Langton Capital – 2018-12-17 – Nov Tracker, Restaurant Group, EIG, Admiral, T Cook etc.:
Nov Tracker, Restaurant Group, EIG, Admiral, T Cook etc.:A DAY IN THE LIFE: It might just be my imagination, but I think that the car parks, including the one where we’ve picked up two, seventy quid fines for overstaying our welcome and shopping too much, are a little emptier than they were this time last year. And, if a relatively obtuse, non-shopper like me can notice such a thing, then that may be grounds for concern. I mean I simply wouldn’t notice a 2%, 3% or 4% decrease in usage so it may be a bit more than that. Just saying. The stats will come out one way or the other, that’s for sure. On to the news: NOVEMBER PUB & RESTAURANT TRACKER: • The November Coffer Peach Business Tracker covering pub & restaurant sales suggests that LfLs rose by 1.5% on the same month last year. Number still well below inflation and the level of sales needed by most operators in order to hold margins stable. • Tracker reports London better than the country as a whole at +2.3%. Pubs better than restaurants (again) • The Tracker says ‘both pub and restaurant operators saw positive sales during the month – with collective like-for-likes ahead 2.1% and 0.6% respectively.’ • CGA says ‘the November figures will be welcome for a market that has seen generally flat trading across the year, and operators will hope this upward trend continues into the festive season.’ • CGA comments ‘managed pubs have continued to trade better than the restaurant market, and especially in London where collective like-for-likes were up 3.1%. Restaurant chains also did marginally better in the capital, with sales up 0.9%, compared to 0.5%, but as the figures show remain under pressure from increased costs and tough competition.’ • Drink sales remain strong at +3.0% with a 0.6% rise in food sales across UK pubs. • Re capacity, the Tracker says ‘chains are continuing to open new sites, and although the rate of expansion has slowed there were more openings than closures among the Tracker cohort over the month.’ • F&B venues seem to be better than the High Street as a whole. RSM (a sponsor of the Tracker) comments ‘with retailers recently reporting the biggest drop in footfall for the month of November since 2009, the relative health of eating and drinking out is a better indicator of where the future of the High Street lies.’ Arguably, thought this below-inflation figure is better than High Street sales as a whole, the UK has quite enough restaurants as it is. • Coffer Group says it is seeing ‘an ever-increasing demand for public houses and indeed, late night licence bars, not only in the capital but across the country.’ Coffer says ‘the demand for restaurant space is increasing but is reflective of the current political uncertainty.’ • Total sales across the groups measured by the Tracker were +3.7% suggesting that new capacity is still running at 2% plus. • Sales for the cumulative last 12mths are up only 0.8%. This will not be enough to keep margins static. • Langton Comment: Whilst better than 1) recent numbers and 2) the High Street as a whole, growth of 1.5% (or just 0.6% for restaurants) will not be enough to keep pace with costs. • Margins are still falling and, as the Tracker suggests capacity is still going on, this is likely to persist for some time. • That said, there is room for winners. Nando’s, Franco Manca and, at least in its growth phase, Wagamama amongst them. PUBS & RESTAURANTS: • The Sunday Times has reported that a number of financial buyers have tabled second-round bids to purchase EI Group’s c370 commercial properties. • Camra has called on EIG not to sell the pubs to property developers. • Bridgepoint is reported to be opening its first Zizzi restaurant in Shanghai. • Restaurant Group will be promoted to the FTSE250 on Wednesday. The group’s purchase of Wagamama should complete on Friday. • Restaurant Group’s nil paid shars (the 8% not taken up by shareholders) were placed in a fully paid form at 125p per share on Friday. • The Restaurant Group now has almost a tenth of its shares shorted after its controversial £560m takeover of Wagamama. Shorters include Cigogne Management and Crispin Odey. • Admiral Taverns has reported full year numbers to 2 June saying it has generated a ‘robust financial performance against a challenging market backdrop.’ • Admiral says turnover is £67.7m with underlying company EBITDA of £23.5m. Underlying EBITDA per pub is up +4.2% compared to last year • Admiral CEO Kevin Georgel comments ‘in summary, this has been a very significant year for Admiral Taverns. The successes achieved from corporate activity, operational and commercial improvements and pub investment, not only reflect the excellent progress we have made against our strategy to be a leading operator in our field, but are testament to our unwavering commitment to the tenanted sector and our passion for supporting licensees to run successful, sustainable community pubs.’ • Admiral comments that ‘the current political and macro-economic uncertainty is inevitably impacting consumer and wider business confidence. Against this backdrop we believe that consumers are looking for affordable, authentic local experiences and that well-invested community pubs offering great value, quality and service, stand to benefit.’ The group reports ‘we are pleased to report that trading in the early months of the Group’s 2018/19 financial year has been ahead of the Board’s expectations.’ • The Springboard Charity is back in the West End for its annual pantomime. The performance will take place at the Leicester Square Theatre between 29 January and 1 February. • Loungers has reported full year numbers to 22 April to Companies’ House showing revenues of £121m and adjusted EBITDA of £16.7m. The group generated a PBT of £5.6m. • Sainsbury’s and Asda are reported set to push through price cuts with their suppliers in a move that could cut some prices to consumers by as much as 10%. A Sainsbury spokesman denied the suggestion that the two companies were ‘having discussions around hypothetical supplier negotiations’. • Head of Public Affairs and Communication at SIBA, James Calder has commented on the outcome of the Low alcohol descriptors consultation: ‘Keeping the low alcohol descriptors as they are is a huge missed opportunity. Given small, independent low alcohol beer producers are leading innovation in the category (and producing some really, really nice beers at 0.5%ABV and below) we thought that the time was right to change the descriptors to give consumers clarity and to reflect how the words are actually used. Why the Health and Social Care department has failed to listen to consumers, trade groups and specialists in low alcohol beers, we don’t know’. • Wine Intelligence has found that the number of people who have drunk wine in the last month has decreased by one million in just three years to 28.5m. • Diageo intends to build a new $130m distillery in Kentucky as demand for American whiskeys grow. • Starbucks plans to expand its trial with delivery to 2000 stores across the US, following a successful period in 100 units in Miami. • Research conducted by the British Beer & Pub Association has found that nearly 2,000 pubs in Wales will benefit from the Welsh Government’s decision to further invest in and extend the high street rates relief scheme in 2019-2020. • The Chief Executive of the Scottish Beer & Pub Association, Brigid Simmonds has commented on research that indicates that the change to the drink-driving limit has not reduced road accidents: ‘While the change in the drink-driving limit may not have reduced road accidents, it has definitely had an impact on the nation’s pubs with 340 closing since the introduction of the policy in 2014. Rural and suburban pubs have been particularly hard hit by the policy at a time when they already face a difficult economic climate, rising costs and shrinking profit margins’. • Moore Stephens reports the number of restaurants filing for insolvency has nearly doubled over the last eight years. In 2017/18 restaurant insolvencies were up 24% yoy to 1,219, being described at ‘epidemic’ levels. • EI Group Friday bought back another 294,590 of its own shares for cancellation at 181.55p per share. • Cat Rock Capital, a 2% holder of Just Eat, criticises the online food delivery platform as ‘the worst-performing public equity’ in its sector. The hedge fund urges Just Eat to shed assets, change pay incentives for senior execs and announce three-year financial targets in the next month. • Camerons Brewery reports up revenue up to £74m in the year to 29 April 2018 with EBITDA down to £5.6m compared to £6.4m the year before. • Laura Ashley will close around 40 stores in the UK with plans to expand its presence in China. • Carlsberg has bought a 28.5% stake in Super Bock Group owner Viacer. • Zonal, an EPOS provider in the UK hospitality sector, announces key changes in its senior leadership team. Sales & Marketing Director, Clive Consterdine, is retiring, with Zonal set to split the role into two. Kara Purves will take marketing while Tim Chapman will take sales. HOLIDAYS & LEISURE TRAVEL: • A No 10 spokesperson denies reports that people will be warned not to book holidays beyond March 2019. Abta says ‘The European Commission has said that even in a no-deal scenario, flights will still operate between the UK and EU, and a visa is not required.’ However, Britons would still have to apply for an ETIAS costing €7. • Thomas Cook CEO Peter Fankhauser has purchased another 172,117 shares in the company at 29.05p per share. • CGA’s 2018 Hotel Report shows that Britain’s number of licensed hotels has fallen by 4.1% in the last year. The report claims food and beverage brands are an increasingly vital element of hotels’ strategies and offer significant potential for growth. • Moët Hennessy Louis Vuitton acquires Belmond hotel group for over £2bn, with the transaction expected to complete in H1 2019. • Business has lost influence on politicians according to Tim Montgomerie, a former Times columnist, saying ‘ It will have to work harder to stay at the top of the political agenda.’ • Southeat Asia ride-hailing firm Grab receives a $150m investment from Yamaha Motor in Series H funding. The round targets $3bn with investors featuring Toyota, Hyundai and Microsoft. • GTC Travel Group reports British student group travel to China up 30% this year with trends expected to continue to rise in 2019. FINANCE & ECONOMICS: • Jaguar Land Rover is to cut up to 5,000 jobs in the New Year. • NIESR has reported that the rate of wage inflation could pick up further. It sees 3.5% during H2 next year. This will potentially feed through to prices. • Sterling down vs dollar at $1.2583 but up vs Euro at €1.1127 • Oil down at $60.20 • UK 10yr gilt yield down 4bps at 1.25% • Brexit etc.: o Pantomime season in full swing. Tories canvassing for a People’s Vote (say Sky, Sunday Times etc.), oh no, we’re not say Mrs May & a few loyalists including Damian Hinds. Sunday Times says a second poll is being ‘secretly prepared’. o General agreement that there is no willingness in Europe to re-open negotiations. FT says ‘the scale of the PM’s defeat in Brussels…has been impossible for her aides to disguise.’ o Red herring rows with Messrs Juncker and Blair manufactured to illustrate Mrs May as a handbag swinger? o Justice secretary David Gauke suggests he would quit if Mrs May seeks a no-deal Brexit. Serial businessman & job-creator Sir Richard Branson warns no-deal would “near bankrupt” the UK. o Brexiters (like Liam Fox, a medical doctor and Boris Johnson, a journalist) say oh no it wouldn’t. o FT says Mrs May threatened Angela Merkel, Macron, Juncker & Tusk with a no-deal Brexit if they didn’t make concessions. PRIOR DAY LATER TWEETS: • Later tweets: Restaurant Group Rights Issue takeup 92%. Good result, suggests nil paid shares ended up with holders wishing to take up Rights • Alcohol Change UK has commented that another 1.1m people are planning to participate in dry January taking the total to 4.2m. • Research from the NPD Group’s Pub Tracker has found that pub visits declined in the year ending September 2018 by 0.3% • Fulham Shore says Landlords ‘are in disarray’. LfLs (not given) ‘have been positive for 9mths’. • Times suggests ‘Parliament is in a sort of intellectual deadlock’. It says a People’s Vote could be the only way forward • Mike Ashley says trading in November was “unbelievably bad”. He says retailers risk being “smashed to pieces”. START THE DAY WITH A SONG: Last Friday’s song was Need a Dollar by Aloe Blacc. Today, who sang: Look at the stars, Look how they shine for you And all the things that you do RETAIL NEWS WITH NICK BUBB:
• ASOS: The share price of ASOS has been under some pressure recently, as if the City sensed that something might be amiss, but we certainly weren’t expecting the Online fashion giant to issue a huge profit warning today…Yet mighty ASOS has echoed Mike Ashley’s comment that November trading had been “unbelievably bad” by saying that “Although we delivered Q1 solid growth in sales of 14%, we experienced a significant deterioration in the important trading month of November and conditions remain challenging. As a result, we have reduced our expectations for the current financial year”. UK sales growth was 19% in the 3 months to end November, but ASOS say that this was only achieved with more promotional activity than planned. And with France and Germany slowing as well and notably weak sales in the Rest of the World region (mainly Australia presumably, although that is not spelt out in the
• Saturday Press and News (1): The Saturday’s papers had a lot of fun with the row between the embattled Theresa May and Jean-Claude Juncker over his description of the UK’s Brexit policy as “nebulous”, but there was plenty of Retailing news around to talk about as well. The Daily Mail actually led its front page with the sensationalist headline “Panic Sales to save the High Street”, flagging that “desperate stores are slashing prices by up to 80% in a High Street bloodbath” (the guilty party cutting some womenswear lines by 80% was, of course, Debenhams), although the Daily Mail has run these sort of scare stories before. But even the FT had a big article headlined “Bleak run-up to Christmas caps sorry year for stores”, following up on Mike Ashley’s much quoted comment that November trading had been “unbelievably bad”, with Paul Martin of KPMG noting that Black Friday had been like a
• Saturday Press and News (2): In other news, the Daily Mail, the Guardian and the Times all highlighted the Sky News story that Mike Ashley is also looking to buy Hamleys (as if he didn’t have enough to do as it is…), whilst the news that the disgraced/bankrupt Dominic Chappell has again lost his appeal over the fine for misleading the BHS pensions inquiry was widely noted (the Telegraph quoted him saying that he wished he’d never bought BHS, whilst the Guardian and the Times flagged that he blamed the beleaguered Philip Green). The Daily Mail and the Times market report both highlighted the Director share buying in Superdry after last week’s profit warning, whilst the Times market report also noted that the Odey hedge fund has been topping up its shareholding in Sports Direct. And the Times and the Daily Mail flagged that Sainsbury’s and Asda won their judicial appeal about the • Sunday Press and News (1): The row between “Mad” Mike Ashley and Debenhams got plenty of focus in the Sunday papers, with the main Business story in the Mail on Sunday headlined “Put your money where your mouth is Ashley!”, after Debenhams Chairman Ian Cheshire told the newspaper in an exclusive interview that Sports Direct should make a takeover bid if it wants to get control of the Debenhams business. The Mail on Sunday also quoted the leading fund manager Martin Walker, of Invesco Perpetual, as backing Ian Cheshire’s stance and quoted an anonymous industry boss as saying that Mike Ashley is “20% genius, 60% common sense and 20% bonkers”. However, the Business editorial in the Sunday Telegraph thundered that “if Christmas turns out to be the bloodbath predicted, Cheshire may find that the only alternative to insolvency is Ashley’s lifeline”. • Sunday Press and News (2): On a happier note, the Mail on Sunday had a profile of the boss of Aldi UK, Giles Hurley, noting his view that recent sales growth has been “incredible” and that 1 in 5 of all Christmas puddings bought this year will come from Aldi. Less happily, the Sunday Times had a big feature on the embattled boss of Kingfisher, Veronique Laury, flagging that she is “running out of time to fix Kingfisher” and that she is “falling short of her over-optimistic promises”. And one of the main Business stories in the Sunday Times was that the builder’s merchant Travis Perkins is looking to replace its veteran CEO, John Carter.
• Sunday Press and News (3): In other news, the Sunday Telegraph flagged that Sainsbury’s and Asda are planning a major squeeze on suppliers if the CMA approves their merger deal, the Mail on Sunday noted that the new boss of Laura Ashley is planning to move into the beauty spa business and the Sunday Times flagged that the menswear chain Blue Inc has gone bust again. The Sunday Times also flagged the accusation by one Property analyst that the embattled shopping centre business Hammerson has been fiddling its gearing figures through the way it accounts for its Designer Outlet joint ventures. And Oliver Shah of the Sunday Times flagged up in his column the pressure on Retail property funds caused by the collapse in the High Street and also weighed in on the row between Julian Dunkerton and the management of Superdry, thundering that “there is a chance that both are wrong”. Finally, the • News Flow This Week: The big focus for retailers this week should be on counting the takings, as the traditional late Christmas spending boom gets underway, so there is no company news scheduled, but, on the Economics front, we get the CBI Distributive Trades survey for “December” on Wednesday, the ONS Retail Sales figures for November on Thursday and the widely followed monthly GFK Consumer Confidence survey first thing on Friday. |
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