Langton Capital – 2018-07-17 – SSP Q3, Deltic, Comptoir, consumer spending & other:
SSP Q3, Deltic, Comptoir, consumer spending & other:
A DAY IN THE LIFE:
Oh, to be twelve again.
Daughter just back from Flamingo Land (with school), a former zoo evolved into an animal-heavy adventure playground with rides etc.
Q. Did you see the animals?
A. No, we only had six hours to go on the rides.
Free from complications, that one. At least for now. On to the news:
PUB, RESTAURANT & DRINK PRODUCERS:
• SSP updates on Q3 trading saying it has ‘had a good third quarter and has made further encouraging progress.’
• SSP reports Q3 total group revenue +7.3% on a constant currency basis, with LfL growth of 2.7%.
• SSP says ‘like-for-like sales growth in the UK and Continental Europe was broadly in line with that seen in the first half of the year, driven by on-going growth in the air sector. As anticipated, trading in the rail sector continues to be softer, with some additional impact from strike action in France.
• SSP reports ‘net contract gains were driven by strong contributions from North America and the Rest of the World. Looking forward, trading in the new units has been encouraging and the programme of new unit openings for the rest of the year, in particular in North America, is slightly ahead of our plans.’
• SSP says ‘we have seen a good improvement in the operating margin in the third quarter driven by the on-going roll out of our strategic initiatives, with operating margin growth a little ahead of that seen in the first half’.
• For the year to date ‘total Group revenues increased by 10.2%, including LFL sales growth of 2.8%, net contract gains of 5.6% and revenues from acquisitions of 1.8%. At actual exchange rates, total Group revenue increased by 8.3% year on year.’
• Re the outlook, SSP says ‘looking forward, whilst a degree of uncertainty always exists around passenger numbers in the short term, we are well placed to continue to benefit from the structural growth opportunities in our markets and to create further shareholder value.’
• Nightclub operator Deltic is considering an IPO on the stock market reports The Times. The group is reported to be considering a capital markets day for later this month.
• Deltic has considered an IPO previously but has never considered the time to be right. It attempted to merge with Revolution Group last year.
• HMRC has estimated that 326 soft drinks manufacturers have been affected by the ‘sugar tax’. The tax was introduced on 6 April, taxing manufacturers 19p per litre produced of drink with sugar concentration of 5g per 100ml.
• Pub campaigner, MP Andrew Griffiths, has resigned his position as small business minister after allegedly propositioning female bar staff in his constituency via social media.
• Comptoir has announced the appointment to the Board of Mark Carrick as CFO. It reports ‘Mark joined the Group in April 2018 as Chief Financial Officer and was formerly Director of Operational Finance with the Ten Entertainment Group. Mark started his career in hospitality at JD Wetherspoon in 1999 where he qualified as an accountant and has since held several senior roles within a diverse range of multi-site leisure businesses over the past 19 years providing finance, commercial and operational expertise.’
• Comptoir reports ‘Jonathan Kaye has notified the Board of his resignation from the Board as a non-executive director, in order to focus on his other business interests, with such resignation to take immediate effect. The Company has commenced the search for a suitably qualified independent non-executive director and will make a further announcement in due course.’
• Visa has reported that spending on its credit and debit cards rose by 0.7% in June versus May. This after a 0.9% rise in May. The numbers are skewed by a move to contactless payment.
• Visa points to World Cup & warm weather for rise in spending. Has seen strong increases in restaurants & bars. The latter, yes, but CGA Peach data suggests that spending in restaurants remains under pressure.
• British lenders expect consumer borrowing to rise in Q3, echoing signs of a boarder recovery in the economy. The Bank of England has warned banks to avoid risks in their lending to households.
• EU immigrants to the UK have fallen by a quarter to a five-year low last year. ONS data has indicated that a net 101,000 EU nationals moved to the UK in 2017, the fewest since 2013.
• McDonald’s is currently being linked to 61 cases of parasites infecting customers after eating salads at their restaurants.
• The British retailer Mark & Spencer has announced it will cut 351 jobs in stores across the country, as the group fights to remain competitive. A spokesperson for the group said: ‘M&S is transforming and this is a tough but necessary decision to take to ensure our stores support the future of the business and provide the best service for our customers’.
• Artificial Intelligence will create as any jobs as it makes redundant in the next 20 years, according to research from PwC.
HOLIDAYS & LEISURE TRAVEL:
• American Express Global Business Travel is to complete its takeover of Hogg Robinson Group this week, in a deal worth £410m.
• The Airport Operators Association welcomed the government’s White Paper on ‘The Future Relationship between the UK and the EU’. The paper notes ‘There is a precedent for this within the EU-Canada Air Services Agreement which provides for the possibility of fully liberalised access subject to a sufficiently open bilateral approach to ownership and control’ as well as ‘seeking participation’ in the European Aviation Safety Agency.
• Toyoko Inn reveals plans to open its first UK hotel in Manchester Piccadilly, consisting of 350 rooms in 22 floors. Toyoko Inn is one of Japan’s biggest hotel brands with more than 270 hotels around the world.
• More than 80 potential innovation partners have come forward with expressions of interest to help Heathrow build a third runway.
• The European Commission has warned Airbnb that its terms and conditions fall foul of EU consumer rules. The firm should tell consumers the full up-front cost of renting a property, including service and cleaning charges or at least inform customers that there may be additional sums to pay later.
• The US travel ban will not stop travellers from the Middle East visiting the US, Qatar Airways’ chief executive, Akbar Al Baker stated.
• Netflix shares have fallen 14% in after-hours trading on Monday, as the group reported disappointing subscriber growth. The group increased subscriber numbers by 5.2m in the three months to June, flat on the same period last year.
FINANCE & MARKETS:
• Rightmove has reported that UK house prices fell 0.1% this month. They are now up 1.4% year on year versus inflation of 2.3%
• Rightmove says there is a glut of sellers attempting to dispose of property. The number of houses coming onto the market rose 8.6% in July. It says ‘the proportion of sellers already on the market that are reducing their asking prices is the highest at this time of the year since 2011, indicating initial over-optimism on price.’
• The IMF has cut its 2018 growth forecast for the UK from 1.6% to 1.4%. It blames trade tensions caused by the Trump administration and Brexit uncertainty.
• IMF cuts Eurozone growth forecast from 3.4% to 2.2%.
• Bank of England Deputy Governor Jon Cunliffe has said that the Bank should be cautious when raising rates. He said there was ‘very material’ uncertainty about Brexit.
• US consumer spending rose 0.5% in June on May.
• Sterling down at $1.3247 and €1.1303
• Oil down over $2 at $72.05
• UK 10yr gilt yield up 1bp at 1.28%
• World markets: UK down, Europe up and US mixed yesterday. Far East mixed in Tuesday trade. UK set to open up a fraction.
• Brexit, politics etc.:
o The government has narrowly won votes on its Brexit trade proposals after caving in to pro-Brexit demands
o Tory civil war erupts leading to questions as to fitness to govern. MPs to vote on early summer break.
o ‘Ministers’ (Boris & David Davis) reported to be briefing Rees Mogg etc. on how to hamstring the government
o Former Tory minister calls for second referendum. Justine Greening says ‘the only solution is to take the final Brexit decision out of the hands of deadlocked politicians, away from the backroom deals, and give it back to the people.’
o Guardian columnist Simon Jenkins says second referendum would be ‘absurd’. Prefers a general election to change government etc.
o PM has said her Brexit negotiating strategy is not dead.
o President Trump blames previous US administrations for ‘foolishness and stupidity’ over relations with Russia. Denies that Russia helped him get elected.
PRIOR DAY TWEETS:
• Later tweets: June Tracker +1.1%. Pubs +2.8% but restaurants down 1.8%. Below inflation despite weather & World Cup
• June Tracker total sales +4.2% vs LfL 1.1%. Capacity still going on in spades. Wet led operators performing best just now
• Red’s True in a mess. Gaucho in a mess. Negative net worth, banking issues & unpaid bills. Not what the doctor ordered
• Brexit, serious question. Putting adversarial, read-only positions to one side, is this really where we wanted to be? I mean, really?
START THE DAY WITH A SONG:
Yesterday’s song was Thinking Bout You by Frank Ocean but today who sang:
I left my baby and it feels so bad,
Guess my race is run
She’s the best girl that I ever had
RETAIL NEWS WITH NICK BUBB:
British Land: One of the few shopping centre landlords to publicly stand up to the House of Fraser CVA plan was British Land and ahead of their AGM they have set out the impact on their business. Leasing activity in Offices is said to have continued to be “good”, but the Retail market remains “challenging”: “The impact of long term structural change driven by the internet is being compounded by short term trading headwinds. As a result, there have been well publicised retailer failures and further CVA’s from those operators with more challenged business models. Across our portfolio, the combined impact of administrations and CVAs since 1 April 2018 is 1.6% of total group contracted rent, up from 1% at the time of our preliminary results in May and accordingly Retail occupancy now stands at 96.4%. We are seeing increased polarisation but continue to believe that British Land assets are on
News Flow This Week: The N Brown AGM is at 12.30 today. Tomorrow brings the Hotel Chocolat pre-close update. And Thursday brings first dealings in The Works IPO, the Sports Direct finals, the Mothercare Q1/AGM update, the AO.com Q1 update/AGM and the ONS Retail Sales figures for June.