Langton Capital – 2018-08-22 – M&B, debt, overbuilding, Hostelworld, Sportech & other:
M&B, debt, overbuilding, Hostelworld, Sportech & other:
A DAY IN THE LIFE:
We don’t know if it’s the muggy weather, the exposure to foreign climes or the air-conditioning on the ship over from Rotterdam to Hull that’s caused it but Langton has been struck down by some sort of lurgy and, to call it gastric flu, would be something of a euphemism.
No details to follow, thankfully, but it has dampened or even temporarily rendered non-existent, our sense of humour. On to the news:
PUBS & RESTAURANTS:
• M&B has announced a JV with 3Sixty Restaurants whereby M&B acquires Luke Johnson’s stake in the business. Mr Johnson has sold a number of leisure assets in recent months including Laine Pub Co, Draft House and Gails.
• Ego already leases three sites from M&B and the latter will doubtless comb its estate looking for further opportunities. Ego says ‘this is a simple case of M&B taking a minority stake and us working together to grow the Ego brand. We are ambitious for growth and we see potential for more M&B sites and other avenues for expansion.’ M&B commented ‘we’re delighted to formalise our partnership with the Ego team.’
• Citizens’ Advice has reported that households are now some $18bn in arrears on essential bills such as council tax and electricity. Households have maintained spending in some cases by borrowing and in others by not paying other bills. Citizens’ Advice says some ‘families are living in fear’.
• As many as 40% of UK consumers think that there should be a cap on the number of restaurant chains on the high street. The foodtech company GoKart reported that a third of respondents to the survey said they had seen their favorite local establishment close in the last 12 months.
• Anx Patel, CEO and founder of GoKart, commented on the findings: ‘While the closures impacting big restaurant chains might dominate the headlines, today’s research shows that the UK public is actually more concerned with the fate of their local independent high street outlets. Indeed, it is positive to see that over half of UK adults are willing to support their local restaurants, drawn by the diverse offering of different cuisines and foods, not to mention the freshness and high-quality of ingredients that are commonly used’.
• Famous Brands, the parent company of GBK has issued another warning about the brand’s mounting losses. The Johannesburg listed group said that it was ‘giving consideration to strategic options relating to a subsidiary that may have a material impact on the price of the company’s share price’.
• The MCA has reported that a new ping pong concept, Serve, is looking to add a further 12-14 sites in the UK over the next three years. Co-founder and managing partner David Smith said: ‘We have identified c25 towns and cities in the UK that fit the mould of what we are looking for in terms of demographics and location, and we will probably do around 12-14 of those’.
• Vending machine and coffee services business Selecta has bought Express Vending, which generated around £39m in turnover for the year to July 2018.
• Hospitality operations platform Fourth has acquired digital people solutions company Octane to help its customers with recruitment and onboarding. Ben Hood, CEO, Fourth said: ‘Hiring quickly and hiring well is a finely tuned balancing act, particularly in an industry with a high churn rate of employees and increased regulatory pressures. This new streamlined system will provide complete end-to-end management and transparency of the recruitment process, saving businesses vital time and money.’
• The 2018 harvest in Champagne is due to start today and is expected to be ‘exceptional’ both in quality and due to its early arrival. Francoise Peretti, director of the UK Champagne Bureau, commented: ‘2018 will be remembered as an exceptional year: exceptional because of its early harvest date and exceptional grape quality. Though it is too early to tell, producers are hopeful this year’s harvest will produce an outstanding vintage.’
• Ian Wright, CEO of the Food and Drink Federation, says that food and drink is a ‘UK exports success story’, with global sales hitting a record level of £10.6bn for the first half of 2018.
• Kantar Worldpanel reports sales of branded products up 3.9%, overtaking total own label growth. However, premium own label sales growth was up 6.3%. Non-alcoholic beer sales were up 58% yoy.
• Chanel will launch its first men’s makeup range, debuting in South Korea.
• North east-based Bells Fish Shop, has announced that it will open its fourth site in Durham after securing a £1.5m investment.
HOLIDAYS & LEISURE TRAVEL
• Eurowings partners with Mytaxi to allow passengers to book transfers directly through the carrier’s app. Katrin Rieger, VP of customer experience and product at Eurowings, said ‘We’re pleased to be working with Mytaxi. The new service via the Eurowings app means we can offer our passengers an even more efficient travel experience’
• Passengers who received compensation from Ryanair for cancelled and delayed flights have reportedly been charged extra fees after banks rejected the cheques.
• Hostelworld’s share price fallen as investors sell on news of a cut dividend and with the group warning of a decrease in demand following the recent hot weather and the World Cup.
• Uber have hired a new CFO, Nelson Chai, setting the way for the group’s much anticipated IPO next year.
• Sportech has reported H1 numbers to end-June saying revenue rose to £31.6m from £31.2m on a constant currency basis. Adjusted EBITDA was £3.3m vs £3.4m but investments in sports betting took the reported EBITDA down to £2.8b.
• Sportech has reported a loss from continuing operations of £0.6m (profit £0.1m). CEO Andrew Gaughan comments ‘the May 2018 US Supreme Court decision that effectively permitted US states to enact legislation to license and regulate sports betting was very exciting for Sportech. Soon after the decision was announced, we signed an agreement with Sportradar for sports betting data, trading and risk management services, and technology platforms.’
• Sportech says ‘in Connecticut, we believe that we will have a strong direct-to-consumer sports betting offering’ and it says ‘our Racing and Digital business maintained consistent levels of service revenues for H1 2018 versus the prior year.’ The group regarding its Stamford, Connecticut Bobby V’s Restaurant & Sports Bar ‘growth is slower than originally forecast, but we expect our new highly-experienced Food and Beverage and Group Sales Managers to deliver a beneficial impact as we enter the 2019 financial year.’
FINANCE & ECONOMICS:
• UK government finances in July surplus of £2bn. This represents the larges surplus for July in 18yrs. Borrowing in the April to July period was the lowest since 2002. This is excellent news as far as it goes but the quantum of debt accumulated in the last 12yrs or so is huge.
• CBI survey concludes that British exports remain strong. Currently they are benefiting from the lower pound but are not suffering from any problems that may arise with the movement of goods post Brexit.
• Sterling up at $1.2909 and €1.1151
• Oil up at $72.90
• UK 10yr gilt yield up 4bps at 1.27%
• World markets. All up bar UK which slipped on a slightly stronger pound
• Brexit etc.:
o UK Brexit secretary Dominic Raab has recommenced talks with Michel Barnier.
o Mr Raab may disappoint some Brexiter voters when he says no EU citizens will have to leave the UK even in the even of a no-deal Brexit.
PRIOR DAYS LATER TWEETS:
• Later tweets: Harassed online delivery drivers & food couriers face ‘heightened risk’ of collisions, say boffins. Deliveroo cyclists, confused uber drivers etc.
• Hostelworld Group has reported H1 numbers down & cautioned that it has been impacted by competition and hot weather in Europe
• Liam Fox (MP since 25, never worked in industry) to say that the UK can be a ‘21st Century exporting superpower’. He doesn’t know how
• Game Digital says pre-owned games market now challenging. Well it will be if people download games rather than buy discs
START THE DAY WITH A SONG:
Yesterday’s song was ‘Everybody Needs Somebody’, famously covered by the Blues Brothers, but originally performed by Solomon Burke. Today who sang:
Come down and waste away with me,
Down with me
Slow, how you wanted it to be
RETAIL NEWS WITH NICK BUBB:
Carpet Watch: Being a carpet wholesaler to the independent sector has never seemed a very promising business model and yet Headlam has an excellent record and is now capitalised at c£380m whereas it is poor old Carpetright that nearly went bust this year. And despite the softness in the UK carpet market, Headlam has announced some resilient interim results today, although it has warned that “the full year outcome, whilst ahead of the full year 2017, will be towards the lower end of current market expectations”.
Laura Ashley: It is unclear why the Malaysian company that controls Laura Ashley still keeps its UK listing, but it still comes out with detailed half-year results, albeit it is struggling, with today’s finals for y/e June showing that profit before tax and exceptional costs fell to £5.6m from £8.4m last year.
Debenhams: You would not have expected there to be a long queue of people wanting to be the new FD of poor old Debenhams, but Rachel Osborne (who was last heard of falling out with the CEO of Domino’s Pizza) has stepped up to the plate and starts next month.
John Lewis Watch: The unhelpful heatwave was well and truly over last week, but w/e Aug 18th did not see gross sales exactly bounce back strongly at John Lewis, with sales only 3.9% up (c2% up on a LFL basis, on our calculations). Home sales were still down, by 1.1% gross, but Electricals were up by 7.7% gross and Fashion sales were up by 4.3% gross, as new autumn season product got consumer’s attention. After the weak start to the second half of the financial year, gross sales are now running flat over the last 3 weeks combined (in the previous 26 weeks, John Lewis was up cumulatively by 0.3% gross or c1.5% down LFL).
Waitrose Watch: The cooler weather was, predictably, unhelpful last week to sales of picnic and barbecue fare at Waitrose and yesterday’s weekly sales overview from JLP flagged that gross sales at Waitrose were 1.1% down, ex-petrol, in w/e Aug 18th (c1% down LFL). The last 3 weeks overall have been up by 1.4% gross. After a strong end to the first half in July, the cumulative sales picture for the previous 26 weeks was +2.3% gross for Waitrose (c2.2% up LFL).
News Flow This Week: Things haven’t been as quiet as expected so far this week, ahead of the Bank Holiday weekend, but the silly CBI Distributive Trades survey for “August” tomorrow morning will doubtless still get the usual uncritical coverage in the newspapers…