Langton Capital – 2018-09-25 – Time Out, AG Barr, Brighton Pier, Hotel Chocolat & other:
Time Out, AG Barr, Brighton Pier, Hotel Chocolat & other:
A DAY IN THE LIFE:
Don’t you find that temperature memory is fleeting?
By that I mean that, when it’s chilly, you can hardly remember what it was like not to be able to get to sleep because of the heat and, when it’s hot, you can’t believe that you were ever consigned to one room in the house – admittedly only when the oil for the boiler ran out – and you had to stoke the fire, put down cuddly toys to keep out the draughts and all the rest.
And so, perhaps, it is with history.
You can’t (or don’t want to) contemplate what it was like in the past, so you exclude it from your thinking.
The humbling Suez Crisis, the three or was it four Sterling devaluations overseen by the last Labour Government but one, the intervention of the IMF (Labour again), the three-day week (Tory) and the general slide down the league tables in manufactures etc.
All of that is fake news invented by experts and it was optimism that got us out of the trees, impelled us to leave the caves when it was scary and dark out there but it can have negative consequences. Check the Darwin Awards or a regional newspaper on any day of the week for various example of overconfidence, leaping before looking etc., etc.
But still, bring on that Red, White and Blue Brexit, is what I say. Take back control, cheaper food, no tariffs, super-democracy, better NHS etc. Stick to slogans, not facts, it’ll keep you sane. On to the news.
PUBS & RESTAURANTS:
• Time Out Group reports H1 group revenue growth of 20% yoy to £22.4m with group gross profit up 42%. Group revenue growth was driven by the Time Out Market division with revenue up 50% in the division. The company reports an operating loss of £10.2m, with an adjusted EBITDA loss of £6.4m. Net cash and cash equivalents at 30 June 2018 were £9.4m.
• Julio Bruno, CEO of Time Out Group plc, said ‘Our first Time Out Market in Lisbon continues to exceed our expectations, with records broken again in the first half as visitors grew 12% to 1.9m. Over the next 12 months we will open ‘owned and operated’ markets in New York, Miami, Boston and Chicago and our first franchise location in partnership with Ivanhoé Cambridge in Montreal.’
• Brighton Pier reports FY numbers (53 weeks to 1 July) saying revenue was £31.7m (against £31.3m last year) with PBT down to £3.2m (from £3.5m) and EPS down from 10.4p to 7.8p despite the 53rd week.
• Brighton Pier reports ‘we completed an ambitious £1.3m upgrade of the restaurant and bars’ and says that operating profit at the bars division was in line with the prior year.
• Brighton Pier Group chairman Luke Johnson reports that the group bought Paradise Island Adventure Golf during the year and comments on the Pier saying that its ‘results were reasonable in the circumstances.’
• Mr Johnson says ‘these are relatively testing times for the leisure and hospitality industries, mainly owing to cost inflation, additional taxes and intense competition. However, your board believes The Brighton Pier Group remains well placed to take advantage of opportunities.’
• Mr Johnson concludes ‘I remain confident of our prospects, and as a sign of my faith in the business I intend at the earliest practical opportunity to exercise my warrant in full at a cost of almost £1million, which would increase my shareholding to 27% of the enlarged share capital.’
• AG Barr reports H1 numbers. All on track.
• AG Barr reports 6mth numbers to 28 July saying revenue +5.5% to £136.9m with PBT up 4.0% to £18.2m.
• AG Barr reports H1 EPS of 12.74p (up 8.6%) with a H1 dividend of 3.9p vs 3.71p last year. CEO Roger White comments ‘we have delivered a solid financial performance in the first half of the financial year, navigating through the Soft Drinks Industry Levy implementation, reformulation, extremes of weather and CO2 shortages in addition to a dynamic consumer, customer and macro-economic environment.’
• AG Barr reports ‘our core brands have performed well and have good momentum with both consumers and trade customers.’ It says ‘we will continue to ensure our actions and investment decisions support our long term growth strategy. We plan to invest further across the second half of the financial year which we anticipate will have a moderate impact on margins. We remain on target to meet our profit expectations for the full year.’
• Hotel Chocolat FY numbers to 1 July. Revenue +11% at £116.3m with PBT +13% at £12.7m and EPS of 8.8p vs 7.8p last year. Dividend of 1.7p for the year as a whole, up from 1.6p last year.
• Hotel Chocolat CEO Angus Thirlwell comments ‘I am pleased to report another year of significant progress for the Group.’ Mr Thirlwell says ‘the encouraging performance of our UK channels means we remain confident of further growth.’ See also Nick Bubb below.
• Tough for some crowd-funded vehicles.
• The West Berkshire Brewery PLC says ‘it is more than disappointing that our financial results do not yet reflect the keenly anticipated benefits of our capital expenditure and our investment in our Company’s personnel infrastructure’.
• West Berkshire points to delays in the delivery of new brewing and packaging equipment as being partially behind its less-good-than-anticipated performance. The group also ‘in the middle of a large and expensive further expansion into its new premises while continuing to pay rent on its previous site’.
• The West Berkshire Brewery has filed accounts to 31 March 2018 with Companies House saying that turnover rose to £3.34m from £2.60m last year. The group made a gross profit of £1.30m (vs £978k in 2017) but it lost £2.27m before tax compared with a loss of £737k last year.
• West Berkshire has losses accumulated since incorporation of £3.1m. The group had positive shareholders funds of £7m as at 31 March and has raised £908k in further capital since its year end.
• West Berkshire, which has raised capital via crowd funding and is chaired by David Bruce, says ‘we are in a position now of consolidation and retrenchment as we focus on further improving all aspects of our new business.’
• New World Trading Company (NWTC) has posted a 15% increase in underlying sales for the year to 31 March 2018, with revenue reaching £45.1m and adjusted operating profit up 14% to £5.2m. Speaking to MCA, the company said the strong performance is thanks in part to its five new sites. Chris Hill, chief executive officer of NWTC, said: ‘This has been an exceptional year for NWTC in challenging market conditions. We have made significant progress laying the foundations for our future growth and we look forward to the exciting new openings planned for The Botanist as well as The Florist brands.’
• Four in 10 Brits who drink beer are unhappy about the cost of a pint, according to a study of 2,000 respondents. The research, commissioned by St Austell Brewery’s Proper Job IPA to mark Cask Ale Week, has also found that the perfect pint should have a head of 9mm and be served in a ‘proper’ pint glass at 5:30pm on a Saturday, in a beer garden with a partner. Said pint should be accompanied by a packet of crisps, and with mobile phones firmly in pockets.
• The UK ready meal market is now worth an estimated £4.7bn annually thanks to the rise of premium brands and more specialist meals, writes Pragma Consulting. These newer variants focus on not so much on speed but on being stress-free (most take around 30 minutes) and justify higher price points with superior ingredients and less additives.
• Port exports to the UK remain ‘unbelievably stable’ despite an ongoing decline in the fortified wine sector, according to the chairman of Symington Family Estates. According to figures provided to the Institute of Douro Wine (IVDP) by the Portuguese Ministry of Agriculture, total exports of Port to the UK totalled 1,034,209 nine-litre cases in 2017, a 5.65% increase compared with 2010.
• The Chief Executive of the FDF, Ian Wright has commented on the Government’s latest ‘No-Deal’ Technical Notices, stating: ‘The Technical Notices show that a ‘no-deal’ Brexit will have a severe impact on UK food and drink supplies and trade from March 2019. Upon leaving the EU, UK exports would face the EU’s prohibitively high WTO Most Favoured Nation tariffs, which would make many products uncompetitive and threaten the success of more than £13bn of our industry’s annual exports’.
• Alan Yau’s Turkish pide restaurant, Babaji Pide, has closed. Yau had been involved with the restaurant for more than a year.
• The Fuller’s Premium Lager, Frontier, has begun a social media campaign promoting Frontier Fridays. Frontier drinkers will be able to enjoy a free pint between 1pm and 5pm every Friday for four weeks from 28 September to 19 October.
• The Co-op intends to phase out single-use plastic bags, and is promising to use a minimum of 50% recycled plastic in product packaging by 2021.
HOLIDAYS & LEISURE TRAVEL:
• Thomas Cook shares fell almost 25% yesterday after the company warned that hot weather in northern Europe had dampened demand for holidays further south. Holidays were still taken but, as bookings were delayed (both by the weather and by the World Cup), operators had begun to discount and the margin on sales suffered.
• On the Beach shares fell by 6% and TUI shares fell by 3% in sympathy. Dart Group, which owns the Jet2 brand, fell by only 1.5%. TUI is due to update on trading on Friday. It is likely to have faced the same market problems that Thomas Cook has just commented on.
• Travelodge reports H1 total revenue up 8% with RevPAR increasing by 3.1% yoy in the period. The brand also debuted its new Travelodge Plus hotel format, opening its flagship property in the City of London in August. Travelodge says the growth has helped mitigate the impact of cost increases, including an increase in the National Living Wage and operational costs relating to higher occupancy rates. The company reported a £1.3m increase in earnings before tax to £43.3m.
• Per Travel Weekly, cruise line business leaders reveal that the industry has avoided the summer slump felt by other travel sectors. Bernard Carter, managing director for the EMEA region at Oceania Cruises, said his anticipation of slow sales in June and July due to the World Cup did not materialise.
• Tui acquires Musement, an Italian online seller of activities, tours and excursions, for an undisclosed sum with the deal expected to complete in October.
• STR reports European hotel occupancy up 1.4% yoy to 77.9%, ADR up 4.1% to €118.64 and RevPAR up 5.5% to €92.39 for August 2018.
• Bede Gaming has grown to have over 3m registered players and 200,000 monthly users over the past seven years.
• Instagram’s co-founders have announced they are leaving the social media company. Kevin Systrom, CEO, and Mike Krieger, CTO, will step down from Instagram in the next few months.
• Apple completes its acquisition of Shazam, valuing the UK-based music app at a reported $400m.
FINANCE & ECONOMICS:
• Oil prices jumped yesterday to their highest level in nearly 4yrs. Brent crude is changing hands at around $81.40 per barrel.
• Sterling up vs dollar at $1.3103 but down vs Euro at €1.1159.
• UK 10yr gilt yield up 6bps at 1.62%.
• Brexit etc.:
o If the release of briefing papers showing what might happen in the event of a no-deal Brexit was partly intended to bounce MPs into agreeing a Chequers’ deal, the effort will have been wasted if there is no Chequers’ deal left on the table.
o Telegraph reports majority of Mrs May’s cabinet would like a Canada-style deal. Foreign Secretary Jeremy Hunt is said to be pushing for such a solution. Mr Hunt had backed Remain in the 2016 vote.
o The choices now appear to be No Deal, Canada Deal, Norway Deal or stay in the EU.
o Whether observers backed Remain or Leave in 2016 it is a sad reflection on the UK political process that we are now more than 80% of the way from June 2016 to March 2019 and we still do not know what the half of the country that wanted to leave the EU really wants.
o None of the factors that are causing problems, the options on the table, Northern Ireland etc., are remotely new.
PRIOR DAYS LATER TWEETS:
• Later tweets: Unions continue push into F&B operators including McDonald’s, JD Wetherspoon, TGI Friday & others.
• Thomas Cook has updated on full year trading saying the Lates market has been tough & recent trading ‘disappointing’.
• Brexit next year (driving license issues, ATMs perhaps not working etc.) could lead to further delays in UK outbound bookings.
• PM says Brexit talks at impasse. Telegraph says majority of Cabinet want Canada deal. Expect Cabinet leaks shortly
• Labour scaring the horses. Second referendum perhaps but high price to pay. Higher income taxes, hit 2nd homes, give 10% of co’s to shareholders etc.
START THE DAY WITH A SONG:
Friday’s song was Only Love by Ben Howard. Today, who sang:
Freezing breath on a window pane,
Lying and waiting
A man in the dark in a picture frame
So mystic and soulful
RETAIL NEWS WITH NICK BUBB:
• Debenhams: We flagged yesterday that the embattled management team of Debenhams would be putting a brave face on things on the analyst’s trip to see their shiny new store in Watford (which opens officially on Thursday) and they did indeed give a good account of the improvements in the autumn fashion range and the fun new marketing campaign (“do a bit of Debenhams”). And the store is pretty good, although it is only 80,000 sq ft (over 3 floors) and relatively low cost, with a lot of emphasis on flexible fixtures. There are some nice design touches though, as well as an impressive Personal Shopper and changing room area, whilst the much-vaunted Beauty Hall has some interesting service concepts that can be rolled out. Having said that, the challenges are obvious and much depends on being able to salvage the balance sheet by selling the Magasin business in Denmark, but there are
• Next: We said yesterday that back on August 1st, with the Q2 sales update, Next warned that a decent July had probably brought sales forward from August and maintained its cautious full-year full-price sales growth guidance of c2.2%, despite achieving 4.5% growth in H1 (up 15.5% in Directory and down 5.3% in Retail). The overall comps are tougher in H2 and given that the High Street is likely to be tough this Christmas, after a difficult September, we said that it would be a surprise if Next upped their guidance today, but they in fact say that “it turned out we did not experience any material loss of sales in August and early September. So, we are now raising our central guidance for full year pre-tax profits by £10m to £727m”. The main focus in the very long results document will be in the views of the estimable CEO Simon Wolfson on the outlook for Brexit …Analysts meeting 8.45am
• Card Factory: The interim results from Card Factory are headlined “Growing sales despite a challenging consumer environment” and a 5p special dividend is still being paid, even though underlying PBT fell 14% and LFL sales were slightly down. The embattled CEO Karen Hubbard tries to make the best of it, by saying “As expected, trading in recent weeks has remained challenging given the weak consumer environment, but we have seen continued growth in average spend and improved performance of redesigned Everyday ranges. The Board is confident that the Group will continue to make further strategic progress on new initiatives. We remain positive about the growth prospects for the business over the medium term”. There is no comment on the full-year profit outlook, however. Analysts meeting 10am.
• Hotel Chocolat: Today’s finals are slightly ahead of expectations, with revenue up by 11% and underlying EBITDA up by 16%, but the main interest is the news about a jv launch in Japan and a store opening in the US, of all places. Analysts meeting 9am.
• Today’s Press and News: M&A is the big theme in the FT, which notes that the US luxury group Michael Kors is set to announce a deal to buy Milanese fashion house Versace and that the French supermarket chain Casino has rejected an approach from Carrefour that its rival denies making…There is plenty of coverage of the Debenhams Watford trip, as the press was taken there in the afternoon and CEO Sergio Bucher was interviewed by the BBC and ITV: “Debenhams can grow again, says boss” is the Reuters headline, whilst the Times goes for “Debenhams puts hope in makeover”, the Telegraph runs with “Debenhams unveils new store concept to ‘make shopping fun again’” and the Daily Mail asks “Can gin bars and makeovers save Debenhams?”.
• Yesterday’s Press and News: We didn’t really have time to look at yesterday’s papers before making our way to sunny Watford, but the Telegraph had a useful “SWOT” analysis of Next ahead of today’s interim results and also flagged that the privately owned fashion chain River Island has reported a 40% fall in operating profits in y/e December on the back of a 3% fall in sales. And the main front page story in the FT was the Labour Party proposal that companies give 10% of their shares to staff…
• News Flow This Week: Tomorrow brings the Boohoo interims, along with the monthly CBI Distributive Trades survey. Thursday brings the Halfords Capital Markets Day/Strategy Review and the Joules AGM. Then, with the end of the month coming up surprisingly quickly, we get the GFK Consumer Confidence index first thing on Friday.