City Pub, Diageo, Holts, Brewdog, Gaucho, Comptoir etc.:

A DAY IN THE LIFE:

Is it just me or is Halloween just a massive great pain in the backside that, usually landing during the middle of Half Term week, stops you going away as various kids want to parade up and down with paint on their faces?

OK then, maybe it is just me because pub companies have said for a year or two that Halloween is rivalling New Year’s Eve as the biggest trading day of the year and, falling this year as it does on a Wednesday, they’ll be hoping for dry weather and a monster level of business that doesn’t displace either weekend’s normal trade.

Which is great but for me it means that a week on a beach is an increasingly distant prospect and, having spent a chunk of the summer driving around half the capitals of Europe, a city break at either end of the week doesn’t look quite so appealing. On to the news:

PUBS & RESTAURANTS:

• The City Pub Group ahs reported H1 numbers for the 26 weeks ended 1 July 2018 saying sales rose 24% to £20.0m with adjusted EBIDA of £3.0m (up 25%) and adjusted PBT up 73% at £1.6m.

• 42-strong City Pub Group says total sales in the 11wks of its H2 since 1 July are up by 24%. The group has opened 9 pubs in 2018. It has a further 4 sites in development and ‘further sites in the hands of solicitors and others in negotiation.’

• City Pub CEO Clive Watson reports ‘the strategic expansion of our high-quality drink-led estate has been key to the strong progress we have made in the first half.’ He comments ‘the momentum from the first half has continued into the second half and in the eleven weeks since July 1 we have seen sales increase by 24%. We are ahead of our original target to double the number of pubs operated by 2021 and expect to have 50 by mid-2019. This will be assisted by softening conditions in the acquisitions market and limited competition for sites.’ Mr Watson concludes ‘we are confident of meeting market expectations for 2018 and believe we have the right team and strategy to continue making progress.’

• Diageo has updated on trading ahead of its AGM later today saying ‘the year has started well and performance is in line with our expectations. We continue to execute our strategy with discipline and agility and despite seeing increased volatility in some markets we continue to expect organic net sales growth in F19 to be broadly in line with last fiscal year and consistent with our medium-term guidance of mid-single digit growth.’

• Diageo says ‘in recent weeks, we have experienced some increased emerging market foreign exchange volatility, which has been partially offset by a strengthening of the dollar. Based on current rates* we currently expect exchange to have a negative impact on net sales of £175m and a negative impact on operating profit of £45m for the fiscal year.’

• Gaucho Grill’s administrators, Deloitte, have said that they estimate the chain has a ‘deficiency to members’ (that is a negative net worth) of around £64.6m. The administrator’s reports is a sobering, 31 page, document.

• Brewdog Retail Ltd, the retail arm of Brewdog PLC, has reported results for the year to end-December to Companies House saying that the company turned over £24.2m (2016: £21.7m) and lost £45k against a loss last year of £1.2m.

• Joseph Holt has filed accounts to end-Dec 2017 at Companies House saying that turnover for the year rose to £64.5m from £59.2m last year with PBT of £3.3m vs £3.0m last year.

• Joseph Holt reports ‘the brewing industry continues to experience tough trading conditions’. It says it has invested heavily and managed its business well but in order to increase operating profit by 10.2%.

• Joseph Holt reports ‘the business remains under pressure from cost increases and the general unease in the economy and 2018 will prove to be no less challenging’.

• Comptoir Group yesterday reported H1 numbers to 30 June saying that revenue rose by 19.8% to £15.7m and adjusted EBITDA was £0.5m vs £0.2m last year. The reported pre-tax loss was £417k versus £756k last year.

• Comptoir has net cash of £3.9m vs cash of £5.6m at end-December. It opened one restaurant in its H1. Comptoir says it is ‘pleased to announce that despite the continuing well publicised turbulence within the UK restaurant sector and the increase in costs, Comptoir Group have proven their strength as a resilient operator with a robust set of results delivering performance as per the Board’s expectations.’

• Comptoir reports ‘the performance of the Group’s various brands and restaurants, during the first half of the year, has been steady despite the persistent challenging economic climate.’ It adds ‘a number of well-known national restaurant chains, with a fairly generic homogenous offering and no real ‘differential’ in their proposition to customers, have fallen recent victim to the challenging marketplace. We have observed a significant increase in the level of promotional activity within the restaurant sector.’

• Re current trading, Comptoir reports ‘despite the continuation of the exceptionally hot and dry weather conditions into the early part of the second half of the year, we can report that year to date trading is still in line with the Board’s expectations, with a particularly strong contribution from the restaurants with external dining areas.’

• Karen Forrester, the managing director of TGI Fridays, is to become chair of London-based wine bar business Vagabond, per MCA. Last month, Vagabond secured £3.5m in new funding from sector investor Imbiba and it is now looking to open three sites a year.

• The BBPA’s chief executive, Brigid Simmonds, has called the RPI and CPI figures of 3.5% and 2.7% for August ‘worrying news for pubs and brewers alike’. Simmonds commented: ‘Beer duty is linked to RPI, which rose by 3.5% in August, meaning pubs and brewers face a steep hike in taxes just like under the dreaded beer duty escalator. As a consequence, Britain’s Brewers could see an increase of over £100m in tax in the next Budget. The misery for pubs would be compounded by CPI increases in business rates.

• ‘£1 in every £3 spent in pubs already goes to the taxman and under the beer duty escalator, which saw sustained increases to beer tax, 5,000 pubs closed and 58,000 jobs were lost. It’s clear that action is needed by the Government to alleviate these cost pressures pubs face, else we risk losing them forever. This is why we are backing the campaign longlivethelocal.pub to call on the Government to cut beer tax and support local pubs.’

• For the first time in five years, the pub sector has seen growth in visits from 18-24 year-olds, according to data from the latest NPD Pub Tracker. The tracker shows a 3.6% increase in visits by this age group in the year ending June 2018, compared to the previous 12 months. Worryingly, some 32.2% of all visits to the pub were driven by deals and promotions during the year ending June 2018, up 9.5% on the previous twelve months.

• South Africa’s highest court has legalised private, recreational cannabis use for adults. Selling The drug will remain a criminal offence. 

• The Sainsbury’s-ASDA merger has been referred for Phase 2 CMA investigation after sufficient concern regarding overlapping local stores. The supermarkets claim the merger would result in a 10% cost reduction for shoppers.

• Coca-Cola aims to complete the takeover of Nigeria’s leading juice company, Chi Ltd, early next year, which will mark another step in the group’s strategy to diversify from its core business of sugary sodas. Last month it agreed to buy Costa coffee for $5.1bn, and sources familiar with the matter say it is also bidding for GlaxoSmithKline’s Indian Horlicks nutrition business.

• Tesco says it will be the ‘cheapest in town’ with its new discount chain, Jack’s. The supermarket giant has created 1,800 Jack’s own brand products as part of a £25m investment, which will lead to 10 to 15 discount stores being rolled out in the next year. Chief executive Dave Lewis said it would cater to the ‘economically challenged that need a bargain and the affluent shopper that wants a bargain,’ as he revealed the chain in Chatteris, Cambridgeshire.

HOLIDAYS & LEISURE TRAVEL:

• European airports have warned in private that a ‘no-deal’ Brexit would lead to ‘major disruption and heightened safety risks’.

• The transport secretary has announced a root and branch review of Britain’s railways that will ‘leave no stone unturned’. He said: ‘Privatisation has delivered huge benefits of passengers on Britain’s railways – doubling passenger journeys and bringing in billions of private investment. But it is clear that the structure we inherited is no longer fit to meet today’s challenges and cope with increasing customer demand.’

• US hotel occupancy rose 1.2% to 71.4% year over year, while ADR grew 2.3% to $130.71 and RevPAR increased 3.5% to $93.37 in August, per STR.

OTHER LEISURE:

• Nielsen Scarborough data shows 6.2% of the general adult population in the US (15.6m adults) played some kind of fantasy sport last year. 

• Sky and Netflix claim they will create the ‘biggest on demand TV service’ after new details of their partnership were announced. Sky Q customers will be able to access an ‘Ultimate On Demand’ pack for £10 extra per month without paying for Netflix separately.

• Labour is calling for a ban on gambling advertising during live sporting events in an attempt to curb the ‘public health emergency’ of problem gambling. Deputy leader Tom Watson commented: ‘Current gambling regulation is not up to the job of protecting addicts and those at risk of addiction. Gambling companies have to take more responsibility for harm caused by their products and contribute more to research and treatment.’

FINANCE & ECONOMICS:

• The ONS reported that CPI rose to 2.7% in the year to August. Sterling steadied and short term interest rates rose on the belief that further interest rate rises are both in the pipeline and perhaps a little bit closer than previously anticipated.

• The ONS reports ‘rising prices for a range of recreational and cultural goods and services, transport services and clothing produced the largest upward contributions to the change in the rate between July and August 2018.’ It says ‘partially offsetting downward contributions came from furniture and household goods, and telecommunications; prices for these rose between July and August 2018 but by less than a year ago.’

• The NIESR says ‘CPI inflation increased in the year to August 2018. Our analysis of the prices of the 135,000 goods and services included in the CPI basket suggests that this was due to a relatively small number of big price changes.’

• ONS reports house prices rose at their fastest rate in the North West of the UK (up 5.6% in the last year) whilst falling by 0.7% year on year in London.

• Sterling little changed at $1.3149 and €1.1257

• Oil price up at $79.66

• UK 10yr gilt yield up 4bps at 1.61%

• World markets: UK, Europe & US higher yesterday with Far East mixed in Thursday trade.

• Brexit etc.:

o Mrs May, speaking to EU leaders in Saltzburg, has called for understanding and give in a ‘uniquely complex situation’

o Dominic Raab has said that the Chequers’ compromise proposal is ‘not perfect’. Michale Gove has said that it could be changed post Brexit.

o EU central bank boss Jean-Claude Trichet has said that Brexit will impact the UK more than it will the EU. He said that Brexit was ‘totally contrary to the new world’ of larger economic groupings.

o Michel Barnier has rejected calls to soften the EU’s stance on the Irish border. He said that a ‘moment of truth’ was approaching

o David Davis has said that talks between the UK and the EU could be ‘re-set’. He said that, whilst neither side wanted a no-deal Brexit, the talks would ‘get to a point where neither side can agree.’ He says that the cliff edge will be faced in November.

PRIOR DAYS LATER TWEETS:

• Later tweets: CGA / Fourth suggests ‘Brexit anxiety hitting confidence of pub, bar & restaurant bosses.’ Says 2/3 of pub bosses support 2nd referendum

• 71% of pub & restaurant leader poll respondents say 2016 Brexit vote had already had a negative effect on business.

• Tesco to have a crack at the hard discounters via its ‘Jack’ brand. Will open up to 60 stores in the coming months.

• Compoir H1. Says performance ‘steady’ and ‘robust’ in H1 vs tough backdrop. Sales +20% with EBITDA up & loss before tax down

• Comptoir suggests differentiated offerings suffer less on High St than lazy, me-too, generic, overpriced offers. And why wouldn’t they??

• UK CPI up to 2.7% in year to Aug. Means wages (+2.6% in year to July) are probably negative again in real terms.

• UK 10yr gilt yield blips up to 1.61% on high inflation number & likelihood of further rate rises. Sterling up a tad, FTSE down

START THE DAY WITH A SONG:

Yesterday’s song was Time after Time by Cyndi Lauper. Today, who sang:

Wonder this time where she’s gone,

Wonder if she’s gone to stay

RETAIL NEWS WITH NICK BUBB:

• Nick is taking a well-earned break.