Langton Capital – 2018-08-13 – Villandry, Vagabond, online tax, Instagram, food prices…
Villandry, Vagabond, online tax, Instagram, food prices…A DAY IN THE LIFE: So, having spent only a few days in Prague, an impressive city that we’ll surely re-visit, we’re in Nuremberg which, despite the disasters that befell it before, during and after the war, remains an impressive city with its half-timbered buildings, medieval squares and the like. Haven’t seen any human statues yet, got the hang of the U-Bahn and braved the wasps (has there ever been a more truly detested species of insect?) to have a meal al fresco in the Altstadt and have found the place friendly and warm. Anyway, it’s great to be out and about but, what with half a dozen stops in various apartments in different cities / countries, we’re finding that, by the time you’ve worked the microwave and the TV out, it’s time to leave, all of which makes us hanker after the days when machines had on and off switches, perhaps a volume control or a timer – and that was it. Well the microwave in our London flat still functions that way and, though it cost less than a hundred quid new from some shop or other, it does the job. Anyway, we’re off to Koblenz and Trier vie Heidelberg later today where we’ll no doubt float around a bit on the Rhine and the Mosel. On to the news: PUBS & RESTAURANTS: • The Villandry restaurant group has closed two of its units after struggling to find investors to turn around its financial difficulties. • Vagabond, the London based wine bar has received a £3.5m investment from Imbiba, the MCA has reported. The group has stated that it intends to open three more sites in the following 12-18 months. • UKHospitality has urged the government to push ahead with tax on digital businesses, with Chief Executive Kate Nicholls stating: ‘The taxation system must evolve to keep pace with the impacts of the rapid rise in digital business so the Chancellor’s proposals are certainly welcome. High street businesses, particularly hospitality businesses, are facing an enormous tax inequality and the Government desperately needs to take proactive steps to address this to help support vital businesses in the heart of communities’. • Instagram is becoming more important than even TripAdvisor for restaurant reviews, with many preferring to look at pictures rather than read potentially fake reviews online, writes Sunday Telegraph. • Supermarket giants have warned the Treasury that a no-deal Brexit would push up the price of the average weekly food basket by as much as 12%, per Sunday Times. Senior executives from some of the big four supermarkets briefed the Treasury that the biggest tariffs from the EU could include cheese, up by 44%, beef, up by 40%, and chicken, up 22%. ‘It’s complete nonsense that Brexit supporters say we could, without any damage, go to WTO most favoured nation tariffs,’ a supermarket chairman said. ‘It’s dreadful. There will be hold-ups at the border and that will make it impossible to take things out of the ground in Spain this morning and get them onto the shelves in two days’ time.’ • Figures from Visa and IHS Markit show that warm weather and a decent World Cup run were not enough to maintain a rise in consumer spending growth in July. Consumer spending was 0.9% lower year-on-year for the month and, when taken with figures published last week by the British Retail Consortium that found spending on items other than food fell during July, the data suggest a surge in retail sales that helped lift growth during the second quarter of the year failed to extend into the third quarter. • A report from the Chartered Institute of Personnel and Development (CIPD) says that firms are struggling to recruit staff after a steep fall in the number of people coming to Britain from the EU. Quoting official figures, the CIPD said the number of EU-born workers in Britain increased by just 7,000 between the first quarters of 2017 and 2018. This follows a rise of 148,000 in the same period in 2016-2017. • Gaucho Group Chief Executive, Oliver Meakin has told the Big Hospitality that the group is ‘business as usual’, despite the closure of sister brand CAU and the ongoing sales process. • UKHospitality CEO Kate Nicholls says the recent CBI report into the UK’s future immigration policy ‘underlines the need for a discussion about the realities and practicalities of migration to the UK and its effect on business’. She continued: ‘The hospitality sector is particularly in need of a future policy that provides employers with access to talent to support continued investment and growth, alongside our work to develop domestic talent. This means acknowledging the need for a variety of workers across the sector at many levels, not just those who are deemed highly-skilled. We particularly welcome the recommendation to secure the rights of current EU citizens in the UK, regardless of an exit deal.’ • Catering firms are cutting jobs to cope with rising costs and a significant number of operators do not intend to hire new staff this year, according to a survey for a Nisbets report. Cost increases were coming from increased business rates, rising minimum wage and the increased costs of raw materials, the 600 respondents to the survey said. Other popular ways of absorbing higher costs included increasing food prices (48%), reducing food waste (27%), controlling portions more tightly (25%), buying cheaper ingredients (13%) and growing their own ingredients (5%). • Telegraph reports parts of PwC’s audit of BHS has been labelled ‘incomplete, inaccurate and misleading’. The auditors somehow managed to convey the impression that the retailer would be able to continue trading just before it was sold by Philip Green for just £1. • Yorkshire power station operator Drax has met with the BBPA as it is to begin capturing carbon, which could be used to make carbon dioxide, at its Selby site. Drax may be able to produce enough carbon dioxide to put the fizz back into around 32,000 pints of beer a day. It’s August, isn’t it? HOLIDAYS & LEISURE TRAVEL • STR preliminary data for London indicates record-breaking average daily rate (+4.7% year-on-year to £171.25) and revenue per available room (+9.0% year-on-year to £156.15) for July. Demand comfortably outstripped supply, growing +6.1% vs. +2.0% for the month, with occupancy also up 4% to 91.2%. • Cornwall has been deemed too crowded by some as it is ‘struggling to cope’ with ‘unprecedented mass tourism’ per the BBC quoting tourism sources in the area. Traffic jams are reported to be threatening the movement of emergency vehicles. • Turkey’s currency has fallen to a record low after Donald Trump doubled steel and aluminium tariffs and is down more than 40% this year. • HNA sells Radisson to Jin Jiang-led consortium for $332m with the deal expected to close at the end of the year. • Norwegian Cruise Line Holdings shares were up 4% after it reported Q2 net income of $226.7m compared to $198.5m the year before. President and CEO Frank Del Rio said ‘The continuation of the robust booking environment from our core source markets, combined with the successful execution of demand creation strategies drove higher pricing across all three brands, resulting in second quarter revenue, yield and earnings growth well above expectations’. • STR reports US lodging RevPAR increase of 0-2% in July, ADR up 1-3% but occupancy down 0-2%. Luxury hotels showed RevPAR up 2-4% and ADR up 3-5% with occupancy down 0-2%. • Rail fares are to rise in line with RPI, probably around 3.5%, from next January. Bank of England governor Mark Carney has said that RPI has ‘no merit’ and has suggested that ‘virtually everyone recognises’ that the CPI is a superior measure. FINANCE & ECONOMICS: • UK growth picked up to 0.4% in Q2 compared with 0.2% in Q1. The ONS says that growth remains ‘modest’. It says that growth 0.1% in June, down from 0.3% in the previous month. The ONS says ‘the economy picked up a little in the second quarter, with both retail sales and construction helped by the good weather and rebounding from the effects of the snow earlier in the year. However, manufacturing continued to fall back from its high point at the end of last year and underlying growth remained modest by historical standards.’ • ONS says ‘the UK’s trade deficit noticeably worsened, as exports of cars and planes declined sharply while imports rose.’ • Japan’s economy grew by an annualised 1.9% in Q2. • Sterling down vs dollar at $1.2751 but up vs Euro at €1.1217 • Oil up at $72.65 • UK 10yr gilt yield down 5bps at 1.25% • World markets: All down Friday, Far East down in Monday trade START THE DAY WITH A SONG: Last Friday’s song was One Love by Bob Marley. Kicking off what should be another quiet week, who sang: I walk a lonely road The only one that I have ever known Don’t know where it goes But it’s home to me, and I walk alone RETAIL NEWS WITH NICK BUBB: • Saturday Press and News (1): The news that the beleaguered House of Fraser has been bought out of administration by Mike Ashley/Sports Direct vied with the revelation that the Chancellor is looking at an Online sales tax, in terms of the front page headlines in the Saturday papers: the Guardian ran with “”Amazon tax” needed to save High Street, says Hammond”, whilst the Times also highlighted that Amazon has been barred by the ASA from advertising “unlimited next-day delivery” for Amazon Prime subscribers (“Amazon “misleads buyers””). The Daily Mail also went big on the Online sales tax idea, as part of its “Save our High Streets” campaign and the lead story in its market report was the news that ASOS and Boohoo were “rocked” on Friday by the Chancellor’s belated conversion to the need to “level the playing field” between Online and High Street retailers.
• Saturday Press and News (2): On the inside pages there was saturation coverage of the controversial Sports Direct/House of Fraser deal. The FT flagged that the deal had sparked concern in the industry about why Sports Direct had been given preferential treatment and what it would need to invest in the HoF business, quoting our view that Mike Ashley will probably sell the best stores, dump the worst stores and keep the rump as an upmarket trophy. The Guardian looked at the long list of recent Retail bankruptcies and had some vox pop from shoppers in Guilford concerned that their local HoF store could become a Sports Direct, whilst the Times looked at the history of House of Fraser and highlighted how so-called “pre-pack” deals can be “phenomenal stitch-ups” and also looked at whether HoF could merge with Debenhams. The Daily Mail flagged that Mike Ashley appears to have walked away from
• Saturday Press and News (3): The Sports Direct/House of Fraser deal inevitably prompted lots of editorial comment in the Saturday papers. In the Telegraph, the Fashion Editor said that “Department stores need glamour to survive”, whilst the Business editorial said that “Bold ideas needed at House of Fraser”. The Guardian said “this is Ashley’s opportunity to show that he’s no one-trick retailer” and the Daily Mail said “Ashley wants to be a hero”, but the Times Business editorial lamented Mike Ashley’s lack of communication about his plans, apart from his “lame slogan” about wanting to turn HoF into the “Harrods of the High Street” , and the main Times leader column (headlined “House of Ashley”), thundered that “A fight to the death on the High Street is putting jobs and pensions at the mercy of ruthless brinkmanship and questionable dealmaking”. Finally, the “Inside London” column in
• Sunday Press and News (1): We expected to see a lot more coverage of the background to the controversial Sports Direct/House of Fraser deal in the Sunday papers, but the Sunday Times confined itself to a relatively brief article about how House of Fraser pensioners had missed out. To its credit, however, the main Business story in the Mail on Sunday was headlined “It’s a fix: Ashley accused on House of Fraser deal”, highlighting the row about why EY, the administrators, had turned down a £100m offer for HoF from Philip Day that would have taken on the pension liabilities and noting that Lib Dem leader Vince Cable has called for an investigation into the abuse of “pre-pack” deals. And the Observer had a good double-page spread on “The rise and rise of the House of Ashley”, flagging that the HoF deal is part of his gradual move to go more upmarket , helped by his son-in-law, Michael • Sunday Press and News (2): The most interesting angle on the Sports Direct/House of Fraser deal was the Sunday Telegraph story that the thwarted Philip Day and his backers may now target the embattled Debenhams, even though Mike Ashley is also said to be plotting a merger of Debenhams with House of Fraser: “Tycoons ready to do battle over Debenhams”. And the Business Editorial in the Sunday Telegraph, flush with the success of its prediction a week ago that House of Fraser would be bought by Mike Ashley, argued that the grand plan is to merge with Debenhams with House of Fraser: “House of Debenhams”. • Sunday Press and News (3): In other news, the main Business story in the Sunday Times was that the secret report by the FRC into the collapse of BHS has savaged the role played by PwC in signing off the 2014/15 BHS accounts. The Sunday Times also flagged that the founder of the Jack Wills fashion chain, Peter Williams, has got the push again, after falling out with the private equity owners BlueGem. And the Sunday Telegraph highlighted that the big mobile networks have rejected Dixons Carphone’s demands for better terms, noting that Vodafone is finalising a deal to continue on substantially the same terms as before and that O2 is running with its current deal…
Today’s Press and News: The row about the Sports Direct takeover of the bankrupt House of Fraser carries on in today’s papers, with the Times flagging that the thwarted bidder Philip Day has called on Mike Ashley to pay an extra £70m for the business, to pay concession owners and suppliers, whilst the FT notes that the deal faces regulatory scrutiny from the Pensions watchdog. And although City AM says that “Mike Ashley is the new emperor of the high street” it also highlights that “0ne of the most pressing questions is how Ashley pulled this off when other bidders were also vying for the business”. |
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