Langton Capital – 2018-11-16 – Pat Val, RTN, Oakman Inns, Brexit deal & other:
Section TitlePat Val, RTN, Oakman Inns, Brexit deal & other:A DAY IN THE LIFE: Being banned is arguably the best thing that could ever have happened from a marketing point of view to Iceland Frozen Foods’ palm oil ad. It’s all over the place if you haven’t seen it but (spoiler alert) it outlines the plight of an orangutan displaced when its habitat is destroyed to make way for a palm oil plantation. Which is most definitely suboptimal from the orangutan’s point of view but the main points that came out to me were that 1) conflicts of interests (farmers vs wildlife or directors vs shareholders in the corporate world) need to be carefully managed and 2) unforeseen consequences (buying ‘green’ renewable fuels can kill animals on the ground or voting for Brexit can lead to business paralysis and potentially an extreme Socialist government, wealth taxes, mansion taxes, exchange controls etc.) abound in an interrelated world. But – and this is one for Colonel Nicholson in Bridge over the River Kwai, Theresa May in her Brexit blundering and Unilever and others in determining their palm oil policies – when you’re in a hole, it’s usually best to stop digging. You can, like Macbeth, decide it’s bloodier to turn back than to press on but, in the real world, this is rarely true. If nobody ever admitted they’d made a mistake, we would be in a sorry state indeed. And it’s worth remembering what happened to Colonel Nicholson and that Macbeth is a tragedy. There, the clue’s in the name. On to the news: PATISSERIE HOLDINGS: • Not out of the news for long, Patisserie Holdings yesterday announced that it ‘accepted the resignation of Paul May as the Company’s CEO with immediate effect.’ • CAKE says it is ‘pleased to announce the appointment of Stephen Francis, as the Company’s Chief Executive Officer.’ It says ‘Steve is a strong leader and experienced turnaround Chief Executive with a proven track record of rapid operational performance improvements.’ • Mr Francis has worked at Tulip, a pork & farming company, and at Danwood Group where he was responsible for ‘restoring the credibility with stakeholders, re-building the management and transforming the profitability of the Company.’ • Luke Johnson says ‘I am delighted to welcome Steve Francis as new CEO at Patisserie Holdings PLC. He has a strong track record of restoring value in turnaround situations, especially in the food industry, and the board looks forward to working with him in the revival of the business.’ • Mr May’s exit terms have not been announced. He received a basic salary of £292,000 last year and was entitled, according to the report and accounts, to 12mths notice. • The FT reports that CAKE chairman Luke Johnson has hired a former top investigator at the UK’s SFO, John Gibson, as his lawyer. The FT reports ‘there is no suggestion of wrongdoing by Mr Johnson’ but says that ‘his position at Patisserie Valerie means he is almost certain to face questioning as part of the SFO investigation.’ PUBS & RESTAURANTS: • Big reporting period coming up. Next week we have EI Group, Marston’s, M&B and Fullers with Greene King reporting the week after. • Shareholder advisory company ISS is reported to have recommended shareholders accept Restaurant Group director’s £4m per restaurant bid for Wagamama. Shareholders vote on the purchase on 28 November. • A Mexican entrepreneur is reported to have filed a claim for $345m against Coca Cola claiming corporate fraud and property theft regarding a drink that aims to boost brain performance. • A pay rise for JD Wetherspoon’s CFO Ben Whitley was approved at the group’s AGM yesterday. • Partizan Brewing has lodged accounts with Companies’ House showing that its retained profits declined by around £80k in the year to July 2018. The company raised around £200k in new equity during the period. • Oakman Inns is seeking to raise up to £8m through the issue of ordinary shares and 8.5% Oakman Bonds. The 25-strong chain ‘has consistently generated strong like for like sales growth, with the last 5 years showing 4%, 7%, 6%, 4% and 7%.’ • Oakman is offering ordinary shares at £3.50 each (an EBITDA multiple of 7x) and bonds with a coupon of 8.5%. • Kate Nicholls, chief executive of UKHospitality has commented on the now-under-threat Brexit outline deal, stating: ‘In light of the importance of a deal for securing a transitional period and underpinning business planning and investment as well as securing the supply chain, we will therefore be working with other business groups and stakeholders to support the Government’s approach’. • HOP Vietnamese, the grab and go chain, is set to open its largest site at The Leadenhall Building, taking the group to five units. • The wine and spirit trade association (WSTA) has stated that a ‘no deal’ Brexit could be ‘catastrophic’ for its members. • Tossed, the salad grab and go chain, has agreed a franchise deal with Mid Counties Co-op, the MCA has reported. • As few as 10% of pubs have been found to intervene to stop children gambling on their premises. • Kate Nicholls chief executive of UKHospitality has also responded to finding that pubs are failing to prevent children from gambling on their premises, commenting: ‘Underage play on gaming machines in pubs is wholly unacceptable. Our members, and the wider pub sector, understand this and the issue is taken very seriously UKHospitality is already working with its members and other trade bodies to develop a social responsibility charter, with bespoke pub-specific messaging; highlighting responsible gaming and the prevention of underage play’. • Brigid Simmons, chief executive of the British Beer & Pub Association has remarked on pubs lack of preventing children from gambling on their premises, stating: ‘We are committed to keeping the pub a safe and friendly environment for families, so we take these interim findings very seriously. We have ensured that all of our members are aware of both the BBPA’s and Gambling Commission’s codes of practice and we are already taking steps to develop a social charter for responsible gambling, for use by licensees and pub companies’. • HelloFresh has announced strong Q3 2018 results with revenue up 39.5% to EUR302.2m. • The food group, Barilla is attempting to buy the second largest pasta plant in Italy, the factory has the capabilities of producing 280k tonnes of pasta a year. • Detox Kitchen launches a crowdfunding campaign to raise £550k for 7.8% of the business, valuing the company at c£7m. The company is a home delivery service with two central London delis and a retail arm. • Shoppers will be able to bag good deals from struggling retailers on November 23’s Black Friday. HOLIDAYS & LEISURE TRAVEL: • Expedia data shows double digit growth in demand for UK hotel stays from July to September, with both domestic travellers and major international markets providing the boost. The number of international travellers from China surged by almost 180% yoy with visitors from the US growing by almost 40%. • The bosses of Airlines UK and the Airport Operators Association welcome the European Commission’s guidance confirming no flight disruption in the event of a no-deal Brexit. • Mintel’s 2018 Solo Traveller Report claims the industry is not doing enough to cater to the growing solo travel market. The research showed 17% of adults took a holiday on their own in the last five years, up 2% yoy. • Uber reports Q3 losses of $1.07bn as the firm invests in bikes, scooters and food delivery. Revenue rose 5.4% and gross bookings increased by 6% to reach $12.7bn. • Uttlesford District Council approve London Stansted’s planning application to serve up to 43m passengers a year. CEO of the airport, Ken O’Toole, said ‘This will boost our region’s economic growth and deliver 5,000 additional jobs at London Stansted Airport.’ • Health & Fitness travel has suggested that wellness tourism will grow at around 6.5% this year, some two times the rate of tourism overall. • Japan Airlines is to introduce a breathalyser system at overseas airports after one of its pilots was arrested for being drunk at Heathrow. • The US hotel industry has reported y-o-y results for the week 4-10 November, with occupancy up 0.7% to 69%, average daily rate rising 1% to $129.95 and RevPAR increasing 1.6% to $89.68. • Stansted airport confirmed that its application to Uttlesford District Council for permission for the airport to serve up to 43m people a year, has been approved. The expansion is expected to create 5,000 new jobs. OTHER LEISURE: • The Greektown Casino-Hotel in Detroit has been sold for $1bn to VICI Properties (the owner of Caesars Palace in Las Vegas). • Manchester United has seen revenue fall in Q1 to £135m from £143.7m, as the club played fewer home games. Executive Vice Chairman of the club, Ed Woodward commented: ‘Our financial strength enables us to continue to attract and retain top players and to invest in our academy, as we look to drive the success on the pitch that the club and our fans expect’. FINANCE & ECONOMICS: • Sterling fell to $1.2796 yesterday. Against the Euro, it fell to €1.1281 • Oil up a buck and a quarter at $67.27 • UK 10yr gilt yield down 12bps at 1.36% • World markets: UK mixed yesterday (with domestic stocks lower). Europe down, US up and Far East lower in Friday trade. • Brexit: o Raft of resignations put Brexit deal, Mrs May’s job and Tory’s hold on power under threat. Dominic Raab, the second Brexit-supporting minister to resign in four months, says he cannot support the deal that he hoped to draft. o Michael Gove has declined the offer of the job as Brexit Secretary. He is said to be considering resigning as Environment Secretary o Former Labour cabinet minister Andrew Adonis has said that labour may take poer if it takes a stand in favour of remaining in the EU. o Mrs May met with the 1922 Committee yesterday. Jacob Rees Mogg has put in a letter expressing no confidence in Mrs May’s premiership. o Some businesses including Aston Martin have said that the proposed deal is much better for industry than no deal at all. PRIOR DAY LATER TWEETS: • Later tweets: Brexit minister Dominic Raab resigns in protest against deal. Sir Keith Starmer dismisses it as an ‘inadequate miserable failure’. • DUP campaigns for Brexit that may lead to united Ireland. May not have thought the whole thing through. Scotland says ‘me too please…’ • Labour & other oppo parties (including party within a party Tories) to vote against ‘inadequate miserable failure’ of a deal… • Mrs May says ‘it’s the best we could do’. Tragedy of it is, she’s right. Sinking ship, rats, stench of incompetence & careerism in equal measure • Smaller shareholders GrizzlyBear & Vivaldi (who own 20x as many shares as Board) urge Restaurant Group to drop risky, pricey Waga deal • Consumer confidence. Ultimately rooted in business intentions, investment etc. That depends on certainty. And there isn’t a lot of that about… • Can you buy your way to success? GrizzlyRock Capital & Vivaldi Asset Management say RTN shouldn’t try. Too pricey, too big, too risky… • Dart Group shares drop on H2 and next year caution. Very strong H1 numbers notwithstanding, the shares are down 13% • Patisserie Valerie. Deadly silence from company. Meant to re-list 3wks ago. Hope those who stumped up £25m to save Co know more than we do START THE DAY WITH A SONG: Yesterday’s song was In Between days by The Cure, today who sang: Oh, no, Don’t throw your hand If you feel like you’re alone No, no, no, you’re not alone RETAIL NEWS WITH NICK BUBB:
Planet ONS Watch: In the real world, Retail Sales were subdued last month, as per the BRC-KPMG Retail Sales figures for October (the 4 weeks to Oct 27th). But “seasonally adjusted” life wasn’t too bad on that strange parallel world, the Planet ONS (aka the Office of National Statistics), via yesterday’s official Retail Sales figures for October…City economists were a bit disappointed by the 0.5% fall in month-on-month seasonally adjusted sales volume (even though year-on-year volume growth was still 3.0%), but we focused, as usual, on the year-on-year non-seasonally adjusted sales value figures and the split between Large and Small Businesses. Overall Retail Sales (ex-petrol) were up by a solid 3.2% (after growth in September was slightly revised up, to 4.5%), but the ONS reported only 2.4% sales growth for Large Businesses, versus 6.0% growth for Small Businesses…Unaccountably, the ONS Trade Press: The front cover of Retail Week magazine today is a graphic about smartphone ecommerce ordering, to flag up the main feature on “Location, location, geolocation” (“The technology connecting people to places”). RW also has articles about the secrets of Primark’s success, how M&S is restyling its fashion offer and the key features of the Autumn Budget. And in his leader column, the Editor highlights the 30th anniversary of the foundation of Retail Week and, looking back at how the sector has been transformed since 1988, thunders that “Retail’s winners have never feared disruption”. BDO High Street Sales Tracker: We flagged on Wednesday that sales at John Lewis slumped badly last week, despite weak comps, with poor Fashion sales blamed on the mild weather, but today’s BDO High Street Sales Tracker for medium-sized Non-Food chains for last week, w/e Sunday Nov 11th, highlights that BDO Fashion sales were only 1.9% down last week (including Online). Total BDO sales (including Homewares and Lifestyle sales) were down by 3.7% (-7.6% in terms of Store LFL sales and up by 11.1% Online), despite soft comps. News Flow Next Week: The big shadow over next week is the “Black Friday” discounting promotional frenzy, but before that we get the AO.com interims and the Bonmarche interims on Tuesday, the Kingfisher Q3 update on Wednesday and the Majestic Wine interims (along with the Mothercare interims?) on Thursday. The much revised “PUSU” deadline for the John Whittaker consortium over its bid for Intu Properties is also on Thursday. |
|