Langton Capital – 2018-12-13 – TUI, TCG, discounts, Restaurant Group, Pernod & other:
TUI, TCG, discounts, Restaurant Group, Pernod & other:A DAY IN THE LIFE: As we enter the Festive season, it’s worth remembering that goodwill can only go so far as we moved offices earlier in the year and, much to our discomfort, the block next door has just been demolished and is to be rebuilt over the next two, five or ten years, the timetable dependent on how optimistic we’re feeling. And the noise has obliged us to invest in ear-protectors and a decibel reader so that we can complain when the noise reaches certain levels and generally agitate in order to make out views known. Our windows are caked with dust and we are Mr Unpopular with our landlord, the City of London and the contracting company making all the noise and, as you might expect, our Christmas cards from all of the above are very much stuck in the post with what bonhomie there is manifested by simply glaring a little less fiercely at one-another. Anyway, there’s still stuff going on our there so, without further ado, let’s move on to the news: PUBS & RESTAURANTS: • Discounts still prevalent in the run up to Christmas. Beefeater & Brewer’s Fayre (Whitbread) 33% off, Prezzo (CVA) 40% off, Frankie & Benny’s (Restaurant Group) 30% off mains. Pizza Express 25% off, Harvester (M&B) 33% off, Nicholson’s (M&B) 25% off. Café Rouge (CDG) 30% off. • Restaurant Group rights issue closes today, result (and stock left with underwriters) announced tomorrow morning). • EI Group yesterday bought back 304,834 of its own shares for cancellation at 178.4p per share. • The US hedge fund Elliott Management has taken a position ‘in excess of 2.5%’ in Pernod Ricard. The hedge fund has recently mentioned that Pernod Ricard’s track record in merger and acquisitions had been ‘disappointing’. • Naked Wines has stated that Fiano and English wine have the greatest potential for growth. The group also commented that investment in Prosecco has fallen by around 26% since 2016. • Springboard, the analyst firm, has stated that they believe high street footfall will again fall this month, following the 3.2% decline in November. The group anticipate that this may be fatal for several straggler high street companies. • Time Out Group has announced that it has signed a conditional lease agreement for a new Time Out Market in Waterloo London. The Time Out Market will anchor a £200m redevelopment of 135,000 sq ft within Waterloo station. Julio Bruno, CEO of Time Out Group plc, said: ‘London was the birthplace of Time Out in 1968 so it is a true milestone to bring Time Out Market to our city and in such a fantastic location. For 50 years we have of the city to Time Out Market London’. • Vietnamese restaurant group Pho has reported an increase in turnover of 17.7% to £30.5m in the year ended 25 February 2018. The group opened four sites in the year and is looking to continue with expansion plans into the new year. • Research from Allegra has shown that coffee-focused chains have grown 6% in Europe to 33,745 units. Costa Coffee is Europe’s largest cafe group with an 8.7% market share. • Facebook IQ’s second annual ‘topics and trends report’ has found that mentions of soul food are on the up. The report commented: ‘Among the cuisines being revamped on a grand scale, soul food is getting some major attention from healthy eaters working to emulate rich, soul-warming dishes’. • Neilsen’s has reported that everyday 3.4 billion consumers connect to the internet and spend an average of six and a half hours online. TUI GROUP FULL YEAR NUMBERS: • TUI reports full year numbers to end-Sept saying it has achieved the ‘fourth consecutive year of double-digit earnings growth post-merger, with 10.9% increase in underlying EBITA and continued strong ROIC performance.’ • TUI says its ‘sustained strong performance in a challenging market environment demonstrates its successful transformation as an integrated provider of holiday experiences, with strong strategic positioning and double diversification across destinations and markets.’ • Revenues +5.3% at €19.5bn with underlying EBITA up 4.1% at €1.147bn. Full year dividend of 72c up from 65c last year. • TUI reports ‘looking ahead, we continue to expect to deliver superior annual earnings growth with improved seasonality, strong cash conversion and strong ROIC performance. This will be driven by the benefits of our digitalisation efforts, efficiency measures and differentiation strategy through the disciplined expansion of own hotel and cruise offering, plus destination experience content.’ • TUI specifically says ‘we reiterate our guidance of at least 10% CAGR in underlying EBITA for the three years to FY20.’ The group says ‘in the nearer term, we expect to deliver at least 10% underlying EBITA growth in FY19 with growth from investments, digitalisation and efficiency, as well as our double-diversified business model, helping to mitigate market challenges.’ • TUI says ‘as previously flagged in our Q3 results and pre-close trading statement, the ability of Markets & Airlines to outperform was limited by the prolonged hot weather this Summer in Northern Europe and significant levels of airline disruption, in what continues to be a challenging market environment.’ • Re Brexit, TUI comments ‘with regard to the UK’s exit from the EU in 2019, the main concern remains whether our airlines will continue to have access to EU airspace.’ It says ‘we are currently developing scenarios and mitigating strategies for various outcomes, including a “hard Brexit”, depending on the political negotiations, with a focus to alleviate any potential impacts from Brexit for the Group.’ HOLIDAYS & LEISURE TRAVEL: • Thomas Cook has stated that they did not implement their strategy quick enough this year resulting in them having ‘a turnaround to do’ in 2019. E-commerce director Phil Gardner told Travel Weekly Business Breakfast: ‘The lates market hit us this year. We need to be stronger in managing our commitments and have already made changes in that area. We also need to be faster at executing our strategy around our own-branded product. We’ve had a good start for bookings next year, and have confidence in 2019, but need to focus on margin and profit’. • Leeds-based Rothgen Group get the green light to develop a 104-bedroom four star eco-resort in Tyram Lakes, Doncaster. • UN climate change executive secretary Patricia Espinosa calls on the travel and tourism sector to reduce its carbon footprint through innovation and sustainable practices. • Senior travel industry figures denounce the ongoing political instability as ‘a shambles’ but insist they have seen no signs of an impact on bookings. • A disruptive passenger has been ordered to pay Jet2 £3,000 after her actions meant the flight had to be diverted to Faro instead of its destination, Gran Canaria. • Forecasts predict lower oil prices and solid economic growth will increase the global airline industry’s net profit to $35.5bn in 2019, up from 2018’s $32.3bn. Passenger numbers are estimated to increase to 4.59bn in 2019, up from 4.34bn in 2018. FINANCE & ECONOMICS: • RICS says uncertainty and gloom about Brexit likely to hit the UK housing market well into next year. Balance of surveyors believe that home prices will fall over the next three months. RICS says ‘it is evident from the feedback to the latest RICS survey that the ongoing uncertainties surrounding how the Brexit process plays out is taking its toll on the housing market.’ • Sterling $1.2616 and €1.1097 • Oil $60.44 • UK 10yr gilt yield 1.28% • World markets all up yesterday. Far East up today. • Brexit etc.: o Mrs May survives attempted coup as the: my job > Tory Party > the UK economy game plays out. Votes against maybe higher than anticipated as secret ballot flushes out dissatisfaction. o BCC reacts to further uncertainty with ‘utter dismay’. Wounded Mrs May heading to Brussels for EU summit. EU says it will not renegotiate the PM’s semi-Brexit that has the support of only around 15% of voters. Mrs May maintains that she is ‘delivering what the British people voted for.’ o As others see us: Laura Kuenssberg BBC: ‘the prime minister who promised she would be strong and stable is instead at the top of a party that looks weak and chaotic.’ BBC – for some Europhobes, no deal would ever have been good enough. De Telegraaf (Netherlands) quoting Dutch MEP says ‘the future relationship between the EU and the UK is too important to leave to a generation of politicians who have placed their personal and party interests above the national interest.’ PRIOR DAY LATER TWEETS: • Later tweets: Fulham Shore ends H1 with more stores, more revenues, more EBITDA, more profit and less debt. Must be doing something right • DP Poland says trading tougher. Unsure on 2019. Aggregators causing it problems. Shares off sharply. • Tory civil war re Europe goes back to at least the 80s. Knives out for Mrs May. Certainty still in very short supply • Wage growth suggests interest rates would be going up if it weren’t for all the other nonsense that’s going on START THE DAY WITH A SONG: Yesterday’s song was Roads by Portishead, today who sang: You’ve been learning, Um baby I been learning All them good times baby, baby RETAIL NEWS WITH NICK BUBB: Sports Direct: The much-awaited Sports Direct interims show decent underlying 15.5% growth in pre-exceptional EBITDA (helped by reduced losses in the US operations), but the overall performance is depressed by a huge loss in House of Fraser since acquisition and the company has warned that the full-year profit outcome will be held back by House of Fraser (aka the Harrods of the High Street)… Ocado: The Online Grocery market has been slowing down, but the Q4 update from Ocado today (for the 13 weeks to Dec 2nd) reports respectable sales growth of 12.0%, although much of that must be driven by the huge new Erith CFC opening… Bonmarche: Another huge profit warning today from the struggling womenswear chain Bonmarche may be dismissed as a company specific problem, but management say “The current trading conditions are unprecedented in our experience and are significantly worse even than during the recession of 2008/9”.
Christmas Party Watch: Tonight’s Asda Christmas Drinks reception for press and analysts has apparently been cancelled and perhaps that is understandable in view of the evident tension between Sainsbury and the CMA over the Asda merger plan that was revealed yesterday. But last night’s Marks & Spencer Christmas drinks for the press was also cancelled and that is more interesting…Apart from the distraction of the Tory party leadership vote, the obvious reason is that M&S were not keen to have to answer questions about the future of the embattled CEO of M&S, Steve Rowe, and the unpopular new M&S Food MD, Stuart Machin (in the wake of the news that the former Sainsbury boss Justin King is to be a non-exec Director on the M&S Board with effect from Jan 1st). But the fact that pre-Christmas trading must be very difficult, in both Food and Clothing, must have also been a |
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