Greene King, Xmas, discounts, costs, new openings etc.:

A DAY IN THE LIFE:

Wifi problems with new laptop have taken the edge off our good humour this morning.

Anyway, I must make a note-to-self not to stumble into Boots again next Christmas. It’s like Hell but, as the perfume counter is placed near the door in order to ensnare panicky present buyers, it probably smells better. On to the news:

GREENE KING – XMAS UPDATE & 36 WEEKS TO DATE:

• Good managed performance over Christmas. Tenanted profits slightly lower.

• Greene King has updated on Christmas trading (for the 36wk period to 6 Jan) saying that LfL ‘sales were up 3.2% following strong trading over the Christmas period as we continue to trade ahead of the market.’

• GNK says ‘LFL sales in the last two weeks, covering Christmas and the New Year, were up 10.9% and we achieved record Christmas day sales of £7.7m.’

• The group says ‘all sales categories saw LFL sales growth over the last six weeks with our Greene King branded Local Pubs driving strong drink sales growth. Last year’s additional investment in Value, Service and Quality continues to underpin our performance.’

• GNK comments ‘Pub Partners LFL net profit was down approximately 1% while total beer volumes in Brewing & Brands were up 1.8% and own-brewed volumes were down 2.3%.’

• GNK says ‘our cost mitigation programme is on track to limit net cost inflation to £10-20m.’

• Re new pubs, GNK says it remains ‘on course to dispose of 100-110 pubs and open around nine new pubs in the financial year.’

• The group has been bought back £62m of Spirit A5 bonds to date.

• GNK concludes ‘while the ongoing uncertainty around Brexit may still have an impact on consumer confidence and spending during the year, we remain confident of our outlook for the financial year.’

• The group says ‘we remain focused on our strategic priorities of driving profitable sales growth, developing a more streamlined and efficient organisation, and further strengthening and improving the flexibility of our capital structure to deliver long-term value for our shareholders.’

PUBS & RESTAURANTS:

• Comments from GNK above confirm us in the view that Xmas was good but, given the weather comps & the shape of the kids’ holidays in 2018/19, the readacross for the rest of the year may be limited.

• Still, groups did have a Christmas and, as they can only play the ball that they are bowled, they will have been relieved and please to have banked so much cash.

• Year on year wholesale foodservice price inflation reached 6% in November, the highest level during 2018, research from the CGA’s and Prestige Purchasing’s Foodservice Price Index has indicated. Inflation was led by the milk, cheese and egg categories, with these subsections rising as much as 13%. Shaun Allen, Chief Executive of Prestige Purchasing, commented: ‘These latest inflation figures show how volatile the supply markets continue to be within the foodservice and hospitality sector, and it is only anticipated to become more challenging as we head into 2019 with the outcome of Brexit still to be determined’.

• Research from Pragma has found that the dining at home market has grown 73% over the last ten years in the UK to a value of £4.2bn. However, Pragma suggests that the industry may be approaching maturity as aggregators look to consolidation, Just Eat’s takeover Hungryhouse, and the likes of Amazon pulling out of the sector completely in 2018.

• Pragma commented that with Uber Eats’ UK expansion and JustEat’s development of its own delivery fleet, meal delivery platforms are becoming evermore undifferentiated. Pragma speculated that this market development may enable restaurants to negotiate harder with delivery partners.

• Discounting hitting new highs with Café Rouge and Bella Italia (both CDG) offering 50% off mains, Toby & Harvester (M&B) offering 40% off and Zizzi & Prezzo both also offering 40% off. Pizza Express is 2-4-1 on mains (50% off) as January starts to bite.

• January will seem like a long month to payday as consumers spent up over a good Xmas & a longer than usual period during which the kids were off school.

• Sour dough pizza offer Three Joes is aiming to raise some £400k via crowd funding in order to open a third restaurant. The group opened a first unit in Fareham, Hampshire in August 2017 and a second in Winchester in July last year.

• Chipotle will open its seventh site in London and second in the City of London on King William Street.

• The Morning Advertiser has found that people who abstain from drinking in January, often drink less in the following month too, with drinking visits per week falling from 4.3 to 3.3.

• Chief Executive of SIBA, Mike Benner has commented on the NHS’ new ‘Long Term Plan’ on alcohol, stating: ‘We know the vast majority of people in the UK drink sensibly at home and in the pub. Sadly, it’s a fact that a small percentage of people in the UK abuse alcohol and consume dangerous amounts of cheap, strong booze. This relatively small number of ‘frequent fliers’ are responsible for most of the repeat alcohol related admissions to hospital. These people need targeted help, and independent brewers will welcome this new measure to deliver the support these people need, and to reduce pressure on the NHS’. 

• Drinks Business has reported that Michael Saunders, chief executive Bibendum expressed concern at the potential January sales of London restaurants, commenting: ‘Having a drink has got very expensive; it is now £9 after service for a glass of wine – that is a lot of money’.

• In the US, Pizza Hut plans to expand its beer delivery program to 300 restaurants in seven states by mid-January. This follows a successful pilot in parts of Arizona and California.

• Whitbread will open its eighth Bar + Block Steakhouse on 8 February in Wimbledon. The concept had a successful 2018 roll-out in Nottingham, Aldgate and Leamington Spa. 

• Livelyhood acquires Gigalum in Clapham South with plans to turn the site into a new neighbourhood pub for Spring 2019.

• EI Group yesterday bought back 266k shares for cancellation at 193.4p.

• Kona Grill Inc. has been informed by the Nasdaq Stock Market that it hasn’t complied with market rules and could be facing delisting, as the group’s market cap has fallen below $15m.

• Aldi reports it sold nearly £1bn of goods in the UK in December, with premium ranges proving popular. Sales were up 10% yoy in the week beginning 17 December.

HOLIDAYS & LEISURE TRAVEL:

• Which? Travel’s annual airline survey has ranked Ryanair as the worst airline in the UK for the sixth consecutive year, with an overall customer score of 40%. Jet2 emerged top of the pack with an overall customer score of 75%. 

OTHER LEISURE:

• Jung-Ju Kim, founder of Korean gaming company Nexon, has announced his intention to sell his controlling interest for around $9bn.  

• Disney reveals production costs for Mary Poppins Returns were nearly £100m, with the film bringing in £30m from the British box office since it was released two weeks ago.

• Samsung Electronics is expected to announce a 29% decline in quarterly operating profits as demand for smartphones and memory chips slow.

FINANCE & ECONOMICS:

• UK car registrations fell 6.8% during 2018 as a whole in what was a second year of decline. Private, fleet and business registrations all fell in 2018, with the biggest losses felt in the fleet sector (down -7.3%).

• A survey commissioned by the TUC has suggested that Britain’s household debt mountain has reached a new peak. UK households now owe an average of £15,385 to credit card firms, banks and other lenders.

• Sterling up at $1.2763 but down at €1.1151

• Oil $57.25

• UK 10yr gilt yield down 2bps at 1.26%

• World markets: UK & Europe lower yesterday with US up. Far East higher in Tuesday trade.

• Brexit. Little certainty as MPs return to the debate. Teresa May says vote will go ahead on 15 Jan.

PRIOR DAY LATER TWEETS:

• Later tweets: Overall feel that Xmas & very early Jan traded well. But kids back to school later skewing some numbers. This week poss more representative

• Discounting picking up. Toby & Harvester (M&B) 40% off, Pizza Hut 41% off food, Pizza Express 2-4-1 (about 50% off) etc. etc.

• Back to ‘normal’ with H of Commons debating Brexit before voting on Mrs May’s deal 15th. Vote will ‘definitely happen’ says Mrs M (again)

• SMMT: UK new car registrations down 6.8% in 2018 in 2nd year of decline. Sales in Dec down 5.5%. Private, fleet & business sales all down

START THE DAY WITH A SONG:

Yesterday’s song was James Brown’s I Got You, today who sang:

Arrest this man,

He talks in maths

He buzzes like a fridge

He’s like a detuned radio

RETAIL NEWS WITH NICK BUBB:

3.9%, MYSL -1.3%).

Morrisons: Ahead of today’s Christmas trading update (for the 9 weeks to Jan 6th), we flagged yesterday that the house broker, the estimable Shore Capital, expected a slowdown in Retail LFL sales growth to just 0%-0.5% and we also noted that Morrisons had launched a new price promotion, cutting the prices on 900 basic lines by 20%. Well, the LFL sales growth outcome was 0.6%, albeit a footnote says that that includes Morrisons.com sales and that Morrisons.com sales through Ocado CFCs contributed 0.4% in the period. As for the new price cuts, they’re not even mentioned in the statement, so they can safely be discounted as normal seasonal stuff. Total LFL sales growth of 3.6% included 3.0% from Wholesale growth, enabling Morrisons to boast about “A fourth consecutive Christmas of growth” (and say that “Our 2018/19 year-end expectations are unchanged”). Interestingly, Morrisons says “As has
been widely reported, there was a change in consumer behaviour during the period. Morrisons performed well, sustaining a strong offer and trading the business hard for customers. We were again more competitive, with the price of our basket of key Christmas items the same as last year. Customer satisfaction increased significantly”.

Grocery Market Share Watch: The latest Kantar/Nielsen grocery sales figures (for the 4/12 weeks to Dec 29th/30th) come out at 8am.

Joules: Ahead of the interims on Jan 23rd, Joules has, as scheduled, come out with a Christmas trading update to confirm that the Joules brand continued to perform well over the last 7 weeks, with gross Retail sales up by 11.7%, driven by strong Online growth. There is no mention of gross margins, but, reassuringly, “the Board remains confident in the group achieving full year 2019 PBT in line with its expectations”.

Footasylum: Today’s update wasn’t scheduled, although some news was expected this week. Unfortunately the news from the struggling Footasylum (the joint worst performing stock in the sector last year) is bad, with total revenue up 14% but gross margins even lower than expected.

News Flow This Week: After today’s Morrisons update, the Food Retail focus continues tomorrow, with the Sainsbury Q3 figures, the Greggs Q4 and the Majestic Wine trading update. Tomorrow also brings the Ted Baker update, the Shoe Zone finals and the Topps Tiles Q1. Then on “Super” Thursday we get the BRC-KPMG Retail Sales figures for December, the much-awaited Marks & Spencer Q3, the Tesco Q3, the JLP update on Waitrose/John Lewis trading, the B&M Q3 figures, the DFS update, the Mothercare Q3, the Card Factory update and the Debenhams AGM update. Friday then brings the Moss Bros update and the AO.com Q3 update, whilst QUIZ should also be announcing by the end of the week.