Langton Capital – 2018-12-10 – CAKE, Bread, footfall, Paris, Hollywood Bowl & other:
CAKE, Bread, footfall, Paris, Hollywood Bowl & other:
A DAY IN THE LIFE:
Shops on Sunday, what a treat.
But, as we lost our car in the carpark, it did prompt me to wonder just how many hours are spent by befuddled shoppers looking for their vehicles and clicking their remotes hopefully at any car of the same colour in the runup to Christmas?
I mean what, with I’m a Celebrity to think about, Hull City playing, the ongoing Brexit circus and all the rest, how was I meant to know where I’d put the thing, I mean really? On to the news:
PUBS & RESTAURANTS:
• The Times reports that the former marketing chief of Patisserie Holdings raised potential issues with the café chain’s finances to its board more than a year ago.
• Nicola Hedley, who is suing Patisserie Holdings for constructive dismissal, claims that she challenged the group’s revenue figures in summer 2017.
• The Times says the ‘case raises more questions about the management of Patisserie Holdings.’
• Patisserie Holdings shares remain suspended, its CEO and CFO have left the company, its accounts are being investigated by PwC, its finance director is being investigated by the SFO and its auditors, Grant Thornton, are being investigated by the body responsible for the probity of Financial Reporting.
• Sky News reported last month that the ‘ailing’ Patisserie Holdings was looking for new auditors to replace Grant Thornton. Chairman Luke Johnson is reported to be spending more time with the company.
• The Times quotes a spokesman for Patisserie Holdings as commenting ‘in July 2017, the board . . . was informed of an employment dispute involving Nicola Hedley. Employment claim details sent by her lawyer to some board members did not allege accounting irregularities.’
• The Luke Johnson led Gail’s Bakery has seen profits fall to £142,000 in the year to February 2018 down from £2m the year before per The Daily Mail. The group was revenue increase to £86.4m from £79m during the same period.
• The Daily Mail quotes ‘accounts filed at Companies’ House’ but a glance at the Co House website lists the accounts for the year to February are now overdue and have not been lodged.
• Bread had been for sale at figures rumoured to be up to £200m. This would have represented around 15x EBITDA or 2.5x revenue for the bread shops and bakery. It would have meant a PER of 50x or so but the sale was pulled back in October shortly after accounting irregularities at Patisserie Holdings emerged.
• The £200m was perhaps an attempt to anchor the valuation. Just our view but work done by Langton Capital had suggested that the company was perhaps worth considerably less depending on which measure was used and what view was taken regarding future profit growth. The Mail has suggested that, though revenues rose in the last year, profits have gone backwards.
• The ratings agency Moody’s has downgraded Pizza Express as pressure mounts on the group from debts, rising costs and high levels of competition. The agency commented: ‘The downgrade to the ratings of Pizza Express reflects declining profitability’.
• The analysis firm Springboard has found that November saw a 3.2% drop in footfall at shopping centres compared to last year. Commenting on the research, Diane Wehrle, marketing and insights director at Springboard, said: ‘Since 2013, when Black Friday became established as a key trading day, footfall has decreased in every year bar one and the only increase in 2017 was just +0.2%’.
• EI Group Friday announced that it had bought back another c299.5k of its own shares for cancellation at 178.4p.
• The BBPA has described non-alcoholic and low strength beers as ‘incredibly important’ to UK pubs. Kris Gumbrell, co-founder of pub group Brewhouse & Kitchen also commented: ‘We’ve seen in the popularity of session beers that the craft beer drinkers really enjoy beers with lower alcohol contents, so the natural progression would be to expand the low and zero alcohol beers’.
• Heineken has acquired a majority stake in the Spanish craft brewer, La Cibeles.
• Flipdish, the online ordering and loyalty platform for takeaways and restaurants, has completed a €4.8m Series A fundraising. CEO of the group, Conor McCarthy stated: ‘In the last 10 years there’s been a sudden shift in the importance of technology: people who used to phone takeaways to place orders, now will only order online’.
• Same-store sales in US restaurants have increased 1% in November, making it the sixth consecutive month of positive growth.
HOLIDAYS & LEISURE TRAVEL:
• Tui is pooling its resources across Europe in an effort to combat delays due to flight schedule disruptions.
• Paris police urged shops and restaurants on the Champs-Elysees to close over the weekend due to the ‘yellow-jacket’ protests.
• Airlines for Europe claims 2018 is set to be the worst year for air traffic control delays, driven by strikes and staff shortages. Full year stats, Eurocontrol estimates, are likely to show total delay minutes up 53% yoy to 14.3m in 2018.
• Tui withdraws an aircraft due to be based at Leeds Bradford airport, taking six routes off the market next summer.
• Uber is said to have filed the paperwork for an IPO, according to three sources. Uber’s valuation in its most recent private financing was $76 billion, and it could be worth $120 billion in an IPO.
• Per Hotstats, European hotels saw profit per room up 6.1% yoy in October, with the greatest margin on yoy growth in Munich.
• Heathrow has announced it will offer thousands of its European workers financial help in order to secure a place in the UK following Brexit.
• Hollywood Bowl Group has reported FY results to end-September saying that it has generated strong revenue and profit growth & that this has eneabled enhanced cash returns to shareholders.
• Hollywood Bowl reports revenues +5.8% at £120.5m with adjusted EBITDA of £36.2m (+8.3%) and PBT of £23.9m (+13.4%).
• Hollywood Bowl reports EPS +2.9% at 12.5p with a full year dividend (including a 4.33p special dividend) of 10.59p (+16.6%).
• BOWL reports four Bowlplex rebrands during the year and says ‘all 11 former Bowlplex sites [are] now rebranded as Hollywood Bowl centres and fully integrated into the estate.’
• BOWL CEO Stephen Burns comments ‘I am very pleased with the Group’s full year performance. Operating our business in line with our customer led strategy has delivered another strong revenue performance which, combined with our continued focus on cost management, has resulted in a year of record profits and significant operating cash generation. The investment into our high quality portfolio of 58 profitable centres continues to deliver significant, above target, returns. Our new centres are performing very well and we have secured a strong pipeline of new openings that will further enhance the quality of our portfolio.’
• BOWL concludes ‘we will continue to invest in the overall quality of our estate, in technology initiatives that enhance our industry-leading proposition and in initiatives to attract and retain only the very best talent, all with a view to continually improving the experience for our customers.’
• Alibaba has increased its holding in itss beleaguered movies group, Alibaba Pictures, to just over 50%. This follows the news that the head of the movie streaming group was ‘under police investigation in China for alleged acceptance of improper payments’.
FINANCE & ECONOMICS:
• The Halifax Building society has reported that house prices rose by 0.3% in the year to November. They fell by 1.1% in the three months to that date.
• Halifax reports ‘house price growth has slowed as we approach the end of the year, falling from 1.5% in October to 0.3% in November…this is the lowest rate of growth in six years.’
• The Halifax says the rate of house price growth, which is now well below inflation, ‘remains within our forecast range of 0% to 3% for 2018.’
• US jobs growth slowed in November.
• Sterling lower at $1.2729 and €1.1187
• Oil up at $61.40
• UK 10yr gilt yield up 4bps at 1.27%
• World markets: UK up on Friday, Europe & US lower, Far East mixed in Monday trade.
o PM, Stephen Barclay & others insist tomorrow’s vote will go ahead. Mrs May says there can be no ‘tinkering’ with her deal. Big government loss still the most likely outcome.
o Sky reports three of the largest donors to Leave (Peter Hargreaves, Jeremy Hosking & Stuart Wheeler, average age 71yrs) say that there will be no Brexit because politicians are ‘cowards’ and that the UK has been relegated to ‘subservient begging’. It is unclear just what they thought would happen.
o Guardian reports Cabinet split on whether or not to back a People’s Vote now that the results of negotiations are known.
o More resignations forecast in a number of sources
o Tories deemed by some to be unfit to govern. Lord Heseltine has said younger people ‘will never forgive us’ for the current Brexit mess.
o Amber Rudd has suggested a Norway deal. This would include free movement of people & an ongoing payment into EU coffers but would lack a seat at the decision-making table.
o Boris Johnson has said he will take ‘personal responsibility’ if jobs are lost as a result of a harder Brexit. It is not clear what this means.
o Daily Mail quotes PM as suggesting that the Cabinet is risking no Brexit and a Corbyn government.
PRIOR DAY LATER TWEETS:
• Later tweets: AlixPartners reports a 3.2% decline in the number of licensed premises over the last 12 months
• Cybermen spotted in Birmingham & Leeds as Escape Hunt launches ticket sales for its first Dr Who escape rooms
• Brexit winners lied & lied. Jockeying for position in post-Cameron Tory Party. Remainers complacent & bubble-bound. Plague on both blab la?
• Halifax says house prices +0.3% in the year to November. Now way below inflation. Down 1.1% QoQ.
• USA trade deficit widened to $55.5bn in Oct, Exports to China down 18%. What happened to that ‘easy-to-win’ trade war, Donald?
• Primark cautions ‘during November Primark trading was challenging in a tough retail market.’ That would be most recent trading, then?
• AlixPartners has licensed premises numbers down 3.2% over last year. That’s a net figure. Given level of openings, must be a lot of closures
START THE DAY WITH A SONG:
Last Friday’s song was Purple Haze by Jimi Hendrix, today who sang:
Funny how quick the milk turns sour,
Isn’t it, isn’t it
Your face has been looking like that for hours
Hasn’t it, hasn’t it
Promises, promises turn to dust
RETAIL NEWS WITH NICK BUBB:
• Saturday Press and News: The news that the embattled Ray Kelvin has taken a leave of absence from Ted Baker got plenty of coverage in Saturday’s papers, although there were some unhelpful and lurid headlines, following further allegations of misconduct (eg “So what has the VERY touchy-feely King of the High Street got to hide?” in the News feature in the Daily Mail). The Guardian also had a profile of Ray Kelvin (“Eccentric master of the “hug zone” with fashion in his blood”), with lots of wacky photos, whilst the Business editorial in the Times thundered that the decision to take leave of absence was “long overdue” and that the Ted Baker affair has been “a much-needed wake-up call” for British business. In other news, the Times and the Daily Mail picked up the Primark warning about tough trading in November, whilst the Times and the Telegraph flagged up the good trading reported on
• Sunday Press and News: The embattled Ray Kelvin remained in focus in the Sunday papers, with the Sunday Telegraph flagging that shareholder support for him is wavering and the Mail on Sunday highlighting that hedge funds have stepped up their short activity in Ted Baker. The Sunday Telegraph also flagged that short-sellers have ramped up their bets against Dignity (on the back of the CMA investigation) and that the Debenhams Annual Report & Accounts reveal that Debenhams’ bosses have missed out on big bonuses and share rewards (because of the poor performance of the business). The Sunday Times noted that the sale of the Online beauty business Feelunique (the “Amazon of beauty”) has collapsed and also flagged that Dixons Carphoneis likely to announce many more store closures in Wednesday’s Strategic Review. And the Sunday Times also had a big feature on “The nightmare before
• Today’s Press and News: The weak BRC/Springboard footfall figures for November and their gloomy forecast for December (down 3.2% and 4.2% respectively) get plenty of coverage in today’s papers, eg “Christmas gloom settles on the High Street” in the Times. And the main Business story in the Guardian is that the Brexit backing bosses of hedge funds like Odey and Marshall Wace have increased their short bets against High Street retailers. In terms of upcoming results previews, the Telegraph has a helpful “SWOT” analysis on Ocado, whilst the Times notes the problems facing Carpetright and Dixons Carphone, inter alia.
• News Flow This Week: The big focus this week will be on the Brexit Vote in the House of Commons scheduled for tomorrow evening, but there is plenty of company news to keep us busy, kicking off tomorrow morning with the Carpetright interims and the latest Kantar/Nielsen grocery sales data for the big supermarkets. Then Wednesday brings the Dixons Carphone interims/Strategy Review and the Superdry interims, followed by the much-awaited Sports Direct interims and the Ocado Q4 update on Thursday.