare Value Retail with, but its main rival, McArthurGlen, Europe’s leading designer outlet company, is privately owned. McArthurGlen run 24 centres in nine countries, (including Cheshire Oaks, the UK’s largest designer outlet centre) and it will soon break ground on its Sports Direct: We flagged yesterday that the Daily Mail highlighted on Tuesday that Sports Direct would “gain” £80m from its stake in the US sports footwear chain Finish Line as a result of the upcoming JD Sports acquisition and we assumed that people would realise that the word “gain” was being used loosely and not as a guide to the likely profit on the stake…But Sports Direct’s hapless PR adviser Keith Bishop still issued a short “Media Statement” RNS announcement at 7am yesterday to say that “A headline in the Daily Mail on 1 May 2018 referred to ‘Sports Direct’s £80m gain’ in relation to Sports Direct’s holding in Finish Line. This figure is wholly inaccurate, as any gain to Sports Direct would be a fraction of that amount”….
Weather Watch: After a cold start to May, the weather will warm up nicely this weekend in London, but memories about “the weather” are always notoriously short-term and often too London-centric…so we turned to the Retail weather consultants Planalytics for their regular monthly overview of how last month’s weather “should” have affected trading on the High Street across the UK…And their overview for April was headlined “Spring Finally Arrives”, as it was “Good News For Retailers”. Overall, thanks to the hot spell in the third week of the month, it was the 6th warmest April of the past half century and the warmest since 2011 (the average temperature across the country in April was 9.4C, 1.0 degree above last year and also 1 degree above “normal”). Overall, across the country, in terms of sales of garden furniture, the impact of “weather driven demand” for the month was+11% (after -7% in |
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