Langton Capital – 2018-06-20 – Starbucks, UK rents, Tunisia, veganism, Cineworld etc.:
Starbucks, UK rents, Tunisia, veganism, Cineworld etc.:A DAY IN THE LIFE: I think our dog, who is looking at me as I write, with love in his eyes and food on his mind, has got a middle name. And it’s ‘you’. Either that or his surname is hyphenated. Specifically, it’s ‘you-expletive’ because I mostly hear him referred to as ‘Barnie you-@*!!?**?@.’ Whilst this can draw stares in the street, he’s fortunately referred to by his full name mostly at home, primarily when the beast has been caught in the bin, rooting through cupboards or is paying noisy attention to parts of his anatomy that we’d rather not know about. But this perhaps comes with the territory and, as he’s our first line of defence against any Zombie Apocalypse, we might have to put up with it. Anyway, it’s time for the news but if you would like to come off this email list please simply hit the unsubscribe button above. Similarly, if you are getting it forwarded and would like to go on directly or if you would like to recommend it to one of your colleagues, please just hit the subscribe button and/or suggest that your colleague does too. PUB, RESTAURANT & DRINK PRODUCERS: • ETM Group have announced that it will open a bar, restaurant and sports lounge called Redwood at London Bridge new year. The new addition will take the group to 15 sites. • It is expected that Wales will follow Scotland’s example and introduce a minimum alcohol unit price. If passed, Wales will set the minimum unit price at 50p. • The US retail chain GameStop is discussing a potential buyout with private equity firms, according to Reuters. • A festival dedicated to Veganism, called V For, will take over The Old Truman Brewery in Shoreditch this August. The festival will have best in vegan food and fashion. • Starbucks has announced that its digital initiatives have added 5m new customers to its outreach lists. The group stated: ‘We must move faster to address the more rapidly changing preferences and needs of our customers. Over the past year we have taken several actions to streamline the company, positioning us to increase our innovation agility as an organization and enhance focus on our core value drivers which serve as the foundation to re-accelerate growth and create long-term shareholder value’. • Starbucks has also told investors in the US that it expects to grow more slowing in the US in the next fiscal year. It believes sales growth will be below analysts’ targets for the current quarter. • Starbucks CEO Kevin Johnson says ‘while certain demand headwinds are transitory, and some of our cost increases are appropriate investments for the future, our recent performance does not reflect the potential of our exceptional brand and is not acceptable. We must move faster to address the more rapidly changing preferences and needs of our customers. Over the past year we have taken several actions to streamline the company, positioning us to increase our innovation agility as an organisation and enhance focus on our core value drivers which serve as the foundation to re-accelerate growth and create long-term shareholder value.’ • Starbucks shares fell by c3% yesterday. The group expects LfL growth of only around 1% in the current quarter, well below the c2.9% expected by analysts. • Colliers International has reported that rents have begun to fall across the UK outside London. It says that it expects the rate of decline to accelerate in the wake of a spate of recent retailer failures. HOLIDAYS & LEISURE TRAVEL: • The FCO has relaxed UK travel restrictions to Tunisia in what has been hailed as a ‘huge boost of confidence’ in the north African country. The FCO no longer advises ‘against all but essential travel to the town of Jendouba, and some areas of southern Tunisia, including the towns of Médenine, Tataouine and Douz’. • Spanish air traffic controllers are threatening strike action ahead of the summer peak flying season due to irregular working conditions. Airports on the east coast of Spain and the Balearics, including at El Prat in Barcelona, Palma, Ibiza and Menorca could be affected. • Ryanair is demanding a ban on early morning drinking at airport bars after a flight to Ibiza had to be diverted so that drunk and disruptive passengers could be removed. • Travelodge will open 20 more hotels in Scotland, including 5 locations in Glasgow, taking the company to 64 hotels in the country. • A survey commissioned by hotel chain Jurys Inn has found London to be the most business-friendly city in Europe. 52% of respondents said London is one of the three cities they visited the most frequently, followed by Manchester (29%) and Liverpool (19%). • Minor International plans to increase its stake in NH Hotel Group to 55%-65%, which should enable the group to acquire the Spanish company. • UK holiday park operator Verdant Leisure has reported an 18% increase in Q1 sales . The group has expects revenue to be in the region of £10m in 2017. Chief executive Graham Hodgson said: ‘2017 was a great year for Verdant Leisure, we invested heavily in our portfolio, improved accommodation, facilities and entertainment for our holiday customers and holiday home owners across all our parks and increased our portfolio’. OTHER LEISURE: • Cineworld and Cinemark each acquire half of US based National CineMedia for approximately $156.8m. Mooky Greidinger, Cineworld’s Chief Executive Officer, said ‘Our increased investment in NCM also supports our strategy to reinforce our presence in the United States following the recently completed acquisition of Regal Entertainment Group.’ • YouTube Music is set to be rolled out to 11 more countries, making a debut in the UK and mainland Europe. • VAT should be removed from gym memberships according to Humphrey Cobbold, head of Pure Gym. A Treasury spokesperson said ‘If a gym does not make a profit its members will pay no VAT on membership fees under EU law. But until we leave the EU it is not possible to extend this exemption to profit-making gyms.’ FINANCE & MARKETS: • White House says Beijing may have ‘underestimated the resolve of President Donald J. Trump.’ It says its ‘phone lines are open’. • Sterling down at $1.3158 and €1.1372 • Oil up at $75.43 • UK 10yr gilt yield down 3bps at 1.28% • World markets: UK, Europe & US down but Asia up in Wednesday trade. o Politics & Brexit: o Chancellor Hammond says that, after paying an extra £20bn to the NHS, there will be no extra cash left for other departments. o Vote today on Commons’ role in the final Brexit deal. MPs have to decide whether they agree with the House of Lords or the Government o EU summit on 28th. This was the one where UK was going to present its proposals. This won’t now happen. o Euro-27 likely to step up plans to cope with a no-deal Brexit. May or may not just be posturing o Bloomberg suggests that progress in talks has ‘all but stalled’. Mixture of UK infighting & Euro focus on migration, Trump, tariffs, domestic issues etc. o Belgium said to be preparing for a ‘cliff-edge Brexit’. No10 etc. say that will not happen. o People’s March for a democratic vote on Brexit to take place on Saturday, the second anniversary of the 2016 referendum. Sir Vince Cable says ‘Brexit is not inevitable’ and adds ‘negotiations have been chaotic.’ Labour MP David Lammy says ‘British people are deeply worried about the mess the government has made of Brexit. This is too big to ignore and too important to be left to politicians.’ PRIOR DAY TWEETS: • Later tweets: Wet-led pubs, your time has come. Less capacity, less discounting, bit of warm weather, Bank Holidays & World Cup… • Sunday kick off vs Panama will hit food-led outlets & casual diners but be a massive boon for wet-led operators… • Overcapacity in casual diners could take decade plus to unwind. Next best use of busted restaurant is……..a restaurant • China & US face off in battle Trump says he’ll win ‘a thousand times out of a thousand’. Markets concerned for most winners, there’s a loser • Gov. unsure how to pay NHS extra cash. No clue re Brexit deal, state of economy etc. If you ran a Co like that, you wouldn’t last 5 minutes • Debenhams gets hattrick on profit warnings. Seems Langton isn’t only one asking ‘if department stores didn’t exist, would you build them?’ • Debs still in profit, est. £35m. But EBITDA’s £160m so ‘profit’ is potential rounding error & 10% drop in EBITDA is a 50% profit fall • Well-groomed losers ahoy? F & Bev try to leave High St. but who’s coming in? Increases in barbers, beauty & nail salons & vape shops per ONS • Funeral directors & piercing salons amongst the largest constituents of new High Street openings. Give us strength… START THE DAY WITH A SONG: Yesterday’s song was ‘T-shirt Weather’ by Circa Waves. Today who sang: Off, off with your head, Dance, dance ’til you’re dead RETAIL NEWS WITH NICK BUBB:
Retail Sales Watch: After the profit warning from Debenhams yesterday, all the focus in the sector now is on how well June (the 5 weeks to June 30th) turns out on the High Street for Non-Food, given all the World Cup distractions, but we haven’t seen the final word yet on how good the outcome was for May (on the back of the Bank Holidays and warm weather)…The Office of National Statistics (ie the ONS or what we mockingly call the “Planet ONS”) reported that non-seasonally adjusted total Retail Sales by value were up by as much as 6.3% last month (ex-petrol), given strong “Non-Store” sales. But the BRC-KPMG measure of gross sales (which focuses on Large Retailers) was only up by 4.1% (up by 2.8% LFL). So, who was right? The ONS? Or the BRC? Well, the consultancy group, Retail Economics (RE), which was founded by Richard Lim (who used to run the monthly BRC-KPMG Retail Sales survey) John Lewis Watch: Price-matching the recent Debenhams and House of Fraser Sale promotions will not have helped gross margins at John Lewis…but it has helped top-line sales, on top of the short-term World Cup TV buying boost, so yesterday’s weekly sales overview from JLP flagged that w/e June 16th saw decent growth again, with gross sales 5.7% up (c4% up on a LFL basis, on our calculations). Home sales were down by 0.4% gross, but Fashion sales were up by 10.9% gross, helped by Father’s Day trade and Electricals were up by 12.1% gross. Over the last 20 weeks, John Lewis is running up cumulatively by 1.5% gross (broadly flat LFL), which is still nothing to write home about (ahead of next week’s JLP Strategic Review). Waitrose Watch: Over at Waitrose, sales of picnic and barbecue again failed to fare as well as might have been expected last week, as gross sales were down a tad in w/e June 16th (c1% down LFL), with Waitrose blaming the fact that the weather was warmer last year… The cumulative sales picture for the last 20 weeks is +1.6% gross for Waitrose (just under 1% up LFL), which is still below par for the supermarket sector (ahead of next week’s JLP Strategic Review). News Flow This Week: Tomorrow brings the Dixons Carphone finals and the QUIZ Capital Markets Day. And then Friday brings the Boohoo.com AGM, as well as the much-awaited House of Fraser CVA vote… |
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