EasyHotel, Thomas Cook, restaurant capacity, PMIs etc.:

A DAY IN THE LIFE:

Was in Hull yesterday and couldn’t help noticing that all day parking was only £1.

Which is cheap but, as I knew the barrier in the alternative car park that I used wasn’t working, that proved to be cheaper still and, as every Pound is a Prisoner, the extra 100yds walk (albeit in the pouring rain) was arguably worth it.

Anyway, it’s time for the news but if you would like to come off this email list please simply hit the unsubscribe button above. Similarly, if you are getting it forwarded and would like to go on directly or if you would like to recommend it to one of your colleagues, please just hit the subscribe button and/or suggest that your colleague does too.

RESTAURANT CAPACITY – OVERALL NUMBER DOWN.

• CGA & Alix Partners have reported that the number of restaurants in Britain slipped by 2.0% over the year to September 2018.

• Key findings are that indie restaurant numbers are down, chain restaurant numbers are still on the rise. We would suggest that some of these opening decisions will have been made a year or more ago and the move will be towards fewer openings going forward.

• The Market Growth Monitor is pointing to more than 10 closures a week. Some 539 restaurants closed in the year leaving the UK with 26,892 at the end of September. Definitions as to what is a ‘restaurant’ are always a cause for debate.

• The Growth Monitor says there hase been ‘a clear divide in the restaurant sector’s fortunes in 2018. Independently-owned restaurants fell in number by 2.6% in the year to September—but managed restaurants recorded a modest increase of 1.0%, despite news of closures and CVAs from some leading casual dining brands.’

• The Monitor suggests ‘family-owned Chinese, Indian and Italian restaurants have borne the brunt of closures’.

• Restaurant numbers are up 7.7% since September 2013. But the Monitor suggests that ‘after several years of spectacular growth, supply is clearly now settling back to levels that more accurately reflect demand, at the end of a year characterised by rising food, property and people costs, fierce competition and signs of saturation in some areas.’

• The total number of licensed premises stood at 118,905 at September 2018—a 3.2% fall year on year. The Monitor suggests ‘pubs and bars have closed at a faster pace than restaurants, with numbers tumbling 11.3% in the last five years—equivalent to around 24 closures a week.’

• There are more closures in rural areas than in cities and the North of England has seen less of a decline than the South. CGA’s Peter Martin reports ‘the eating out sector has been one of the UK economy’s biggest success stories of the last decade, with casual dining brands growing at a phenomenal rate. But as our latest Market Growth Monitor shows, there are clearly limits to the country’s capacity. We have seen a steady flow of pub and bar closures for many years now, but the restaurant sector is now going through its own clear out.’

• AlixPartners finds a silver lining saying its numbers ‘illustrate that space remains for ambitious and innovative businesses to expand in areas outside of London. Pockets of growth are still to be found for businesses with a highly differentiated offer and strong focus on the guest experience.’

PUBS & RESTAURANTS:

• UK services PMI in big miss at 50.4 in Nov versus 52.2 in Oct.

• HIS Markit reports ‘a number of firms noted that heightened Brexit uncertainty had led to delays with clients’ business investment decisions.’

• HIS Markit reports that service input cost inflation ‘eased to a six-month low during November. Where an increase in operating expenses was reported, service providers generally commented on higher fuel costs and rising staff salaries.’

• EI Group has reported the re-purchase of an additional c238k shares for cancellation at around 181.4p per share.

• Time Out Group has reported that it has ‘entered into a management agreement with CRESTYL Group to open a new Time Out Market in Prague, the capital city of the Czech Republic.’

• This is Time Out Market’s second management agreement. The group says ‘within just a few years, Time Out Market has become a recognised and visionary global brand in the hospitality sector – we are very proud to bring Time Out Market to the beautiful city of Prague.’

• The BBPA has welcomed research that indicates that the UK brewers are amongst the biggest and best in Europe, with Brigid Simmonds, Chief Executive of the association, stating: ‘We should be proud that the UK is one of the biggest producers of beer in Europe, brewing 10% of all the beer produced. Considering that we pay some of the highest tax on beer in Europe, this is no mean feat’.

• Riders for Deliveroo are not allowed to collectively bargain, the High Court has ruled. Mr Justice Supperstone found that Deliveroo riders are not ‘in an employment relationship’ with the firm, therefore the entitlement to collective bargaining did not apply.

• New research has found that out-of-home food delivery is set to increase in the UK with the market set to reach £5bn in 2019.

• Department store sales have fallen 7.1% y-o-y in the month of November, representing a 13th consecutive month of decline, data from Barclaycard users’ spending has found.

• Heineken is believed to be targeting the coffee shop sector for a roll out of its Blade draught system, which offers zero alcohol beer Heineken 0.0, Coffee Business World has reported.

HOLIDAYS & LEISURE TRAVEL:

• EasyHotel has reported full year numbers to end-September suggesting that it has had a ‘transformational year delivering strong revenue and earnings performance.’ The group has ‘accelerated pipeline growth with increased focus on European expansion.’

• EZH reports revenue up 33.7% at £11.3m with PBT of £0.87m (2017: £0.86m). EPS is 0.5p per share (2017: 0.7p when fewer shares were in issue) and the total dividend for the year is 0.22p (2017: 0.33p).

• EZH reports owned hotel REVPAR up 11.4% with LfL franchised revenue +12.1%. The group opened 9 new hotels during the year. CEO Guy Parsons reports ‘despite the wider macro-economic uncertainty that continues to impact consumer confidence, particularly in the UK, we have grown market share for the third consecutive year.’

• EZH says ‘with funds available for future hotel development, we believe easyHotel is well positioned for long-term growth, and will continue to outperform its competitors.’

• Thomas Cook shares rallied 30% by lunchtime on Wednesday, as speculation about a possible rights deal appeared to subside. Despite a downgrade by credit agency Moody’s of both Thomas Cook’s debt and its probability of default rating renewed confidence sent the share to close at 29p.

• TCG NED Lesley Knox joined the group chairman in buying shares. TCG announced yesterday that Knox had purchased c209k shares at 22.6p.

• Re TCG. Directors can get things wrong. But, having said that, seeing directors purchase shares in their own companies is heartening. First, they are doing it to make money & should genuinely believe that their shares are cheap and second, perhaps more importantly in the case of TCG, they must not be aware of any material unpublished information – such as the planning of a Rights Issue.

• If TCG does not need to issue cash, then it’s shares look cheap. They were 146p earlier this year. They touched 19p intra-day earlier this week and are now around 34p. Only around a quarter of revenues come from the (margin-troubled) UK tour operating business. This is quite enough to cause problems (as we have seen) but it should perhaps be put in context.• Johan Lundgren, CEO of EasyJet, has said ‘We are supportive of a deal on aviation [being agreed] but even if there is no deal, the European Commission and Westminster have said they would be supportive of protecting traffic routes between the UK and Europe’.

• A new poll suggests UK holidaymakers will be more likely to opt for all-inclusive holidays due to ongoing Brexit certainty. 25% of  millennials said Brexit will impact their holiday-making decision.

• Gold Medal and Travel 2 report sales up 2% in 2018 driven by growth in cruise and core destinations despite soft touring sales.

• UK airlines support May’s Brexit deal despite political uncertainty. Tim Alderslade, CEO of Airlines UK, said ‘a withdrawal agreement is clearly in the interests of both the UK and Europe’.

• The US Travel Association reports travel to and within the U.S. rose 3.2% in October yoy, but said that it ‘projects that international inbound travel will continue to decelerate through April 2019’. International inbound travel to the US increased by 2.4% in October yoy. 

OTHER LEISURE:

• Remote Gambling Association members, including Bet365, Ladbrokes and Paddy Power, have voluntarily agreed a ‘whistle-to-whistle’ TV advertising ban. The ban comes after political pressure to stop betting adverts during live sports broadcasts.  

• Epic Games launches its own digital store buoyed by its star game Fortnite. The store will compete with other platforms such as Valve’s Steam and Blizzard’s Battle.net. Epic will give developers 88% of revenue generated – higher than most of its competitors.

FINANCE & ECONOMICS:

• Sluggish UK services PMI points to 0.1% growth in Q4 suggests HIS Markit. HIS says ‘a sharp deterioration in service sector growth leaves the economy flatlining in November as Brexit concerns intensified.’ It says ‘the surveys are so far consistent with 0.1% GDP growth in the fourth quarter, thanks to the expansion seen back in October, but growth momentum has since been lost and risks are clearly tilted to the downside.’

• HIS Markit concludes that the UK economy is at risk of contraction.

• The SMMT reports that British new car sales fell by 6.9 percent in the first eleven months of the year. Demand fell by 3.0 percent in November alone.

• Sterling higher vs dollar at $1.2713 but virtually unchanged vs Euro at €1.1204

• Oil unchanged at $61.08

• UK 10yr gilt yield up 3bps at 1.31%

• World markets lower yesterday. Far East down in Thursday trade.

• Brexit:

o Legal advise shows backstop plan risks a “stalemate” and “protracted rounds of negotiations” with EU. Ulster will effectively be treated differently from the rest of the UK on an ongoing basis.

o Mrs May denies she misled the House. Amber Rudd resigned earlier in the year for misleading her fellow MPs. DUP to vote against deal but support Tories in any confidence motion.

o Mark Carney has warned that the UK’s financial sector would suffer under a ‘Norway’ deal. Such a deal would not stop free movement.

o Liam Fox has said that MPs could steal Brexit from ‘the people’. It is hard to see how a democratic People’s Vote would somehow be undemocratic.

PRIOR DAY LATER TWEETS:

• Later tweets: Big ticket, small ticket. Consumers can maintain their lifestyle and may be forgoing big-ticket purchases to save money.

• Thomas Cook has announced that chairman Frank Maysman has purchased 373k shares in the company at 21.6p. No rights issue, then?

• HMG suffers three defeats in House of Commons. Suggestion that Mrs May is absorbing humiliation and relabelling it success.

• Toyota has warned that a no-deal Brexit would be ‘disastrous’. There is a difference between a scare story and a scary story.

• Government’s secret advice to be published today. Press smell a story. In the words of Avid Merion, let’s hope they didn’t say F— or B—

• After a strong revival in Black Friday week, trading at John Lewis slumped again last week, now down c3% LfL over 18wks

START THE DAY WITH A SONG:

Yesterday’s song was Stuck in the Middle With You by Stealers Wheel. Today, who sang:

Fifty feet tall and revved up too high,

All of our exchanges are by candle light

I just realized

RETAIL NEWS WITH NICK BUBB:

Ted Baker: Ahead of the much-awaited Ted Baker Q3 update today (for the 16 weeks to Dec 3rd), we flagged that the better than feared trading update from Joules yesterday provided some encouragement that Ted Baker’s trading update might also not be as bad as some had feared, despite the recent share price slump…And the headline of the statement is bullish: “Resilient performance despite challenging external trading conditions”. But a 0.4% fall in total sales (at constant currency) is way less than the City was hoping for, even if much of the shortfall can be attributed to the phasing of Wholesale deliveries. Retail sales were down about 3% LFL, but the company points to better trends in the last 8 weeks, thanks to more seasonal weather. Gross margins are said to have been in line with expectations, but there is no explicit comment on the profit outlook, so investors may be scratching
their heads until brokers get to review their forecasts. In other news, the company has confirmed that the law firm Herbert Smith will conduct the independent investigation into the conduct of CEO Ray Kelvin.

Big Ticket Spending Watch: In the light of the slump reported by GFK on Friday for “Major Purchase Intentions”, as part of its November Consumer Confidence survey, it was interesting to see that the SMMT New Car sales figures for November yesterday morning were only down 3.0% overall in volume terms, despite a 16.7% slump in Diesel sales and the continued supply uncertainty caused by the WLTP emissions tests. Mind you, buying a car these days is not exactly a “big ticket” purchase, given the plethora of low-interest finance schemes…

FTSE Index Watch: The latest FTSE Index Quarterly index review was announced yesterday evening, but, as expected, there were no significant Retail changes, ie Marks & Spencer (with a market cap of £4.7bn) isn’t yet small enough to drop out of the FTSE 100 index and potential challengers like JD Sports (market cap £3.7bn), B&M (market cap £3.4bn) and Howden (market cap £2.8bn) have dropped badly off the pace. One interesting move on the Reserve lists, however, was that the much shorted Pets At Home (market cap £640m) got back onto the list of potential entrants to the FTSE 350 index.

News Flow This Week: The Signet Q3 results will be announced out in the US this lunchtime. Tomorrow brings the ABF (Primark) AGM update.