Langton Capital – 2018-06-18 – May Tracker, discounts, Crowdcube, debit cards, Star &c.:
May Tracker, discounts, Crowdcube, debit cards, Star &c.:A DAY IN THE LIFE: So, with England set to play this evening, we find ourselves facing something of a dilemma. That is, should we stop work today at 2pm, 3pm or 4pm? Or pull stumps immediately after we hit ‘send’ on this email? Because there are no other options on the table and, as the grass is growing like fury in our garden, the lawnmower’s bust and we don’t want to either 1) pay for it to be mended or worse still 2) shell out for some grasping third party to cut our grass, it’s best not to think about it. Hence football to the rescue with the reassuring thought that it’s probably best to watch all the matches, just to make sure that we don’t miss anything. On to the news: MAY PUB & RESTAURANT TRACKER: • CGA Peach’s May Tracker has concluded that the ‘sun shines on pubs, but casts [a] shadow on restaurants.’ • Weather, Bank Holidays & Royal Wedding better for pubs than for restaurants. • May LfL pub sales up 3.5% but restaurants down 2.1%. Average up 1.4%. Tracker says ‘hot weather in May helped boost trade in Britain’s pubs, but hit restaurant sales. Overall, the country’s managed pub, bar and restaurant groups saw collective like-for-like sales up 1.4% on May last year.’ • Tracker says ‘while managed pubs saw collective like-for-likes jump 3.5% for the month, with drink-led outlets doing best, casual dining brands saw like-for-like sales drop 2.1% against the same period last year.’ Peach’s Peter Martin says ‘it’s a familiar story. When the sun shines people head for the pub, or more precisely the pub garden. In contrast, restaurants do better when it’s dull and damp. Weather remains the biggest factor when it comes to sales in the out-of-home market. It’s the way it is.’ • Tracker says London LfLs up 1.6% vs 1.4% outside the M25. Peter Martin said ‘the effect of the Royal Wedding on trade is hard to judge, but if anything, it may have depressed sales with many people staying home to watch on the TV.’ It was all over by lunchtime, though. • Tracker says ‘the good news is that overall the sector saw an uplift in trading in May, which contrasts with the 1.2% fall in April. The public continues to go out to eat and drink, and confidence among operators is also returning, if not yet to pre-Brexit levels.’ The average of April & May, up just 0.1%, is well below inflation and further behind the type of inflation being seen by F&B operators. • Coffer Corporate Leisure says ‘it’s always easy to blame the weather. But it was a long wait until May when the pub sector got the benefits of some sunshine. Better weather and a World Cup with a record 32 teams should see very strong trading for many pub businesses over the coming period.’ • Coffer says ‘restaurants and food led pubs may have a tougher summer to add to the pressures they are under. In the longer term, we see competition for casual dining chains become little less intense as poorer performing units are closed.’ This may be correct over time but, as opening decisions made a year or two are just coming to fruition, capacity is not yet being removed from the market. • RSM says ‘with the World Cup underway and forecasters predicting more scorching weather to come, the pub sector looks set to enjoy a bumper summer – assuming England make it past the group stages.’ Wallet fatigue will set in at some point and, despite the feast of football, bills need to be paid. • Peter Martin says ‘the shake-out of sites in the casual dining sector seems to be helping by reducing the threat of oversupply, and deals are also being done in the market, showing that investors also want to be involved in pubs, bars and restaurants.’ • Total growth for May was 4.5% (compared with 1.4% LfL) suggesting that new build is still adding meaningful capacity. • Running yearly growth is just 0.6%, well below inflation. PUB, RESTAURANT & DRINK PRODUCERS: • Discounts. Prezzo 30% off food, Bella Italia also 30% off. Pizza Express up to 25% off. • City Pub boss Clive Watson tells MCA Brexit is a ‘monumental mistake’. Says sovereignty should be pooled. Says 80% of the food we import comes from the EU & access to overseas labour is necessary. • Sunday Times says private equity has made a ‘dog’s dinner’ of the High Street. • Crowdcube has seen its revenues fall with cumulative losses mounting. The online fund-raiser has lost £16m since 2013. Revenues last year were £3.8m (down £200k) with losses of £4.7m. Broker Numis is reported to have paid £6m for a stake some 3yrs ago. The Sunday Times mentions a number of busted investments including Sugru (down 91%) and Vibe Tickets (in administration). • The High Court has granted a judicial review of the an earlier decision that said Deliveroo drivers were self-employed contractors instead of workers. • MEATliquor has taken over the kitchen of the Walkabout in Brighton during the World Cup, the MCA has reported. • The Royal DSM has surveyed 3,300 consumers in seven countries in Europe and the US and has found no signs that demand for artisan beer is to decline. The survey also found that 75% cited taste above everything else, including price, as the main driver for selecting a beer. • The Blackbook winery has been founded under the railway arches near Queenstown Road in Battersea. The winery is the third ‘urban’ winery in London after London Cru and Renegade. The Blackbook winery is the latest ‘urban’ winery to open and is committed to making wines exclusively from English grapes. • This Friday is the fourth Beer Day Britain, which aims to celebrate the history of ‘the nation’s favourite drink’. • The Wine and Spirit Trade Association has warned that a ‘no-deal’ Brexit could threaten juniper imports from the Mediterranean and lead to a ‘doomsday’ for British gin. The trade body said that custom delays could lead to ‘extremely testing times’ for UK gin distillers. • Tesco has reported its 10th consecutive quarter of sales growth. Sales grew 1.8% in the 13 weeks to 26 May, while revenue at its wholesale arm Booker was up 14.3%. • Kettle Foods is investing £2.7m in its Norwich facility to upgrade production capacity. • Debit card spending has overtaken cash for the first time, with a total of 13.2bn debt card payments made last year, up 14%. UK Finance has found that 13.1bn cash payments were made last year. • Heineken is to unveil plans for a £44m investment in 500 of its 2,900 pubs, creating 1,000 jobs. David Forde, UK managing director, said: ‘We are passionate supporters of the Great British pub and believe well-invested pubs will continue to prosper’. • Luke Johnson, leisure sector investor, has stated that his mistakes in business have been selling assets too early. Mr. Johnson commented: ‘The most successful capitalists know the greatest rewards come from compounding gains over the long run. Indeed, one of the wisest pieces of investment advice is to ‘run your winners’. • Subway has found that after allowing franchisees to opt out of their breakfast offering very few have excised this option. HOLIDAYS & LEISURE TRAVEL: • Royal Caribbean Cruises will acquire a 66.7% stake in Silversea Cruises worth $2bn, with the purchase financed through debt. • BBC broadcaster Steve Richards told the Guild of Travel Management Companies’ (GTMC) that political uncertainty on Brexit will lead to a fresh ‘crisis’ for UK corporate travel leaders. Richards also said ‘There is a majority [among MPs] in the Commons for Britain to be part of the customs union, so one way or another it seems Britain will be in a customs union.’ • Nationwide closures of House of Fraser has put 30 Virgin Holidays travel agent jobs at risk, after six concessions will be forced to shut. • STR reports US hotel occupancy down 0.2% to 72.9%, ADR up 2.5% to $131.28 and RevPAR up 2.3% to $95.82 for the week ending 9 June. Meanwhile, Canadian hotels posted occupancy up 1.2% to 74.6%, ADR up 6.8% to $180.37 and RevPAR increasing 8.2% to $102.21. • The Office of Rail and Road reports a 1.4% drop in the number of rail journeys yoy, the first drop since 2009-10. The decrease could be fuelled by a 9.2% fall in season ticket journeys yoy. In total, about 1.7 billion journeys took place on the UK’s rail network. OTHER LEISURE: • The US cable giant Comcast £22.1bn takeover bid for Sky plc has been given the all clear by the European Commission. • Moody’s has reported that Comcast’s $65 billion bid for most Twenty-First Century Fox assets is credit negative FINANCE & MARKETS: • BCC cuts forecast for UK growth this year to 1.3% and for 2019 to 1.4% (both numbers down 0.1%). • BCC says there is a ‘lacklustre outlook’ for consumer spending, business investment and trade. It sees a ‘testing time for business in the UK’. It says ‘the BCC urges the government to focus as much as possible on the domestic business environment, reducing the uncertainty that firms face, and take action on skills shortages and poor mobile connectivity, which lower productivity and hold UK businesses back.’ • US President Donald Trump is to stick 25% tariffs on $50bn worth of Chinese imports. He is accusing Beijing of intellectual copyright theft. • China has said it will respond quickly to protect itself • Sterling little changed at $1.3269 and €1.1443 • Oil down nearly three bucks at $2.93 • UK 10yr gilt yield up 2bps at 1.33% • Brexit, politics etc.: o Observers say No10’s promises re the NHS are meaningless in the context of an uncertain economic outlook o Forget Brexit says No10, up-skirting and fatuous comments on the NHS are the new big-issues o Mrs May has said it is important to stop parliament from blocking a Brexit that it does not approve of o Pro-EU MP Dominic Grieve tells BBC ‘I can assure you I wake up at 2 a.m. in a cold sweat thinking about the problems we have put on our shoulders.’ o Brexit not a big deal in a Germany considering what to do about Donald Trump and the potential break down of the post-war order PRIOR DAY TWEETS: • Later tweets: MCA’s Eating Out Panel says hot May weather, Royal Wedding & Bank Holiday didn’t prevent y-o-y decline in eating out. • London hotel market suffering from overcapacity. Not really a surprise. STR says REVPAR down 5% in May. Costs up so profits hit. • Major hiccup in London hotel market. Oversupply. Build decisions made 4, 5yrs prior to open & hence current glut, falling occupancy etc. • Brexit. Labour disarray & cakeism. Tory divisions, EU says no proposals yet workable. Business calls for certainty unanswered START THE DAY WITH A SONG: Last Friday’s song was Shelia by Jamie T. With today’s game in mind, who sang the following: But it’s been no bed of roses, No pleasure cruise I consider it a challenge before the whole human race And I ain’t gonna lose RETAIL NEWS WITH NICK BUBB: • Saturday Press and News (1): The Times went big on the bullish Tesco Q1 update, with a double-page spread (headlined “Tesco toasts a perfect ten as shoppers return”) that focused on the strong sales growth at the recently acquired Booker (attributed to the demise of rival Palmer & Harvey) , with the Business editorial noting that CEO Dave Lewis “has done his rival a big favour” by boosting the case for the Sainsbury/Asda merger. The Times also flagged that Iceland chose to announce some disappointing results for y/e March on Friday and warned that the new-year has got off to a weak start. And the Times also highlighted that the embattled Philip Green and his lawyers are trying to stop the publication by the FRC of its report into the collapse of BHS… • Saturday Press and News (2): In other news, the Daily Mail’s “Big Shot of the Week” profile was of Carol Kane, the joint CEO of Boohoo.com, whilst there was a snippet in the Times about the news that Mahmud Kamani’s brother, Jalal, has gifted half his Boohoo shares to a trust for his kids. Both papers had snippets about the news that the administrators of the Jacques Vert fashion business have closed 102 concessions. The Daily Mail also had an investment feature on Ocado, highlighting how wrong many brokers have been about the business and asking whether the shares can get to £13. And the market reports noted the upgrade by Liberum on the struggling Superdry in a sector review on Friday. Finally, Lex column in the FT had a piece about the high-flying US discount chain Five Below, with the catchy headline “slime of the times”. • Sunday Press and News (1): The implications of the collapse of the Poundworld chain were the main focus in the Sunday papers: the Sunday Telegraph had a big feature on “Are the discount kings losing out in price battle?”, flagging that Poundworld’s fall has sown seeds of doubt about other discount chains, whilst the Sunday Times highlighted that Poundworld was owned by the private equity firm TPG and ran a feature with the punchy headline “Private equity shows how to make a dog’s dinner on the High Street”. Ahead of the House of Fraser CVA vote on Friday, the Sunday Times also noted that the landlord Frogmore has accused New Look of “playing games” over its CVA and its request for rent reductions. • Sunday Press and News (2): The Sunday Telegraph also had a big feature on Oxford Street (“Can Oxford Street hold onto its allure as retail giants struggle?”), highlighting the planned closure of House of Fraser and the recent decision to scrap the plan to pedestrianize Oxford Street. The Sunday Telegraph also flagged the big profit fall to be announced by Dixons Carphone next week and all its recent problems (although it seems likely to get off with only a modest fine for its IT data cyber-breach). And the Sunday Telegraph noted that Boohoo faces an investor protest at its AGM on Friday over Director pay. Finally, the Mail on Sunday flagged that Marks & Spencer has put its Per Una womenswear brand up for review amidst falling sales. Today’s Press and News: The Mail on Sunday story that Marks & Spencer is thinking of ditching its Per Una womenswear brand gets followed up by the Times, City AM and the Telegraph, whilst the main feature in the G2 section of the Guardian is a look at how the High Street in Aldershot coped with the closure of Marks & Spencer. The Daily Mail flags that New Look is pulling back from its foolish store expansion in China. And there are various previews of the retailers reporting this week, with the Times focusing on Bonmarche and the Telegraph on Dixons Carphone. News Flow This Week: As the World Cup gets into gear this week (with England’s first game this evening, versus Tunisia), on top of the start of the Fevertree Queen’s Club tennis tournament today and the start of Royal Ascot tomorrow, there is plenty going in the sector to keep us busy. Tomorrow brings the long-awaited Footasylum finals, as well as the Bonmarche finals. On Thursday we get the Dixons Carphone finals and the QUIZ Capital Markets Day. And then Friday brings us the Boohoo.com AGM, as well as “D-Day” for the landlords, via the much-awaited House of Fraser CVA vote… |
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