Langton Capital – 2018-08-08 – Stock Spirits, Saga, Paddy Power, consumer spending…
Stock Spirits, Saga, Paddy Power, consumer spending…
A DAY IN THE LIFE:
As I sit writing this it’s in the low-30s in Berlin with an expected high for the day of 39 degrees.
And that, I can say with some authority, is a bit too hot for a city short on air conditioning and long on walking from A to B.
Still, we shall have a look around later on. Plenty of sun screen, bottles of water and the rest because, as we gawp at the various ruins, walls and Reichstag buildings, we wouldn’t want to become a statistic. On to the news:
PUBS & RESTAURANTS:
• Stock Spirits has reported H1 numbers to 30 June 2018 saying total revenue rose 5.3% to €124.1m with operating profit €18.0m (up 9.7%) and profit after tax up 8.6% with EPS up 9.1% at 6.38 € cents per share.
• Stock Spirits reports that its ‘Polish business [has] now stabilised, delivering revenue and volume share gain despite pricing remaining highly competitive.’ CEO Mirek Stachowicz says ‘in these six months we have delivered growth in volumes, sales revenue, profit, and margins. Despite some challenges in our core markets, and in particular the competitive pricing environment in Poland, we believe that our ongoing focus on investment in our brands, product innovation and premiumisation are working well and we are well positioned to achieve further growth in the second half of the year and beyond.’
• Shares in Domino’s Pizza yesterday fell by around 11% after the company reported lower profits at the H1 stage.
• Domino’s had reported that profits fell due to issues in its international markets, particularly in Norway and Sweden.
• Shares in Poland operator DPP fell by around 9% on consideration of news from larger operator Domino’s Pizza Group
• Domino’s in the UK has been offering 30% off on orders over £30. It maintained yesterday ‘in the UK, despite continued consumer uncertainty, we’ve achieved further like-for-like growth by maintaining our clear focus on product, service and value for customers’.
• The IWSR has said that global alcohol consumption could increase to value the market worldwide at over $1 trillion in 5yrs’ time. Wine is forecast to see the largest growth with beer also in growth and spirits consumption to rise marginally
• Barclaycard has reported that consumer spending rose 5% in the UK in July 2018 compared with a year earlier. It says Britons were making the most of the long hot summer
• Barclaycard reports spending on essential items rose 8.7% ‘driven by a strong rise in supermarkets (6.7 per cent) and petrol (13 per cent)’.
• Barclaycard reports ‘pub spending was boosted by the continued heatwave and World Cup matches – rising 73 per cent on the day of England’s semi-final.’ The credit card company, whose numbers will have been boosted by the move to contactless payments and the growth in the use of plastic in general, says ‘despite consumers making the most of summer, looking ahead, one in three worry that higher interest rates will leave them financially worse off.’
• Barclaycard reports consumers are spending more on ‘experiences and outdoor activities.’
• Barclaycard says ‘however, despite a willingness to spend on summer treats while the good weather lasts, shoppers remain cautious about the broader economic picture with confidence in household finances dropping six percentage points from June to 59 per cent last month.’
• Fever Tree directors sold 3m (against an indicated 2m) shares yesterday netting them around £103m. Fever Tree says that the increased number of shares was ‘due to significant institutional demand.’
• Papa John’s International has reported same-store sales fell in Q2 by 6.1%. Revenue was down by 6.2% and net income fell by almost a half to $11.8 million, or 36 cents per share, down from $23.5 million, or 65 cents per share in Q2 last year. The company says ‘while results have been challenged by recent events [the resignation of the founder due to an alleged racial slur], we are committed to these strategic priorities and continue to believe that they will lead to enhanced performance.’
• The MCA has reported that the UK eating out market is worth around £89.4bn and is growing by 1.5% per annum.
• MCA reports food & drink demand is growing at its slowest rate since 2013. It says the market could grow by around 2% by 2021.
• Rockfish, the seafood restaurant group founded by Mitch Tonks, has reported 15% LFL growth in the May – July quarter. CEO Tonks says ‘we opened the first Rockfish in 2010 and have taken the time over the last few years to continue to refine our offer, brand and culture while simultaneously preparing for growth by building our training function, developing our management systems and our pipeline of talented, passionate people.’
• Bidfood’s Consumer Views Study found the cost of food to be one of the most important factors behind consumers’ decisions to eat out with 45% of Brits attempting to reduce their leisure spend. Healthy menu choices were important to 20% of consumers, with 30% saying they want smaller portions of British classics at lower prices.
• Research from the Campaign for Real Ale (CAMRA) has found that Greater London and the East Midlands have suffered the greatest percentage of pub closures in the past six months, with 1.3% of pubs in each region closing for business.
• The Brewer Charles Wells has announced that it intends to invest £8m into the growth of its French estate of managed pubs over the next three years. The group currently operate 13 managed pubs in Paris, Bordeaux, toulouse, Montpellier, Lyon and Lille.
• The IWSR forecasts a favourable outlook for future global alcohol consumptions, saying it could grow in value by £61bn within the next four years and valuing the industry at more than £826bn in five years. Wine would see the biggest growth with an additional 37.8m cases consumed around the world with the beer market expected to return to growth in 2018.
• Aldi will launch a Chardonnay/Sauvignon Blanc this weekend, making it the first UK supermarket selling orange wine. The wine will be produced by Cramele Recaș, a Romanian estate which has seen UK exports increase by 35% in 2017.
HOLIDAYS & LEISURE TRAVEL
• Saga has reported CFO Jonathan Hill is stepping down from his position as Group Chief Financial Officer and as a Director of the Board on 28 September 2018. It says ‘the search process for a successor to Jonathan is in progress and Saga will update the market as soon as this has concluded.’
• Spending in travel agents increased 10% y-o-y in July according to data from Barclaycard. Barclay has reported a 5% rise in overall consumer spending in July.
• Millennials have been found to have borrowed more than £130m to pay for their holidays since 2016, according to research from MoneySuperMarket. The study found 48% of Britons are willing to borrow money in some capacity to go on holiday.
• Doncaster Sheffield airport has gained ‘overwhelming’ public support for its development plans and an East Coast Mainline station at the site, creating up to 13,000 new jobs at the airport.
• Aviate, a flight consolidator and part of the Travel Innovation Group, reports revenue up almost a third to over £80m. The company attributed the continued growth to additional partnerships with major airlines, the restructuring of its lead generation team and new business streams, including Aviate Journeys.
• Indian taxi-hailing firm Ola is to enter the UK market. Founded in 2011, Ola serves 125m customers
• Paddy Power Betfair has reported H1 numbers saying revenue rose 5% to £867m with underlying EPS of 173.6p (down 4%).
• Paddy Power says it is making ‘good progress on returning the Paddy Power brand to growth’ and says ‘full year 2018 underlying EBITDA, pre-US sports betting, now expected to be between £460m and £480m, reflecting recent trading momentum, the introduction of additional taxes in Australia and the inclusion of losses from the FanDuel daily fantasy sports business.’
• Paddy Power Betfair CEO Peter Jackson says ‘it has been a busy and successful few months for Paddy Power Betfair.’ He says ‘we have made substantial progress against our strategic priorities and trading in Q2 was good, with all brands and operating divisions contributing to the Group’s double-digit revenue growth.’
• Paddy Power concludes ‘we now have much better visibility of the regulatory and fiscal changes in the UK, Australia and the USA, and believe that our scale, leading customer propositions and strong balance sheet mean we are well positioned to build a business that can generate sustainable shareholder returns over the long term.’
• According to Techcrunch, Elon Musk has tweeted that he is thinking of taking Tesla private. The billionaire said ‘Am considering taking Tesla private at $420. Funding secured.’ This would value the company at $82bn.
• Walt Disney shares fell 2% yesterday as the group missed its numbers.
FINANCE & ECONOMICS:
• Halifax reports UK house price growth picked up last month to 3.3% on a year earlier. Halifax still describes the market as ‘soft’.
• Sterling up marginally vs dollar at $1.2954 but down vs Euro at €1.1144.
• Oil up at $74.60
• UK 10yr gilt yield up 3bps at 1.33%
• World markets all higher.
START THE DAY WITH A SONG:
Yesterday’s song was It Must Be Love by Madness. Today, who sang:
Rows and rows of disused milk floats stand dying in the dairy yard,
And a hundred lonely housewives clutch empty milk bottles to their hearts
Hanging out their old love letters on the line to dry
RETAIL NEWS WITH NICK BUBB:
ScS Group: Today’s scheduled pre-close trading update from the Sunderland-based sofa retailer ScS is weak, but after the notably bad Furniture sales in July reported by the BRC-KPMG Retail Sales survey, nobody can have been expecting good news, particularly after the DFS profit warning on July 12th, and least of all the Board of ScS…Today’s update is headlined “Trading in line with Board’s expectations” and given the challenging trading conditions a fall of 2.6% in LFL sales orders in the second half (to July 28th) is not bad, albeit there is no comment on margins. There is also no comment on the House of Fraser situation, but the concessions that ScS run there account for only c7% of the business and a 4.3% fall in LFL orders was only marginally worse than in the core business
John Lewis Watch: Over at John Lewis, trade wilted again in the heatwave last week…w/e Aug 4th saw gross sales dip by 2.1% (c4% down on a LFL basis, on our calculations), with Home sales down by 7.3% gross.
Weather Watch: The weather has continued to be really hot recently in London, but memories about “the weather” are always notoriously short-term and often too London-centric…so we turned to the Retail weather consultants Planalytics for their regular monthly overview of how last month’s weather “should” have affected trading on the High Street across the UK (after yesterday’s BRC-KPMG Retail Sales survey for July) …And their overview for July yesterday was again headlined “Strong Summer Warmth”, spelling “More Good News For Retailers”, as, with plenty of days topping out at or above 30 degrees C, it was the fourth warmest July in the modern record and the warmest in the last 5 years. The overall UK temperature for July of 18.6C was 2.4 degrees above both last year and above normal. Overall, across the country, in terms of sales of key seasonal products, the impact of “weather driven
News Flow This Week: The Footasylum and Majestic Wine AGM’s are being held today. Tomorrow brings the Card Factory pre-close update.