Langton Capital – 2018-12-20 – Cannabis, CAKE, access to labour, discounts, Brexit etc.:
Cannabis, CAKE, access to labour, discounts, Brexit etc.:
A DAY IN THE LIFE:
I note that 7 of my 10 most frequently-used phone numbers on my mobile have the same surname as I do.
And, as our family isn’t named Smith or Jones, it’s a fair bet that they’re relatives leading me to ponder whether 1) I have a large family or 2) I have no friends.
Or both, of course, as the former is pretty much a given and the latter seems to be suggested by the evidence.
But here we have an illustration as to the folly of jumping to conclusions because the ‘friends’ (and business contacts, for that matter) may simply be being squeezed out and find it hard to capture a ‘share of voice’ against a garrulous hoard of braying Brumbys.
And it’s true that friends, colleagues and business contacts rarely ring to ask if I can lend them a tenner, make sure that the bins get put out, remind them whether the Skoda takes petrol or diesel or ring the vet because the rabbit has a sniffle.
Hence, perhaps some sort of exchange rate should be applied, one ‘friend’ call is worth two, five or ten ‘relative’ calls but, in the end, who knows?
Anyway, just a few working hours left until we can draw stumps for the year. On to the news:
PUBS & RESTAURANTS:
• AB InBev has announced a partnership with Tilray to research non-alcohol beverages containing cannabis extracts. The group says ‘the research partnership combines AB InBev’s deep experience in beverages with Tilray’s expertise in cannabis products. AB InBev’s participation will be through its subsidiary Labatt Breweries of Canada, one of the country’s founding businesses and its leading brewery.’
• AB InBev says ‘Labatt is committed to staying ahead of emerging consumer trends.’ The company adds ‘our innovative drive is matched only by our commitment to the highest standards of product quality and responsible marketing. We intend to develop a deeper understanding of non-alcohol beverages containing THC and CBD that will guide future decisions about potential commercial opportunities.’
• Telegraph reports that spending online on Christmas Day itself could top £1bn this year for the first time ever.
• Sky reports that Patisserie Holdings is to replace auditors Grant Thornton with the the UK’s eighth-biggest accountancy firm, RSM. Sky says ‘the appointment will come after a frantic search in which some of the larger accounting firms declined the chance to tender for Patisserie Holdings’ audit contract.’
• The BBPA says ‘we welcome the Immigration White Paper and its recognition that migrant workers play an important role in the UK economy. Greater flexibility shows the Government has been listening to the beer and pub sector as well as the wider business community.’ The BBPA adds ‘overall, the Immigration White Paper is more positive step than had been anticipated for Britain’s beer and pub sectors and addresses some of our key concerns. However, there are still some major challenges to address in terms of salary thresholds, costs and affordability and we look forward to building on it through consultations and discussions with the Government moving forward.’
• UK Hospitality takes a less-positive view of the White Paper saying ‘the central plank of Government’s immigration policy, to cut off lower-skilled migration with a salary threshold, is fundamentally flawed and will damage the hospitality sector and the wider UK economy. It also does little to build bridges with our European friends.’
• UK Hospitality adds ‘we need the Government to keep to its word, listen to business over the next 12 months and realise that these proposals will be crippling for business, and Britain’s high streets in particular. An immigration policy that recognises the contributions of migrants of all skill levels is one that works for Britain.’ It says ‘the introduction of 12-month temporary visa could risk creating a dual workforce, with those permitted to stay being invested in and those on temporary visas unable to plan or progress. This could prove a significant drag on productivity.’
• Worth acknowledging: Today’s discounts-available email from Vouchercodes.co.uk was much, much longer than usual. It focussed, for obvious reasons in the week before Xmas, on clothing, fashion & accessory offers but there were plenty of restaurant deals to be had, too.
• Pernod Ricard is to invest in African online retailer Jumia in a move to expand its product offering to consumers in the continent. The company says ‘our business relationship with Jumia traces back to 2016 with the successful launch of Jumia-Party, Jumia’s e-commerce platform based on the catching idea ‘We deliver. You Party’, and centred on consumption moments.’
• Foodservice Equipment Journal reports ‘high street foodservice chains are placing advance orders for critical pieces of catering equipment to ensure their 2019 expansion plans aren’t dented by any fallout from Brexit.’ This will tie up working capital in the short term.
• Government has approved £2bn to be spent on preparations for a no-deal Brexit. The WSTA says it is ‘absurd that we are still in a position where businesses are without clarity and confidence that the UK will not crash out of the EU without a deal.’ Pro Brexit Tim Martin has said that a no-deal Brexit would be ‘better for the UK economy and for the drinks industry.’
• AB InBev is to use 100% solar power for its breeries in the UK.
• Nestle announces $154m investment in a new Mexican coffee facility, with the ability to recover 100% of coffee waste to produce energy.
HOLIDAYS & LEISURE TRAVEL:
• Gatwick’s runway remains closed after two drones were seen nearby, sparking a string of delays and diversions. Passengers due to travel have been warned of possible large delays and have been asked to check the status of their flight before coming to the airport.
• On The Beach claims Brexit will have limited impact on 2019 holidays, with 86% surveyed saying they plan to take the same number of holidays abroad or more in 2019.
• Abta estimates more than 4.7m people will travel overseas for Christmas and New Year, with demand to peak on Friday. More than 1m are due to depart from Heathrow alone.
• Tony Roberts, chairman of Clia UK & Ireland, urges agents to boost demand from the 10 million Brits that have ‘the ability’ to cruise. Roberts also said the number of British cruise passengers in 2018 looked set to exceed the 2 million mark.
• Both the UK government and the European Commission reiterate that flights will continue between the two even in the case of a no-deal Brexit.
• STR reports US hotel industry occupancy up 0.4% to 61.7% in November, with ADR up 1.2% to $124.22 and RevPAR up 1.6% to $76.69.
• Uber loses its court appeal to consider its British workers as self-employed, meaning that as workers they are entitled to minimum wage among other rights.
• Flywheel Sports, the boutique cycle studio, has pulled plans for a sale of part of its business after it failed to drum up enough interest. Flywheel has seen sales growth slow since it first launched in 2010.
FINANCE & ECONOMICS:
• The UK rate of inflation slipped to 2.3% in November from 2.4% in October. The fall was driven by the biggest month-on-month fall in petrol prices for more than three years.
• Despite treaties from President Trump to hold them, the US Fed yesterday raised interest rates in the US by a further quarter point to 2.5%. Betting is now on only one raise next year (formerly two).
• Bank of England to opine on UK interest rates later today. Very likely to be no change.
• The UK is set to fall from the 5th largest economy in the world to the 7th next year on the back of a slowdown in growth attributed to currency weakness partly due to Brexit related uncertainty. India and France will overtake the UK.
• PwC says ‘the UK and France have regularly alternated in having the larger economy, but subdued growth in the UK in 2018 and again in 2019 is likely to tip the balance in France’s favour. The relative strength of the euro against the pound is an important factor here.’
• Sterling down at $1.2633 and €1.1095
• Oil down at $56.34
• UK 10yr gilt yield up 1bp at 1.29%
• World markets. UK & Europe higher yesterday but US lower. Far East down in Thursday trade.
• Brexit – daily chaff:
o Amber Rudd says a People’s Vote could become a “plausible” way forward if there is deadlock in Parliament.
o Certainty still in short supply. No further clarity though plans for a no-deal Brexit are to be ‘ramped up’.
o FT comments ‘for decades, the Conservative party has basked in its reputation as the champion of business. But in the past 24 hours, Theresa May’s government has done a remarkable amount to dent that record.’ This due to the prospect of a no-deal Brexit & the hard line on immigration.
o How is cautioning that economic growth could slow in post-Brexit Britain Project Fear but saying there will be rioting on the streets if there is a People’s Vote not?
BREXIT – WHAT GOES AROUND…
Apologies to the authors, but we’ve been here before, haven’t we?
• Dickens on Brexit – ‘it was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way.’
• Buffett on Brexit – ‘a public opinion poll is no substitute for thought.’
• Shakespeare on behalf of Mrs May – ‘I am in blood stepped in so far that should I wade no more, Returning were as tedious as go o’er.’
• Lt Col Nicholson (Bridge over the River Kwai) – ‘there’s no order, no discipline. Our task is to rebuild the battalion.’
• Definition of a fool’s errand. The deviton of time and money to a task that has no hope of success.
And as others see us…
• Der Spiegel. Britain’s ‘leaders have bumbled their way into catastrophe…An entire country is degrading itself.’
• NBC – ‘this could end very badly…’
• Washington Post: ‘There’s no Good Way Out of the Brexit Disaster’.
• Der Spiegel – UK is ‘Isle of Madness’.
PRIOR DAY LATER TWEETS:
• Later tweets: Discounting still in crazy town. Two for ones, 33% off, etc in the week before Xmas. Heaven knows what Jan will be like.
• MA quoting JDW staff saying their strike against the company got them extra cash. Says more to go for at many other JDW venues.
• Auditors take more care post CAKE collapse, accounting scandal, fraud, incompetence etc? See (relatively benign) comment re Revolution Bars
• ICAEW forecasts UK GDP growth at 1.2% this year, lowest since 2008. UK economy to slip behind France & India next year per PwC
• Political incompetence taking toll of businesses (just give us certainty) as UK to slip behind France & India next year (from 5 to 7)
• Gov waits 900 days through 1,000dy Brexit process to ‘ramp up’ no deal Brexit plans. Then goes on holiday for two weeks
• Playing w fire? No-deal Brexit, turmoil, election, Labour gov & exchange controls to lock us in to some Dantean existence for decades?
START THE DAY WITH A SONG:
Yesterday’s song was Boys That Sing by Viola Beach today who sang:
• Kept it at bay,
• Yes you kept your words
• There on your mouth
• But it’s not what I heard
RETAIL NEWS WITH NICK BUBB:
• Carpet Watch: The United Carpets chain of 60 stores is a tiny quoted company, with a market cap of only £5m (mind you, Carpetright’s market cap is just £55m these days), but they have announced surprisingly robust trading this morning with their interim results to end Sept. After falling nearly 2% in the first half, because of the hot summer/World Cup distractions etc, LFL sales have been flat over the last 11 weeks and the CEO says “recent trading performance has shown some more encouraging signs which, if sustained, should result in a better second half result and a reasonable outcome for the year”.
• Planet ONS Watch: Despite the boost from Black Friday, the overall outcome for the BRC-KPMG Retail Sales figures for November (the 4 weeks to Nov 24th) was pretty subdued, but we will, belatedly, find out at 9.30am what “seasonally adjusted” life was like last month on the High Street on that strange parallel world, the Planet ONS (aka the Office of National Statistics), via their official Retail Sales figures…City economists generally expect a 0.3% rise in month-on-month seasonally adjusted sales volume, although Capital Economics have pencilled in a 0.5% increase in November (to give year-on-year volume growth of 2.1%), for what it’s worth. We will be focusing, as usual, on the year-on-year non-seasonally adjusted sales value figures and the split between Large Businesses and Small Businesses (as the ONS persistently thinks, despite all evidence to the contrary, that the latter are
• News Flow This Week: There is no more UK company news scheduled from retailers this week, but out in the US Walgreen will report its Q1 results today, which will put the spotlight on good old Boots the Chemist (now run by the estimable Seb James). On the UK Economics front, we get the delayed CBI Distributive Trades survey for “December” at 11am this morning, shortly after the belated ONS Retail Sales figures for November (see above). The widely followed monthly GFK UK Consumer Confidence survey is out first thing tomorrow.