Langton Capital – 2018-12-04 – Vianet, discounts, Patty & Bun, CAKE, High Street & other:
Vianet, discounts, Patty & Bun, CAKE, High Street & other:
A DAY IN THE LIFE:
At a time when high street chains are having trouble attracting customers, you would have thought they would slow up on their moves to fine car park users and embarrass customers but, whilst I’ve batted off a couple of £70 fines recently, I do have continued real trouble with self-service tills.
Because try as I might, I can’t seem to ring through more than half a dozen items without setting off some sort of alarm or another and, though I try to tell the thing that I’ve brought my own carrier bag or that I’ll admit to having four bananas rather than three (anything for a quiet life), the machines always end up accusing me of theft or something worse by flashing a red light above my head and attracting attention.
And I’m sure I’m not alone but, when you’ve already rung through most of your goods, it’s a pain if nobody comes and you need to load it all back in the basket and queue at a till.
Anyway, at least there’s no claxon sounding, flashbulbs popping and the machines, as far as I’m aware, aren’t yet authorised to deliver electric shocks. On to the news:
PUBS & RESTAURANTS:
• Beer flow monitoring and smart machine operator Vianet has reported H1 numbers to end-Sept saying revenues rose 14.4% to £7.7m and adjusted operating profit was 5.9% higher at £1.8m.
• Vianet reports PBT +10.5% at £0.99m with EPS of 3.05p, up 36.16% and an unchanged interim dividend of 1.7p.
• Vianet reports Smart Machines’ growth has continued with 5,427 new unit sales. Post the H1, the group has extended a contract with EI Group. Chairman James Dickson comments ‘I am pleased to report that the Group’s IOT platform investment and focus on growth areas has resulted in a 6% year on year increase in operating profit for the six months to 30 September 2018. In addition, the Group’s high level of recurring revenue has been further strengthened by growth in the Smart Machines division, and the overall prospects for the second half look increasingly assured.’
• Vianet says its ‘medium to long term prospects are exciting as we increasingly demonstrate that our strategy of leveraging the power of our cutting-edge technology to bring valuable business insight to our customers is the right one.’
• Vianet concludes ‘we have a solid financial platform for further expansion and development. The Board is confident that the Group is capable of delivering sustained growth.’
• Some chunky discounts still available out there as we run into December. Prezzo is 40% off mains, Giraffe is 2-4-1 on mains, Café Rouge & Bella Italia are offering a second main for £1 (about 45% off), Restaurant Group’s Frankie & Benny’s is offering 30% off mains and Pizza Express is 25% off.
• Patty & Bun Holdings has reported overdue full year numbers to end-November 2017 to Companies’ House saying that the group opened 3 new restaurants during the period & that it had 8 as at 30 November 2017.
• Patty & Bun reports a loss before tax of £770k (2016: £352k) on revenues up 43% at £8.8m. The group says that it continues to be funded primarily by its shareholders.
• Patty & Bun’s operating loss was 8.4% of sales, up from 5.7% of sales last year. The group has lost some £1.1m since incorporation but still has positive shareholders’ funds of £6.6m.
• EI Group yesterday bought back 241k shares at 185.1p each.
• Times reports that the former marketing chief of Patisserie Valerie ‘is suing the troubled bakery chain for £325,000 in a claim over the non-payment of bonuses that is critical of the company’s management.’
• Patisserie Holding’s shares remain suspended almost two months after the group was found to have presented misleading information. Its CEO and CFO have gone. The latter is being investigated by the police. The group is reported to be parting company with its auditors, Grant Thornton (which is being investigated by the Financial Reporting Council) but chairman Luke Johnson has remained with the company.
• Mike Ashley is reported to have said that Chancellor Phillip Hammond’s help for the high street announced in the budget was the ‘work of a child’.
• UKHospitality has reacted to the Government’s consultation on banning plastic straws and stirrers, with Chief Executive Kate Nicholls stating: ‘We are fully supportive of measures to cut plastic waste, but a mandatory ban on the use of plastic straws in such a short timeframe would cause problems for the sector. Imposing a ban in such a short space of time may undermine measures that are already in place and increase burdens and costs’.
• The BBPA has also commented on the government’s plastic straws and stirrers, with Chief Executive Brigid Simmonds stating: ‘It is important we all do our bit to reduce plastic waste and that is why we welcome the Government’s proposals to ban plastic straws and stirrers. To help pubs reduce their plastic waste we have already produced guidance for licensees as well’.
• Frontier Pubs, the partnership between Ei Managed Investments and pub operator Pioneer Hospitality, have opened two new venues in London.
• Unilever has announced it is set to acquire the Health Food Drinks portfolio of GlaxoSmithKline in India, Bangladesh and 20 other predominantly Asian markets.
• Robinson’s Brewery acquires The Seacroft, a popular 120-cover pub in Anglesey, from Fleurets.
• Mike Ashley has told the committee for housing, communities and local government that a 20% tax on online sales is the best measure to save bricks-and-mortar stores. Ashley said ‘The high street has to change what it offers consumers. What people were doing before will not be right now and I can guarantee will not be right in the future.’
• Altria, maker of Marlboro cigarettes, is in talks to acquire Cronos, a Canadian marijuana company. Shares in Cronos were up 14% on Monday, giving the company a market cap of $1.9bn.
HOLIDAYS & LEISURE TRAVEL:
• A Business Travel Show survey claims nearly a third of corporate travel buyers increased their use of serviced apartments in 2018, up from 20% in 2017. The number one reason given by buyers for using serviced apartments was ‘better value for money’, followed by convenience.
• Research by Great State shows that 52% of UK holidaymakers are not loyal to any one provider. Thomas Cook, Tui, Booking.com and Expedia were found to be the four most trusted brands.
• Minoan raises £525,000 before costs through a placing of 21m shares. In addition, Minoan has agreed to settle liabilities totalling £250,000 by the issue of a further 10m shares.
• Kiran Jagdev has been jailed for six months and banned from Jet2 for life after being drunk and disruptive on a flight.
• Riots in Paris sent French economic and tourism stocks down with supermarket Carrefour and highway operator Vinci the worst affected, down by 2.1% and 2.6% respectively.
FINANCE & ECONOMICS:
• HIS Markit has reported that the UK’s Manufacturing PMI rose to 53.1 in November from 51.1 the prior month. it says ‘the November PMI provided a lacklustre picture of the UK manufacturing sector, as ongoing global trade tensions and Brexit uncertainty weighed on current business conditions and dampened the outlook for the year ahead.’
• Markit reports ‘manufacturers…reported a further decrease in new export business as slower global economic growth and Brexit worries took a bite out of foreign demand.’
• Donald Trump seems to be pausing in his undeclared trade war against China. China is reported to be cutting the 40% tariffs that it puts on American cars.
• Sterling down at $1.2724 and €1.1207.
• Oil down at $61.90
• UK 10yr gilt yield down 4bps at 1.32%
• World markets all up yesterday. Far East higher in Tuesday trade.
o UK will be ‘indefinitely committed’ to EU customs rules if Brexit talks break down says chief law officer Geoffrey Cox.
o There is a case to be heard as to whether the UK government is in contempt of parliament in not revealing its legal advice confirms Commons Speaker John Bercow.
o EEF confirms manufacturers are stockpiling goods ahead of Brexit next March.
o The EEF says ‘the moderation in manufacturing performance over the course of this year appears to have gathered pace during the final quarter, with more clouds on the horizon than there have been for some time.’
o Yvette Cooper has written in the Evening Standard that Mrs May’s proposed deal is a ‘blindfolded Brexit’. Law officer Geoffrey Cox has said that the government is proposing a ‘calculated gamble’ as to the UK being able to work to its own rules at any stage in the future.
PRIOR DAY LATER TWEETS:
• Later tweets: Beer sales in UK up 4.4% in Q3. First rise in 15yrs. Helped by weather & World Cup but hey, don’t look a gift-horse…
• Michael Gove says may be People’s Vote if MPs reject Mrs May’s partial Brexit. SNP says to suspend Brexit process
• Suggestions that Mrs May is misguided, Bridge over the River Kwai-esque & absorbs humiliation, relabeling it as strength
• Pat Val sued for £325k in unpaid bonuses per Times. Group’s shares remain suspended, little new news on accounting irregularities etc.
• Bitcoin below $4k. Was $20k. People getting rich quick via the poorhouse. Dotcom feel to it. Could be right, 10yrs later…?
• Gove tells Marr wd be undemocratic to vote on Brexit now that details are known. Says Leave would win but not prepared to test that belief
START THE DAY WITH A SONG:
Yesterday’s song was Strange Fruit by Billie Holiday. Today, who sang:
And if young Nigel says he’s happy,
He must be happy
He must be happy in his work
RETAIL NEWS WITH NICK BUBB:
Travis Perkins (Wickes): As the well-timed feature in the Times yesterday on the decline of the DIY market flagged up, the Travis Perkins strategy review today announces that it wants to simplify its business by focusing on trade customers and its core merchanting activities. Rather than axe the Consumer Division, however, the most immediate decision is that the Plumbing & Heating Division is going to be sold off. But Wickes DIY has not escaped, as the plan seems to be to improve its performance before selling it: “The Board will also look to review the options for maximising the value of Wickes in the medium term”.
Today’s Press and News: There was plenty to talk about yesterday, including the row at Ted Baker about the “hugging” regime (which sent the shares down by 15%) , the appearance of Mike Ashley before the High Street Select Committee and the profit warning from McColl’s (which sent their shares plunging by 30%), but Mike Ashley’s demand for a 20% Online sales tax gets the most headlines today.
BRC-KPMG Retail Sales for November (the 4 weeks to Nov 24th): Despite the apparent success of Black Friday, we expected another pretty flat LFL sales outcome for November overall and we weren’t far out, as the outcome was -0.5% (after +0.2% LFL in August, -0.2% LFL in September and +0.1% LFL in October). The key Food/Non-Food LFL sales split is, as usual, buried in the 3-month moving averages (of +0.8% and -1.0% respectively), but the Food Retailers look to have improved slightly last month (after a dull October) and probably saw modest growth in line with the +0.8% LFL 3-month average, which would imply that Non-Food dropped back again last month, with LFL sales about 1.5% down overall. That weak Non-Food performance last month was held back by two bad weeks before Black Friday, although Black Friday week itself seems to have been good (as seen in the John Lewis weekly sales trends). In
News Flow This Week: Tomorrow brings the Joules pre-close update, along with the SMMT New Car sales figures for November and the FTSE Quarterly index review (in the evening). Thursday brings a Ted Baker trading update and the Signet Q3 results out in the US, whilst the ABF (Primark) AGM is on Friday.