Langton Capital – 2018-10-31 – RTN, Wagamama, Coca Cola etc.
RTN, Wagamama, Coca Cola etc:
A DAY IN THE LIFE:
I find it hard to accept that politicians and actors are real people.
I mean they walk and talk and all the rest, but I persist in the belief that they have an ‘off’ switch and think that, when they’ve presented themselves to their public for the requisite amount of time, they simply power-down and stare at a wall for a few hours in order to recharge their batteries.
Of course, there may be the odd one amongst them that strays from their script from time to time but in most cases, it feels as though they’re doing a number on you and wouldn’t give two hoots if your head fell off just so long as it didn’t get in their way or look bad on television.
Hopefully I’m wrong. On to the news:
PUBS & RESTAURANTS:
• Shares in The Restaurant Group fell 14% yesterday upon the announcement the group is to acquire Wagamama for £559m. With current casual dining oversupply and the uncertain fate of the high street, shareholders seem to have received news unenthusiastically.
• MatchPint has found that 61.9% of drinks bought by fans watching the Premier League at a pub are beer, with lager still top of the list, the MCA has reported. However, research has shown that an increasing amount of beer sales during games are shifting to craft beer, contributing to 13% of sales.
• Though duty on beer, cider and spirits has been frozen in the latest Budget, duty on wine is set to rise in line with inflation.
• Coca-Cola has stated revenue was slightly ahead of expectations for Q3 2018 at $8.25bn compared to a predicted $8.17bn. The group reported net income up 44% to $1.88bn from $1.45bn. CEO James Quincey commented: ‘We continue to be encouraged by our performance year-to-date as we accelerate our evolution as an even more consumer-centric, total beverage company. The recent leadership appointments are intended to help accelerate the transformation of our company’.
• NewRiver has disposed of 22 community pubs to a private equity investor, with the deal valued at £14.8m. The pubs had previously been part of the Trent portfolio of Marston’s pubs, that had been sold to NewRiver in December 2013.
• Fever-Tree Drinks has named Numis Securities as their Nomad and second broker alongside Investec.
• Jubel, the beer infusions brand has announced that it will be stocked in Sainsbury’s, the first time the brand has been listed in a supermarket.
• Chief executive of UKHospitality, Kate Nicholls has commented on the new digital services tax: ‘The funds raised by this new tax should be used to ease the unfair tax burdens being shouldered by hospitality businesses to help stop the continued devastation of high streets. If the Government is serious about updating the rates system then we still need to see a thorough, root-and-branch reform of the whole system to ensure it is fair and fit for purpose in the 21st century’.
• Brigid Simmonds, Chief Executive of the British Beer & Pub Association has remarked on the Budget’s plans to regenerate the high street: ‘As a member of the Government’s Future High Streets Forum, the BBPA and many others called for this Budget to help high street businesses such as pubs. The Chancellor has certainly delivered for us! The Chancellor’s announcement to cut business rates for high street and other small businesses by one third for the next two years will no doubt help revitalise town centres and in particular small retail outlets. Pubs, and especially community pubs, will benefit from this to the tune of £120 million over the next two years’.
• Average hourly wages in the hospitality industry are already higher, £8.60, than the new £8.21 threshold for over-25s, data from Fourth has revealed.
HOLIDAYS & LEISURE TRAVEL:
• Yesterday’s suspected terrorist bombing in Tunis has led to British tourists being urged to avoid the area. The attack comes at a time when the country’s tourism industry was starting to recover.
• Abta CEO Mark Tanzer urges the Chancellor to reduce long-haul Air Passenger Duty after the Budget only took action to freeze short-haul APD. The move has provoked a furious reaction from the airline industry as long-haul APD is set to increase in line with inflation.
• Yesterday’s Budget also announced that citizens from the US, Canada, New Zealand, Australia and Japan will be able to use ePassport gates by next summer. The service is currently only available to UK and EEA citizens and members of the Registered Traveller scheme.
• Experts in the tech industry warn that taxing web giants, as per the new Budget, is a risky move that could lead to US retaliation. Chancellor Hammond announced the new digital services tax, which is expected to generate more than £400m a year.
• William Hill has offered SEK 2819m for the iGaming Group MRG, which includes the brands Mr Green and Redbet. Commenting on the Offer, Philip Bowcock, William Hill PLC Chief Executive Officer, said: ‘This proposed acquisition accelerates the diversification of William Hill – immediately making us a more digital and more international business. MRG will provide William Hill with an international hub in Malta with market entry expertise and strong growth momentum in a number of European countries’.
START THE DAY WITH A SONG:
Yesterday’s song was Express Yourself by N.W.A. Today who sang:
And well the toilet smells of desperation,
The streets all echo of aggregation
And you wonder why you can’t get no sleep
When you’ve got nothing to do
RETAIL NEWS WITH NICK BUBB:
Next: We flagged yesterday that Next’s decision to announce their Q3 update today gave the potential for Halloween headlines about “Wolfson’s woes: Next’s shop of horrors”…and actually that is not a bad description of the 8% fall in Next Retail full-price sales for the period (c9% down LFL)! Back on Sept 25th, with the interims, Next were feeling confident about a better than feared start to Q3 and the City had pencilled in c3% full-price Brand sales growth for the period, but the outcome was a disappointing +1.3% (given Next Online sales growth of 12.7%, ex finance income). Whether the quarter was “a game of two halves” is unclear, because Next haven’t provided their usual graph of weekly sales performance, but at least the brief statement says that Next is not changing its full-year sales and profit guidance…
Economics Watch: Despite the Chancellor’s gung-ho optimism in the Autumn Budget on Monday afternoon, the CBI Distributive Trades Survey for “October” yesterday morning was below expectations, for what it’s worth, whilst the latest monthly GFK Consumer Confidence index that came out overnight also shows a slippage: the headline consumer confidence index fell to -10 in October (as expected in a Reuters poll of economists, however) from -9 in September. Highlighting a drop in the “major purchases” sub-index, Joe Staton, the Director of Client Strategy at GfK, said: “The prospect of a no-deal/hard-deal Brexit must surely be weighing heavily on people’s minds, injecting a mood of despondency as to how people view their future personal finances and the longer-term economic outlook for the UK”.
John Lewis Trading Watch: Despite the boost from price-matching Debenhams’ “Spectacular” Sale, John Lewis continued to struggle last week, given its exposure to the troubled Homewares market, according to yesterday’s weekly sales overview from JLP. The w/e Oct 27th saw gross sales only 0.3% up (c2% down on a LFL basis, ex new stores), with Fashion sales up 5.6% gross and Electricals up by 0.5% in gross terms, but with Home sales down by 5.8% gross. That left Q3 overall gross sales 0.2% down (c2.5% down LFL), pulled back by a 4.7% drop in Home sales.
Waitrose Watch: Over at Waitrose last week was also a bit disappointing, with gross sales flat, ex-petrol, in w/e Oct 27th (also flat LFL). The last 13 weeks of Q3 overall have also been down by c0.5% gross, despite the strong start to August for Waitrose, with the “Home and General Merchandise” category running 3.6% down. Tomorrow night the Waitrose management team launch their Annual “Food & Drink” Report in the Cookery Skool at the Kings Cross store.
Intu Properties: Tomorrow brings the John Whittaker “PUSU” bid deadline for the embattled shopping centre giant Intu Properties, but the company has announced today that, at the request of the consortium, the Takeover Panel has granted a two-week extension (until Nov 15th), “to enable continued discussions”.