Langton Capital – 2018-12-03 – Beer sales, Glendola, RTN, Goals, Club Met & other:
Beer sales, Glendola, RTN, Goals, Club Met & other:
A DAY IN THE LIFE:
I swerved one trip to the shops by pulling the old ‘the car parks might be full, I’ll drop you off’ card but, unfortunately, that might only be usable once.
And, indeed, I did have to go out on Sunday and brave the traffic wardens, the crowds and the mulled wine vendors, the only respite from which was to be had fighting for one end of a sticky table in a crowded coffee shop where we paid nearly three quid a head for 30p worth of coffee and milk and then stared glumly at the world in general whilst drinking the tepid brew.
But the relief was temporary as we could see the crowds outside shuffling past in what looked like an unseemly queue for a multi-generational music festival shuffling but was in fact just a crowded pavement.
So, Christmas is happening but I should have been counting carrier bags as you can take a shopper to the shops but you can’t make them spend. On to the news:
PUBS & RESTAURANTS:
• Shares in Restaurant Group bounced around 10p to 144p on Friday. The shares, adjusted for the bonus element of its Rights Issue, were around 220p when the deal to buy Wagamama was announced.
• The Rights Issue takeup, and the number of shares left with underwriters (if any) will be announced on 14 December.
• Beer sales in the UK have increase 4.4% in the third quarter on the same period last year, the BBPA has reported. Chief Executive of the BBPA Brigid SImmonds has stated: ‘It’s certainly good to see that beer sales are doing better overall. England’s success at the World Cup and good weather undoubtedly helped. The Chancellor’s decision in the Budget to freeze beer tax and lower business rates for thousands of pubs will make a huge difference to the viability of the sector moving forward, but Brexit looms large though and brewers and publicans alike need certainty’.
• EI Group bought back 275,152 of its own shares for cancellation at 185.0p per share on Friday.
• Glendola Leisure, which operates the Rainforest Café, Waxy O’Connor’s and various other venues in London and elsewhere, has reported numbers to end-March to Companies House saying that turnover fell by 3.2% to £37.8m and PBT fell by 22.2% to £2.6m.
• Glendola reports ‘the group has traded well in a very challenging environment, which has seen increased costs and competition’. Glendola’s balance sheet remains strong and the group has accumulated profits since incorporation of £22.4m.
• Several private equity firms are in the running to acquire a stake in Wasabi, the MCA has reported.
• Marston’s has entered into a partnership with the electric vehicle rapid charging network, Engenie, which will see 400 EV chargers being installed at the group’s pubs. Andy Kershaw, head of facilities management and projects for Marston’s said: “Our goal is to be the UK’s most environmentally efficient pub business – and with a number of initiatives already taking off, we are working really hard to make that a reality’.
• Employees of David Lloyd and Big Easy will be able to access their earned income throughout the month in a bid to ease anxiety over the cost of Christmas. The leisure businesses are able to offer this to their employees thanks to a new joint-offering from technology providers Fourth and Wagestream.
• Chef Hayden Groves of BaxterStorey has said that brand, cost, reputation and experience are the key considerations when choosing commercial kitchen equipment.
• The government of Pakistan has announced that PepsiCo is set to invest $1.2bn and Coca Cola $200m into the country.
• UK rail fares to rise by 3.1% in January, adding hundreds of pounds to many commuters’ annual travel. Will take money out of consumers’ pockets.
• The BBC notes that shopping centres have evolved from city centre sites in the 60s to out-of-town sites in the 70s and 90s and back to city centre sites in the last decade. Arguably, many assets have been left redundant by changes in tastes.
HOLIDAYS & LEISURE TRAVEL
• Fosun International plans to raise up to $548m with the IPO of its tourism division which owns Club Med. The company will be selling a 17.5% stake valuing the division at $3.13bn.
• STR reports US hotel ADR grew by 2.7% in October.
• CBRE Hotels Americas forecasts occupancy to grow to 66.2% in 2019, with an anticipated 2.1% increase in demand.
• Staycity Aparthotel will open its new 50-apartment Dublin, Chancery Lane site on 3 December.
• Tourism Ireland increases its marketing budget by €10m to €45m for 2019, launching its first new advertising campaign in seven years.
• State-owned Vietnam Airlines plans to IPO on the Ho Chi Minh City Stock Exchange in Q1 2019. Vietnam’s fast-growing economy and rapidly growing tourism markets have been attracting foreign funds.
• As many as 500m guests at Marriott International may have had their private data stolen. Marriott said they became aware of the hack in September but GDPR requires companies to inform regulators of breaches within 72 hours of becoming aware.
• Moody’s has warned that the breach of Marriott’s Starwood guest reservation database is a potentially credit-negative event. Moody’s says ‘it will take months before the company can quantify the costs.’
• Japan Airlines co-pilot, Katsutoshi Jitsukawa, has been jailed for ten months after being caught more than nine times over the alcohol limit at Heathrow.
• Goals Soccer Centres has announced that chairman Nick Basing is to retire from the company ‘to focus on his other numerous business commitments. He will stand down once a replacement has been found or at the May 2019 AGM, whichever is sooner. A search will begin immediately for a successor.’ Mr Basing will step down as chairman on 31 December.
• Chairman designate Michael Bolingbroke says ‘Nick joined the Goals Board in 2015 and has since then led the Company through both the development of its recovery strategy and the formation of its joint venture with City Football Group, successfully accelerating the Company’s expansion in the US. The Board wishes to thank Nick for his focus and tireless efforts over the last few years – his contribution has set our Company on its current growth path. We all wish him well in his future endeavours.’
FINANCE & ECONOMICS:
• Nationwide reported Friday that house price inflation rose slightly in the year to November to 1.9% from 1.6% in October. It says ‘in the near term, the squeeze on household budgets and the uncertain economic outlook is likely to continue to dampen demand, even though borrowing costs remain low and the unemployment rate is near 40-year lows.’
• IMF leader Christine Lagarde has called on G20 leaders to de-escalate trade tensions as they are a risk to global growth.
• Sterling up slightly at $1.2769 and €1.1249.
• Oil up nearly three dollars at $62.33.
• UK 10yr gilt yield unchanged at 1.36%
• World markets: UK & Europe down on Friday but US higher. Far East up in Monday trade.
o Michael Gove has said that there may be a People’s Vote if MPs vote down Mrs May’s partial Brexit next Tuesday.
o Labour has warned that the UK faces a ‘constitutional crisis’ if Mrs May does not publish the government’s legal advice today.
o The SNP has said that it will support moves to suspend the Brexit process if Mrs May’s semi-Brexit deal fails to win support.
o Robert Peston suggests Mrs May is entering the most important week of her political life.
o Suggestions that Mrs May is misguided and absorbs humiliation, relabeling it as strength.
PRIOR DAY LATER TWEETS:
• Later tweets: RTN bouncing after hitting 9yr lows yesterday. Super-volatile nil paid stock up 40% at 37p at time of writing. Still got all to prove
• Should ask questions of no-win-no-fee-based advisors. Might they not be incentivised to recommend deals that, well, struggle somewhat?
• Still waiting for CAKE to relist. Or tell us what on earth’s going on, keep indie shareholders, who own majority of Co, in the loop etc.
• GfK consumer conficence numbers fall to minus 13 in Nov from minus 10 in Oct. GfK says it is the ‘season of uncertainty…’
• Nationwide reports house price growth 1.9% in year to Nov (from 1.6% in Oct). Up from multi-year lows but still lower than inflation
• Mrs May has not ruled out a No Deal Brexit. Akin to telling us that Plan B is that there is no Plan B. Labour still navel-gazing
START THE DAY WITH A SONG:
Last Friday’s song was I Am The Walrus by The Beatles. Today, who sang:
Pastoral scene of the gallant south,
The bulging eyes and the twisted mouth
Scent of magnolias, sweet and fresh
RETAIL NEWS WITH NICK BUBB:
McColl’s: The share price of the struggling convenience store chain McColl’s dipped ominously on Friday, ahead of today’s pre-close trading update, as if something might be amiss. And, lo and behold, profit warnings really do come in threes, as the old adage has it, since the news today is that the business is still experiencing supply issues…LFL sales actually improved to be flat in Q4 (the 13 weeks to Nov 25th), but that was driven by low margin tobacco sales and, “in light of transitional supply challenges and continued difficult trading conditions”, McColl’s has warned that adjusted EBITDA for the year will be only around £35m. Unhelpfully, it doesn’t say what the comparison was, but we can reveal that adjusted EBITDA was £44m in the previous year. And, to rub more salt in shareholder’s wounds, McColl’s has warned that it expects only a modest improvement in the new financial year,
Saturday Press and News (1): The strong results reported by the venerable London department store Fortnum & Mason for y/e July (sales up 12% and profits up 26%) probably got more coverage in Saturday’s papers than they deserved, eg “Fortnum’s sales boost is just its cup of tea” in the Times, but there were also plenty of snippets about the news that Mike Ashley has helped his current adversary, the beleaguered Intu Properties, by buying the ex-BHS site on the edge of its Derby shopping centre. And the Guardian highlighted that Mike Ashley has done a deal with Manchester council to save the threatened House of Fraser flagship store on Deansgate, whilst the Daily Mail flagged that the embattled Debenhams is offering free parking to customers who spend over £50 at Christmas.
Saturday Press and News (2): In other news, the Business editorial in the Times noted that Tesco CEO Dave Lewis might have wished he’d stayed at Unilever, given the recent management turmoil there and the fact that the Tesco share price has flat-lined since his arrival. Lex column in the FT looked at the struggles of mighty Ikea to evolve its business model and cope with increased competition and it also flagged that artificial Christmas trees now account for 44% of the US Christmas tree market. Finally, the Guardian had a feature on the survey by Good Housekeeping magazine on the rising cost of Christmas dinner, up from £2.94 per head last year to £3.11 this year (for a family of 8), with the basket costing £26.43 in Aldi, £39.22 in M&S and £42.98 in Waitrose.
Sunday Press and News: The Retail cupboard was pretty bare in the Sunday papers, but the Observer highlighted that “Mad Mike” Ashley will be the centre of attention when he appears before a House of Commons Select Committee tomorrow, to talk about his plan to “save the High Street” (“Live and Direct: the biggest performer in retail is back on stage”), whilst the Mail on Sunday flagged that he is furious with the fact that the Chancellor only gave Business Rate relief to small, independent High Street retailers in the Autumn Budget. The Sunday Times noted that the secretive property tycoon John Whittaker may be under financial pressure after the collapse of the Intu Properties share price, as he has borrowed heavily against the value of his shares…The Sunday Telegraph made a big deal of the losses reported by the struggling cycle brand Rapha and the column by the veteran Business
News Flow This Week: As we move into December, there is plenty of company news to keep us busy this week, but the appearance of “Mad” Mike Ashley at the House of Commons at 3.45pm this afternoon to talk about his plan to “save the High Street” will be an amusing diversion. The BRC-KPMG Retail Sales for November (the 4 weeks to Nov 24th) are out first thing tomorrow and are likely to be pretty flat again overall, despite the boost from Black Friday. There is also a Travis Perkins (Wickes) Capital Markets event in the West End tomorrow morning. The Joules pre-close update is out on Wednesday, along with the SMMT New Car sales figures for November and the FTSE Quarterly index review will be announced last thing on Wednesday. Thursday brings a Ted Baker trading update and the Signet Q3 results out in the US, whilst the ABF (Primark) AGM is on Friday.