Langton Capital – 2018-05-22 – Stock Spirits, discounting, Shaftesbury, jobs & other:
Stock Spirits, discounting, Shaftesbury, jobs & other:
A DAY IN THE LIFE:
For better or worse, I suffer from that human failing, the optimism bias.
It extends to slight overconfidence at times (under-preparation for exams, lost wing-mirrors when over-estimating the size of tight spaces etc.) and I tend to think that my views and I somehow count.
Well everyone does, I suppose but, from time to time, you have a brush with authority and it’s brought home to you that you are only, after all, the archetypal ‘little man’.
And we in the office are in that position at the moment. We’re being bugged by building noise. And not just the soothing burr that you hear in the distance but jack-hammers and humungous wheeled vehicles demolishing the structure immediately next to ours but, when we’ve complained (to the contractors, the council, the noise abatement people etc.) it’s been pointed out that it’s a £100m project and we, well, are three, four or five zeroes behind that in terms of importance and we can just bug off and suck it up.
Which, having spent money on ear-defenders, innumerable coffees out of the office and general botheration, is what we might yet have to do. Know a good lawyer, anyone? On to the news:
PUB, RESTAURANT & DRINK PRODUCERS:
• Stock Spirits updates on trading at AGM. The co says ‘performance so far this year has been satisfactory, and expectations for trading for the full calendar year 2018 remain unchanged, and in line with current market expectations.’
• Stock spirits says in Poland, the vodka market ‘recorded a slight increase in both value (+1.2%) and volume (+1.1%) versus Q1 last year, driven in part by the earlier timing of Easter this year.’
• Stock Spirits reports ‘the Polish market remains highly competitive, with significant ongoing price pressure. Stock Spirits continues to monitor and position its pricing accordingly across its product range.’
• In the Czech Republic, Stock Spirits says the market continued volume growth (+8.0%) and value growth (+11.3%) during Q1, helped by the earlier timing of Easter.
• West End property owner Shaftesbury has reported H1 numbers saying the ‘West End remains largely insulated from the economic impact of national short- and longer-term uncertainties and challenges.’
• Shaftesbury says ‘trading and footfall remains good across our locations’. CEO Brian Bickell says ‘our results for the half year ended 31 March 2018, which show continuing growth in rental income, EPRA earnings, and NAV, demonstrate the successful and innovative approach we bring to the management of our portfolio, and the breadth of appeal and resilience of London’s West End.’ Mr Bickell says ‘the West End economy has been largely unaffected by business and consumer uncertainty following the 2016 EU referendum and the structural challenges facing national retail and restaurant chains. Interest in our space is good and occupancy remains high with occupiers recognising that the West End has a broad appeal to domestic and international businesses and visitors, as well as its large local working population, and a generally less price-sensitive customer base.’
• Discounts to be found yesterday. Pizza Express 25% off, Frankie & Benny’s 30% off, Beefeater 33% off, Prezzo 40% off.
• Why pay full price? Where’s the road back for some of these operators?
• With petrol prices now at a three and a half year high, the BBC is suggesting that, just as real wage growth has turned positive, consumer spending on other areas of the economy may come under pressure. The RAC says ‘official figures show that transport is routinely the single biggest area of household expenditure bar none and in most cases transport equals the car.’
• Accountants Moore Stephens have reported that the UK restaurant industry has seen an 11% drop in job vacancies over the last 6mths. The sector had, arguably, been over-expanding in the prior period.
• Moore Stephens says ‘many restaurants simply cannot afford to remain open at the current level of staffing costs and with consumer confidence so weak there doesn’t seem to be much relief in sight.’ It adds ‘five years ago, it was usual for around a quarter of revenue at most restaurants to go on wages for its staff. Now, if a restaurant spends 30% on staff pay, it is considered to be doing exceptionally well.’ There have been a number of CVAs in this space in recent months.
• Uber Eats last week announced its acquisition of orderTalk, the online payments system, for an undisclosed sum.
• Edrington opens a £140m single malt distillery and visitor centre for The Macallan Scotch whisky brand in Speyside, Scotland.
• Fuller’s pub The Fence in Farringdon, London will be having a Veggie Kitchen from 8th May-2nd June. The event will be promoting a fully vegetarian menu.
HOLIDAYS & LEISURE TRAVEL:
• Holiday lodge operator Landal Green Parks has opened its fourth new site in just over a year, with its latest addition in the southern edge of the Peak District. Lyndsey Grayson, director of the group, said: ‘The beautiful setting, fantastic facilities and proven customer service on offer at Sandybrook make it a natural fit for the Landal GreenParks brand’.
• ‘Over tourism’ is among the greatest risks to the travel industry, the head of the Macao Government Tourism Office has announced to the Pacific-Asia Travel Association. Macao tourism office director Maria Helena de Senna Fernandes said: ‘We face a capacity problem. It is one of the highest risks we face. The UN World Tourism Organisation projected annual growth in international tourism arrivals of 3.8% a year to 2020. But international arrivals last year were up 7%’.
• Airlines using French airspace today face cancellations and delays following the latest round of strike action by French air traffic controllers.
• Luton airport has made an ‘enhanced pay offer’ which has been provisionally accepted by Unite members after they threatened potential strike action.
• Blackstone has acquired LaSalle Hotel Properties in a deal worth $4.8bn, a 35% premium to the company’s share price.
• STR reports April US hotel occupancy up 0.9% to 67.9% yoy, ADR up 3.3% to $130.33 and RevPAR up 4.2% to $88.54.
• Rail experts told the Transport Select Committee that the Department for Transport encouraged ‘ambitious’ bidding on revenue projections for the East Coast franchise. They said problems with the bidding process were partly to blame for the demise of the contract.
• Sony agrees to acquire a controlling stake in EMI Music Publishing for £1.7bn. The deal would mean Sony would indirectly own about 90% of the record label and its some two million songs.
• Lone Star’s The Club Company has been acquired by Epsiris. The Club Company operates 13 country clubs with more than 40,000 members.
• Comcast’s £22bn offer for Sky is not likely to face regulatory intervention as Culture Secretary Matt Hancock said he is not ‘minded’ to do so.
FINANCE & MARKETS:
• Mrs May is being urged by business leaders to focus on the UK’s underlying problems. It says these range from potholes to housebuilding. They presumably extend to education, productivity etc. The BCC says ‘our future success depends not just on Brexit negotiations, but also on the big economic decisions that must be made here in the UK.’
• Sterling at 2018 lows of $1.3414 and €1.1392
• Oil up to $79.44
• UK 10yr gilt yield down 2bps at 1.48%
• World markets: UK, Europe & US up yesterday with Far East lower in Tuesday trade.
• Brexit, politics etc.:
o Autumn election talk in the Commons continues. Boris tells MPs to rein back on speculation
o Boris (being prime ministerial) has told Brexit hardliners to back the PM as she tries to build a consensus on a trade position.
o FT quotes polls saying a policed border in Northern Ireland would be unacceptable to the majority of inhabitants
o The PM has urged scientists to build for Britain after Brexit. She has urged them to push forward on cancer research & zero-emission cars.
PRIOR DAY LATER TWEETS:
• Later tweets: CVAs in the news. Some done ‘for competitive advantage’. Time to call someone’s bluff? Would they really call in the Receivers?
• General Election? Tory MPs reported gearing up for autumn election to ‘break the Brexit impasse’. No second referendum though?
• New River confirms in talks to buy Hawthorn Leisure. Next asking for rent cuts? CVAs otherwise will skew the playing field
START THE DAY WITH A SONG:
Yesterday’s song was How Soon is Now by The Smiths. Today, who sang:
Take it easy for a little while,
Come and stay with us,
It’s such an easy flight
RETAIL NEWS WITH NICK BUBB:
Halfords: Today’s finals are the first to be announced by new CEO Graham Stapleton, but, wisely, he is not going to set out his strategic plan until September, although he says “by focusing more on our specialisms and our services, ensuring that we always provide best value to our customers and presenting a more seamless and inspirational omni-channel experience, there is a really exciting future of growth ahead of us”. However, underlying PBT fell 5% in y/e March to £71.6m and although that is said to be in line with market expectations, investors may not be pleased to hear that “…we do not expect prices to rise in cycling this year as in the previous year. Given this, the phasing of our remaining FX mitigation actions and decisions to accelerate investment in services and customer capabilities, we currently anticipate FY19 underlying PBT to be broadly in line with
Pets at Home: The final results statement today is headlined “Back on a stronger competitive footing” and, inevitably, that means that y/e March saw underlying PBT fall back, by 12% to £86.5m, reflecting the c£13m price investment in Merchandise and “a £5.0m increase in the provision held for practice loans in our veterinary business”. However, the dividend was held and investors will be relieved to hear that “in the coming financial year we are targeting LFL revenue growth ahead of the market in both Retail and our Vet Group, and a transition back to low single digit underlying Group profit growth”.
News Flow This Week: A busy week continues tomorrow with the much-awaited Marks & Spencer finals. Then Thursday brings the Kingfisher Q1, the Inchcape Q1 and the Shoe Zone interims, plus the ONS Retail Sales figures for April. And the Chelsea Flower Show continues all week.