Langton Capital – 2018-10-05 – JDW, Uber, strikes, tips, Stonegate, staycations & other:
JDW, Uber, strikes, tips, Stonegate, staycations & other:
A DAY IN THE LIFE:
So how many people with beards out there are making a fashion statement and how many are simply taking the opportunity not to scratch their face with a sharp knife every morning for a while?
I wouldn’t imagine there’s an easy answer to that one but, if you shave your neck and cheeks every day then your beard may be a part of your overall ‘look’ whilst if you combine not shaving with making your socks last two days (you’re minimising your carbon footprint), never cleaning your shoes (because it isn’t green) and having black coffee (for health reasons) when you hate it but your milk has run out, then you’re probably in the latter category.
And there are market opportunities in both areas. You could sell nose hair tweezers to the vain or Deliveroo to the lazy. I know which sounds the bigger market. On to the news:
PUBS & RESTAURANTS:
• Workers at UberEats and several McDonald’s, JD Wetherspoon and TGI Friday held a strike yesterday, in a dispute over pay. UberEats riders are calling for £5 per delivery and a further £1 per mile for each journey. A McDonald’s spokesperson says: “All restaurants remain open as usual today despite frustrating attempts by protestors at a handful of locations to impact our customers, and our restaurant teams’.
• As residents of Spitalfields we can attest to the fact that UberEats workers are unhappy. This displeasure has been expressed in the form of perpetual tooting of scooter horns outside the company’s offices.
• Uber demands highlight one of the issues facing delivery. If you had to pay a taxi to get your meal, you would expect to pay heavily for it. But you wouldn’t send a taxi to get your meal in the first place, would you.
• JD Wetherspoon has defended its treatment of its workers ahead of today’s strike at two of its pubs. JDW chairman Tim Martin said: ‘Everyone in the pub and restaurant industry works very hard and the late and early hours are extremely demanding. The people who work in the business are our most valuable asset. It is understandable that there is pressure on pay with low unemployment and a housing shortage. However, bonuses, free shares and other benefits should be taken into account in assessing pay’.
• JD Wetherspoon’s website says ‘and tips paid to employees are retained, in full, by them. The company does not manage tip payments on a local or national basis or impose any charges on employees.’ The BBC has quoted staff at some restaurants saying they are not allowed to receive tips.
• Unite and other unions are trying to push into both the gig economy and service sector employers such as JD Wetherspoon. They are targeting zero-hour contracts, the treatment of tips and other contentious subjects as well as the base rate of pay. This struggle may go on for some time.
• Stonegate Pub Company has reported the rather historic accounts for the period to 24 Sept 2017 to Companies House saying that it had 703 pubs at its year end and generated revenue of £697.5m (2016: £642.6m).
• Stonegate has reported a pre-exceptional PBT of £11.6m versus £16.0m last year. After exceptional costs, Stonegate lost £22.2m before tax in the year under review compared with a post-exceptional loss of £12.5m in the prior year. Stonegate has lost a cumulative £75.6m since its incorporation.
• Constellation Brands Inc has increased its full-year profit forecast, as the group benefited from strong demand for Corona beers during the summer.
• The MCA has reported data that indicates customers are reducing the number of courses they order at a restaurant, due to economic and health pressures. Over 52% of customers were shown to only order main courses when visiting a restaurant for dinner, compared to 50.3% last year.
• The Restaurant Group has turned to international real estate advisor Savills to sell a further nine of its former sites in England and Scotland.
• Ei Managed Investments partners with Helen Standing and Elizabeth Davies to launch Vixen Pubs, offering ‘great food and smart accommodation’. Vixen Pubs will be Ei Managed Investments’ 11th Managed Investments partner.
• Wagamama reports LfL sales up 8.5% in its UK restaurants in the 16 weeks to 19 August 2018, with turnover up 12.3% to £97.4m. Q1 adjusted EBITDA increased by 1.9% to £12.7m, with the group saying it outperformed the market by 10.1%. The restaurant chain opened four new sites in the period; Liverpool New Mersey, Rushden Lakes, Chelmsford and East Midlands.
• Diageo’s Johnnie Walker has announced a collaboration with Game of Thrones to launch a limited-edition White Walker and Game of Thrones Single Malt Scotch Whiskey Collection.
• Over 22% of under 29-year-olds in the UK have no savings at all, figures from the ONS have indicated. The pressure on pay and the prevalence of insecure work means many cannot put money aside.
HOLIDAYS & LEISURE TRAVEL:
• Almost half of Britons are less likely to holiday in Europe after Brexit, setting up staycations for a boost in the coming years. Six in ten said they were concerned about not having free, emergency healthcare while abroad after Brexit in six months time.
• AccorHotels partners its loyalty programme with Eurostar’s to offer more choice and exclusive benefits to members.
• The budget hotel chain, travelodge has stated that it plans to invest £100m in 10 new UK sites. Travelodge has stated that these new sites will target the UK’s biggest conference and event centres.
• The hotel data specialist STR has revealed that the US hotel industry was occupancy rise 1.7% to 71.5% during the week of 23-29 September. The group also reported ADR up 1.7% to $137.31 and RevPAR increasing 9.1% to $98.15.
• Gfinity will become the Tournament Operator of the ePremier League after striking a deal with the Premier League. The ePL, played on FIFA 19, commences in January 2019 with every Premier League club represented enabling UK-based players the chance to compete for and represent their favourite Premier League club.
• Samsung Electronics anticipates that it will report record operating profit in the third quarter, driven by strong demand for its memory chips. The South Korean group has announced operating profit forecasts of c17.5 trillion won ($15.5bn).
FINANCE & ECONOMICS:
• New car sales in the UK fell sharply in September per the SMMT. The body says total vehicles registered fell by 20.5% on the same month last year. Emission legislation, Brexit worries and tough comps were mentioned.
• Economists quoted by the Wall St Journal have suggested that the UK could enter a recession in 2020. Some 59% believe that a recession is ‘most likely’ in 2020 whilst a further 22% think that it may begin in 2021.
• Sterling up at $1.3009 and €1.1302
• Oil down a shade at $85.00
• UK 10yr gilt yield up 8bps to a 3yr high of 1.67%. The 20yr gilt yield is also beginning to edge up as long rates take notice.
o RBS has said a no-deal Brexit threatens a recession.
o Jeremy Hunt’s suggestion that the EU was behaving like the USSR has been criticised as unwise and insulting. Donald Tusk pointed out that he spent half of his life in the communist block.
o EU sources have told Reuters that UK concessions on the Irish border could allow talks to move forward
o Best bet is still a ‘hard fought’ deal that both sides can take credit for. Mrs May then has to get it through parliament
PRIOR DAY LATER TWEETS:
• Later tweets: Prezzo offering 2-4-1 (50% off in our book). Café Rouge 30% off mains, Pizza Hut 33% off food Sun to Thurs.
• Prestige Purchasing has surveyed supply chain leaders and ‘highlighted widespread and deep concerns’ re Brexit.
• Oil at 4yr highs. Could fall again or could feed through to prices. 1p on fuel is reportedly £500m off spending power.
• IPOs: License to lose money? Funding Circle down as much as 24% from IPO at one point. Aston Martin at a discount.
• PM promises austerity is history if she can get Chequers through. Well, hard to know where to start on that statement…?
• Staycation boom to come post Brexit? Poll shows c2/3 worried by healthcare costs post Brexit, weak Sterling etc & less likely to travel
• DFS & ScS say big ticket a shade better but new car sales down 20.5% in Sept. Nissan joins chorus of warnings on Brexit.
• Waitrose: says ‘sunny but cold weather…drove sales of autumnal food’. Albeit only 1wk. Poor for icecream, better for gravy, curry sauces etc
START THE DAY WITH A SONG:
Yesterday’s song was Jump by Van Halen but today who sang:
By the telephone,
Lift up the receiver
I’ll make you a believer
RETAIL NEWS WITH NICK BUBB:
Intu Properties: Despite late-breaking news on the Estates Gazette website that the giant Canadian property fund Brookfield was weighing up a bid, the share price of the beleaguered shopping centre business Intu Properties sank even further yesterday, to 149p, capitalising the group at little more than £2bn. At this level, despite the near £5bn of debt and the pressure on rental values, you’d think that buying Intu was a pretty cheap way into its 2 flagship assets, the Trafford centre in Manchester (which is valued at £2.2bn gross) and Lakeside (which is valued at £1.3bn gross). And after hours it was confirmed that Brookfield is looking at a consortium bid with Peel Holdings and the Saudi group Olayan (who between them hold just under 30% of the equity). That is a powerful base and Peel’s John Whittaker is of course the Deputy Chairman of Intu (having sold them the Trafford centre back
Motorpoint: The City decided to give Motorpoint a bit of a bashing yesterday, on the back of the weak SMMT new car sales figures for September, even though it is not directly involved in the new car market (it operates 12 hypermarkets selling second-hand or “nearly new” cars). And today’s trading update for the 6 months to end Sept is reassuring. H1 sales were up 9%, with stable margins and Motorpoint say “the Board is encouraged with the recent trading performance”, highlighting that “the breadth and quality of stock on hand going into the second half of the year is strong”.
Trade Press (1): The cover of Retail Week magazine today is a photo montage of the new Tesco Jack’s discount store and the new Debenhams Watford store, with the headline “Top shops?”, noting that “Debenhams’ makeover puts beauty centre stage” and that “Tesco aims for the jackpot with discount fascia”. Apart from these 2 features, RW also has features on “How Next is pivoting in a digital world” and the new Nordstrom clothing store of the future. And in his column the Editor looks at the British product focus of Tesco Jack’s and thunders that “The UK doesn’t produce enough of the food it eats”, noting Next’s warning of major disruption at the ports if there is a no-deal Brexit.
Trade Press (2): Drapers magazine today has a special focus on Tailoring, with a front cover photo of Suitsupply founder Fokke de Jong, who is disrupting the men’s formalwear market. The Editor thunders in her column that “The only constant is change – so embrace it”, highlighting that “one thing Mike Ashley cannot be accused of is standing still” and that “one business whose future looks bright is Boohoo Group”. In terms of News stories, Drapers flag that JD Sports is understood to have bought a majority stake in the well-known independent fashion chain Choice, House of Fraser suppliers and industry sources expressed little surprise this week that Mike Ashley has axed the management of House of Fraser and the outgoing CEO of Fat Face, Anthony Thompson, says he is leaving the business “in good health”.
BDO High Street Sales Tracker: We flagged yesterday that Home sales at John Lewis continued to struggle last week and today’s BDO High Street Sales Tracker for medium-sized Non-Food chains for last week, w/e Sunday Sept 30th, also highlights that their Homeware sales were 5.8% down (including Online), albeit against a tough comp. BDO Fashion sales were 4.4% up last week, however, and Total sales were up by 3.3% (0.9% up in terms of Store LFL sales and up 15.8% Online).
News Flow Next Week: Things are busy again next week, kicking off with the BRC-KPMG Retail Sales for September first thing on Tuesday, closely followed by the Greggs Q3 and the MySale finals. The Vertu Motors interims on Wednesday will be interesting in the light of the weak SMMT new car sales figures for September. Then Thursday brings the WH Smith finals, the Dunelm Q1 update, the N Brown interims and the QUIZ trading update.