Discounts, Carluccio, Five Guys, EAT, holiday costs etc.:

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 others with school-age kids, we’ve got the family with us and are downing tools mid-morning to visit various attractions etc. in this fair city of ours. On to the news:

PUB, RESTAURANT & DRINK PRODUCERS:

• Discounts still a feature. Prezzo and Café Rouge 40% off, Pizza Express 25% off. Kids for a quid at Harvester.

• Carluccio’s has had its CVA approved after 91% of creditors voted in favour. The agreement will see up to 30 restaurants closed and paves the way for a fresh £10m investment from backers, the Landmark Group.

• Data from CREST has indicated that 5% of out-of-home visits in the UK include vegetarian products and exclude any meat protein, this is equal to 622m visits.

• Beyond Meat is to launch its plant-based burger in the UK, stating that it will look, cook and taste like real beef.

• Another bout of bad weather has hit the champagne industry, with hailstorms reported to have damaged nearly 2,000 hectares of vines. The Comité Champagne stated: ‘So far 1,800 hectares have been damaged of which 1,000 have been 100% destroyed, representing three percent of the total Champagne-growing area’.

• UKHospitality has called on the government to make sure that employment in the UK is fair, transparent and flexible for both employers and employees. UKHospitality Chief Executive Kate Nicholls said: ‘The UK’s hospitality sector has been a fantastic engine for growth, providing jobs in every region of the country and revitalising high streets. However, the sector is facing considerable barriers to further growth and we need to see the Government act decisively to ensure that employment is transparent and fair for both employers and employees.’

• The Local Data Company has named Five Guys as the UK’s top fast food brand for the past 12 months, with the group operating 85 units and currently having the third most ordered item on Deliveroo.

• EAT. has agreed to give its excess fresh bread to craft beer group, Toast Ale. The Brewer will turn the bread into its award winning range of craft ales and lagers. Louisa Ziane, chief brand and finance officer at Toast Ale said: ‘We’re thrilled to be closing the loop with EAT, creating delicious beers with surplus fresh bread from the production of their sandwiches. Our profits will go to the charity Feedback so we can together tackle the systemic causes of food waste’.

• Beer consumption in the US dropped 1.1% in 2017, the equivalent of 261m litres less, according to data from IWSR.

• Asda’s profits fell by 13% to £735m in the year ending December 2017, but LfL sales were up 0.5%.

HOLIDAYS & LEISURE TRAVEL:

• Ongoing cost creep hit the UK hotel industry in April, with RevPAR down -0.3% to £87.59, according to data from Hotstats. In addition to escalating costs, one of the key challenges to performance at hotels so far in 2018 has been volume levels, which appear to be on the slide. This was illustrated by the 0.9-percentage point year-on-year drop in room occupancy this month, to 77.8%, which completely wiped out the 0.8% increase in achieved average room rate.

• Wyndham has acquired La Quinta Holding’s hotel franchising and management business, adding more than 900 franchised hotels comprising c89,000 rooms to the group’s estate. During Wyndham Worldwide’s first-quarter earnings call with analysts, EVP and CFO David Wyshner said the La Quinta acquisition is expected to contribute about $8m of earnings before interest, taxes, depreciation and amortization a month immediately, ‘subject to some seasonality, growing to around $13 million a month by 2019 as the business is fully integrated.’

• CBRE revises up its 2018 outlook for US hotels with predicted RevPAR growth of 2.8%, up from 2.5%.

• AccorHotels has finalised its €830m takeover of Australian hotel firm Mantra Group, consisting of 135 properties and 5,500 staff. AccorHotels will become Australia’s largest hotel business with 15% of the market comprising about 370 hotels. 

• Marriott International will open its Westin brand in London in 2020. Westin has been rapidly growing its international presence with a debut in Australia and planned launches in Malaysia and the Maldives.

• Which? reports Ryanair has raised the cost of taking bags into the cabin, from £5 since January to £7 for most current routes, or £6 if payment is made when making the booking.  

• Iata global air traffic data shows passenger demand grew 6.2% yoy in April, but fell back on a March 12-month high of 9.7%. April capacity increased by 5.9% and the load factor climbed 0.2 percentage point to 82.3%, which was a record for the month, surpassing last year’s record of 82.1%.  

OTHER LEISURE:

• Sportech, the betting technology firm, has teamed up with global provisional data and digital content provider, Sportradar. The agreement will see Sportech offering Sportradar’s trading and risk management services as well as its comprehensive range of tools and services in  the anticipated roll-out of legal sports betting in the US. 

• Chelsea football club has halted plans to build a £500m stadium in south-west London following owner Roman Abramovich’s withdrawal of his UK investor visa application.

FINANCE & MARKETS:

• The US yesterday went ahead and imposed tariffs on aluminium and steel imports on a number of its allies. Canada, Mexico and the European Union are impacted. France’s President Macron called the move illegal and wrong.

• Goldman Sachs has said that Q2 corporate activity has fallen from levels seen in the first quarter.

• Eurozone unemployment edged down to 8.5% from 8.6%

• UK household borrowing levels edged up in April with net lending of £1.8bn. Consumer credit is growing at an annual rate of 8.8%

• World markets: UK mixed, Europe & US down yesterday. Far East mostly up in Friday trade.

• Sterling down at $1.3263 and €1.136

• Oil up a shade at $77.44

• UK 10yr gilt yield down 2bps at 1.23%

• Brexit, politics etc.:

o Discussions recommence next week.

o FT says adding VAT to EU imports at every border will cost billions.

o EU denies it wants to punish Britain but increasingly referring to ‘consequences’.

PRIOR DAY LATER TWEETS:

• Later tweets: British beer sales fell 1.7% in Q1 2018 per BBPA Beer Barometer, says Q1 beer sales down 1.9% in on-trade & down 1.5% in the off

• Consumer confidence edged up in May but remained in negative territory per the influential GfK Consumer Confidence Index.

• Claims management companies ‘are pulling out’ of holiday sickness claims as ‘almost every claim’ is reviewed for ‘fundamental dishonesty’

• First Group: Recovery stock where recovery proving elusive. CEO goes, big write-downs etc. Results ‘fell short of our ambitions’

• Nationwide has reported house prices fell 0.2% in May. Cites pressure on household budgets. Prices still up 2.4% over 12mths

• Carluccio CVA to face creditors’ vote today, needs 75% of those voting. Landmark Group will put £10m more in if creditors play ball

START THE DAY WITH A SONG:

Yesterday’s song was ‘Ever Fallen in Love’ by Buzzcocks. Today who sang:

Deep in the bosom of the gentle night,

Is when I search for the light

Pick up my pen and start to write

RETAIL NEWS WITH NICK BUBB:

Dignity: The Dignity share price has recovered a fair way of late, after the bashing it took at the beginning of the year on the back of the price war, so it will be dismayed to hear this morning that the wretched CMA has the time (despite having to look at the Sainsbury’s/Asda merger) to launch a review into the £2bn funerals market “to ensure that people are not getting a bad deal”. An interim report, presenting initial findings and views on potential remedies, will be published in six months, ahead of the final report in a year’s time…

Trade Press: Drapers magazine is taking a break today, because of the Bank Holiday, but Retail Week has been published and they run with the Hilco/Homebase deal on the front cover, with a photo of new CEO Damian McGloughlin to flag up the main feature article on “Can Hilco rebuild stricken Homebase?”. RW also have features on “Marathon Man” (“We check in on Steve Rowe’s progress as M&S boss”, “Food for thought” (“The innovations shaping the grocery store of the future”) and “Line management” (“The tech that could make queuing a thing of the past”). The Editor touches on the Hilco/Homebase deal in his column, arguing that “Hilco will give Homebase a fighting chance”, but he directs most of his fire on Tesco’s petty decision to pull out of the BRC, thundering that “Tesco should reverse its decision to quit BRC” and noting that “The BRC may not be perfect. But it is nevertheless a vital
lobbying voice for the industry and its job will be made harder by Tesco’s withdrawal”.

BDO High Street Sales Tracker: We flagged yesterday that the hot weather and the House of Fraser Sale helped John Lewis a bit last week, but today’s BDO High Street Sales Tracker for small/medium-sized Non-Food chains for last week, w/e Sunday May 27th, is still poor. BDO Fashion Store LFL sales were down by 5.6% and, including Homewares and Lifestyle sales, total Store LFL sales were 3.0% down. But overall Online sales were up by 20.6% (with Online Fashion sales up by 20%).

News Flow Next Week: As June gets under way, next week will probably kick off with a Games Workshop pre-close on Monday. Tuesday brings the BRC-KPMG Retail Sales figures for May, as well as the AO World finals and the QUIZ Clothing finals. Wednesday brings an Inchcape Capital Markets Day and we are also expecting a WH Smith update that day. On Thursday the Wesfarmers Strategy Day down in Australia has been rather pre-empted by the recent news about the sale of Homebase/Bunnings UK, but there may be more detail. We are also expecting a Joules pre-close update on Thursday.