Langton Capital – 2018-05-30 – Richoux, Pret, Time Out, Gym Group, Italy & other:
Richoux, Pret, Time Out, Gym Group, Italy & other:
A DAY IN THE LIFE:
Please forgive us if we’re a bit slow to respond to emails etc. this week but, in common with many other families with school-age kids, we’ve got the family with us and are downing tools mid-morning in order to visit various attractions etc. in this fair city of ours.
However, one must say, the weather yesterday was not very amenable.
We were promised sun from midday, then from 1pm and then from 6pm meaning that a trip to Little Venice and a walk by the canals to Camden had to be abandoned in favour of a visit to the museums in South Kensington.
However, in so-changing our plans, we were in the company of about ten million other visitors all of whom wanted to push their way around the exhibits and generally take my life down a notch or two.
And, when I accidentally put a tenner into the ‘Please Deposit a Fiver’ box at the V&A, my misery was complete. I cried for an hour as I considered how or whether I should try to fish it out and I remain inconsolable as Little Venice would have been free. On to the news:
PUB, RESTAURANT & DRINK PRODUCERS:
• Bridgepoint has confirmed it is to sell Pret A Manger to JAB Holdings in a deal valuing the coffee chain at £1.5bn and expected to conclude during the summer. Pret chief executive Clive Schlee said: ‘All of us at Pret believe JAB will be excellent long-term strategic owners. JAB believes in Pret’s values and supports our growth plans. I am really looking forward to this next chapter of Pret’s story.’
• Richoux yesterday reported FY numbers to end-November saying that turnover was down by 17.4% to £11m with adjusted EBITDA down to a loss of £800k.
• Richoux reports it still had cash of £1.74m at its year end (nearly 6mths ago) and that its key stakeholders remained supportive if it needed to call for more cash. This may happen at or around its AGM, which is to be held on 25 June.
• Richoux reports that it had a statutory net loss for the year of £4.5m after a loss of £6.7m in the prior period. The group says ‘the Board, led by Jonathan Kaye, undertook a strategic review of all restaurants and operations of the Group. As part of this review certain restaurants were rebranded or closed which contributed to the significant impairment charge and onerous lease provision.’ It says ‘the Directors are not recommending the payment of a dividend.’
• Richoux reports it is ‘required to call a General Meeting to consider whether any, and if so what, steps should be taken to address the situation [its shortage of capital[‘. It says ‘accordingly, immediately following the Annual General Meeting for 2018, a further General Meeting will be held to discuss this matter.’
• Richoux reports ‘like many restaurant groups in the casual dining sector, trading during 2017 has been difficult. In addition, during this period trading in some of our restaurants was interrupted whilst we converted or refurbished them. The impact of temporary closures will continue during 2018.’ It says ‘the Board has had informal discussions with some of the Company’s key stakeholders, who have indicated that, if during the course of the year the Board concludes that further funds are required, it would be their intention to support such a fund raising. We propose to seek the necessary authorities to allot shares in connection with such a fundraising at our 2018 Annual General Meeting.’
• Time Out has announced that it has entered into a management agreement with global real estate company Ivanhoé Cambridge to open a new Time Out Market Montreal, Canada, at the end of 2018. The group’s first Time Out market in Lisbon, is now the country’s most popular attraction with a record 3.6m visitors in 2017.
• The new owners of Pret A Manger are expected to emphasise transAtlantic expansion over increasing its UK presence, reports the Telegraph.
• Two Ipswich headquartered Burger King franchisee companies have left unsecured creditors £20m out of pocket following their recent entry into administration. Millcliffe and CPL Foods operated more than 30 Burger King outlets, Propel has reported.
• UKHospitality Chief Executive, Kate Nicholls, has commented on the European Commission’s proposal to tackle plastic and packaging waste, stating: ‘Ultimately, we had hoped to drive meaningful change without the need for potentially costly legislation. Support for businesses from local authorities and manufacturers is going to be key if the new proposals are to be useful and manageable. We need a focus on personal and business responsibility to ensure that infrastructure encourages recycling and adoption of alternatives, rather than a blanket elimination of plastic’.
• Everards has reported FY numbers to September 2017 to Companies’ House saying that operating profit fell by 53% to £2.2m with operating profit before recurring items down by 28% at £3.0m.
• Everards reports its ‘173 strong pub estate performed well with profit contribution growing by 0.9% despite operating 3 less pubs during the year.’ It says ‘the pub estate performance has once again provided a strong foundation for continued investments, in refurbishments and business development. The Company continues to attract and retain excellent Business Owners for the pub estate which are atl operated on Tenancies.’
• Re current trading, Everards reports ‘trading in the new financial year has started strongly, with the Company anticipating positive trading performance along with reduced overhead costs as a result of the work completed in 2017.’
• Mountain Warehouse provided a rare bit of good news for the High Street yesterday with a 22% growth in sales for the year to 25th February. Good news but the High Street could do with 10,000 of them.
• Benito’s Hat, the Mexican chain backed by Calculus Capital, has been trialling a smaller, A1-focused trading format in Oxford at the Westgate Centre, per MCA.
• Starbucks closed more than 8,000 stores across the US on Tuesday as staff attended racial awareness training, following an incident in which two black men were arrested while waiting at one of its stores.
• Ride-sharing company Grab has acquired Uber’s Southeast Asian business and is the latest technology business of its type to diversify into food delivery.
• Dixons Carphone will close 92 stores this year due to challenging trading conditions, such as customers increasingly shunning handset upgrades and going ‘Sim-only’. Pre-tax profit in its full year results in June is expected to come in at around £382m, down from £501m in 2017.
HOLIDAYS & LEISURE TRAVEL:
• HotStats has reported total revenue levels at hotels in the USA hit a high of almost $290 per available room in April.’ It says this ‘was led by a 5.6-percent year-on-year increase in revenue in the Rooms department, as well as growth in Non-Rooms revenues, including Food & Beverage (+8.4-percent) and Conference & Banqueting (+11.6-percent) on a per available room basis.’
• HotStats reports ‘April marked another month of positive trading for hotels in the USA. It’s very pleasing to see the high levels of conversion being achieved at a very punchy 41.7-percent of total revenue this month.’
• Research conducted by DCC Forum has indicated that 36% of business travellers are apprehensive about the UK’s exit from the EU on 29 March 2019, representing an increase of more than 10% since the 2016 vote.
• Jet2holidays’ head of trade Alan Cross said summer 2019 sales for Turkey is ‘storming away’ to become the second most popular destination after Spain.
• Love Holidays has been sold to private equity firm Livingbridge. The online travel agent is licensed to carry over 800,000 customers a year.
• Stansted cancelled around 100 flights on Sunday due to thunderstorms, the disruption carried into Monday affecting Ryanair and Jet2 among others.
• Gym Group has announced that John Treharne, the founder of the Company, is to stand down as Chief Executive Officer with effect from 17 September 2018. It says ‘John will remain on the Board as Founder Director continuing to provide the benefit of his immense network and experience across the sector with a focus on nurturing culture and entrepreneurial activity whilst also leaving more time for his family and personal interests.’
• Gym Group reports ‘following a thorough search process which considered both external and internal candidates, the Board is also pleased to announce that Richard Darwin, currently the Company’s Chief Financial Officer, will succeed John as Chief Executive Officer, also with effect from 17 September 2018.’
• Hollywood Bowl has continued with its investment plans, spending £400,000 on a refurbishment of its Heron Gate Retail Park, Taunton.
FINANCE & MARKETS:
• European stocks fell yesterday on the back of the Italian political crisis. This is not the first time that relative instability in the south of Europe has caused ructions for markets across the continent.
• Sterling down vs dollar at $1.3255 but up vs Euro at €1.1481
• Oil down a shade at $75.15
• UK 10yr gilt yield down sharply (off 14bps) to 1.19% on economic slowdown fears & postponed interest rate rises.
• Brexit, politics etc.:
o Negotiations recommence next week.
o George Soros has said that the EU should ‘transform itself into an association that countries like Britain would want to join’.
o British manufacturers have suggested that the government’s position on trade with the EU is naive. The EEF has said that ‘max-fac’ could not be implemented by the end of the Brexit transition period on 31 December 2020.
PRIOR DAY LATER TWEETS:
• Later tweets: Pret now owned by German investors JAB. UK asset sale continues or inevitable given Reimann family move to coffee dominance?
• Stonegate says could see £6m sales uplift from World Cup. Will drop through nearer marginal profit % than the average. Very helpful
• Global shift to the East continues as China’s cinema box office earnings to exceed US in 2018
• UK’s growth rate confirmed at 0.1% for Q1. Sends spot rates down, likelihood of rate rise recedes, Sterling down
• Potential exits from FT All Share (Mothercare, Moss Bros, Carpetright) highlight plight of High Street.
• Big pushback on H of Fraser CVA as property owners see what the implications are for property prices going forward
• Richoux FY revenue down 17.4%. Adjusted EBITDA loss £0.8m. Net loss after bad stuff £4.5m. Key stakeholders ‘will support fund raise’.
• Later, later tweets: Athleisure a rare spot of hope on the High Street as Mountain Warehouse posts 22% sales growth. Don’t need 10,000 of them, though…
• Recession fears, concerns for global growth? UK 10yr gilt yield. Two weeks ago, 1.56%, yesterday 1.32%, now 1.19%. Quite important.
• Yield bobbing around. 10yr UK gilt now 1.23%. Slight rebound but sharply lower over last couple of weeks
START THE DAY WITH A SONG:
Yesterday’s song was One Day Like This by Elbow, but today who sang:
‘My tea’s gone cold I’m wondering why I,
Got out of bed at all
The morning rain clouds up my window
And I can’t see at all’
RETAIL NEWS WITH NICK BUBB:
• B&M: In the absence of a pre-close trading update, there has been some nervousness about what the cold weather in March did to Q4 trading at B&M and today’s final results statement does not add much detail, as the company, rightly or wrongly, focuses on the outcome for the year. It does, however, mention that Q4 was “disappointing” and that the spring season started slowly (remember that B&M has a big garden centre business) and “the snow” must have done some damage as underlying PBT for y/e March was “only” up 16.5% to £221.5m (ex the 53rd week). The business in Germany was one black spot, although the Heron Foods acquisition seems to have gone well. Importantly, management flag “a pleasing start to Q1 trading across the group, with +3.1% LFL in B&M in the UK excluding the Easter week”, but there will be questions for CEO Simon Arora to answer at the 8am analysts
• Retail Sales Watch: After the profit warnings from Dunelm and Dixons Carphone, all the focus in the sector now is on how well May (the 4 weeks to May 26th) turned out on the High Street for Non-Food, but we haven’t seen the final word yet on how good or bad the outcome was for April…The Office of National Statistics (ie the ONS or what we mockingly call the “Planet ONS”) focuses, alas, on dubious,” seasonally adjusted”, month-on-month volume figures, but it also reported on Thursday that non-seasonally adjusted total Retail Sales by value were up by only 0.8% last month (ex-petrol), given the move of Easter into March, despite continuing strong Small Retailer sales. But the BRC-KPMG measure of gross sales (which focuses on Large Retailers) was down by 3.1% (down by 4.2% LFL). So, who was right? The ONS or the BRC? Well, the consultancy group, Retail Economics (RE), which is run by
• News Flow This Week: The latest monthly Kantar/Nielsen grocery sales data (for the 4/12 weeks to May 19th/20th) comes out at 8am. Tomorrow brings the monthly GFK Consumer Confidence index and the Card Factory AGM trading update.