Langton Capital – 2019-02-01 – Comptoir, CAKE, discounts, consumer confidence, o/seas hols etc.:
Comptoir, CAKE, discounts, consumer confidence, o/seas hols etc.:
A DAY IN THE LIFE:
Minus two & a bit of snow this morning and the dog has decided that, despite him being just one down from a St Bernard when it comes to breed-types, he doesn’t like it.
He’s checked the front door, the back door and now the front door again and the snow, a bit like the insistence from Brussels that a long-laboured deal is a deal, isn’t going away just because he wills it so.
So now he’s trying to guilt me out for not having the foresight to have a chunk of the front garden roofed whilst I’m just thankful that his bladder takes up about 50% of the internal space of his body & am safe in the knowledge that, if needs be, he can keep his wee wee to himself for an indeterminate length of time.
I pity the poor tree that he visits later this morning, though. On to the news:
The sell off of sites…
• Patisserie Holdings is ‘increasingly likely to be sold off in chunks’ reports the FT. The paper says ‘its unreliable accounts [are] deterring even those bidders that specialise in distressed companies.’ We would suggest that the legacy issues, not least the threat of litigation and suggestion from KPMG that the accounts cannot be relied on, mean that a buyer would be taking on a large (and unknowable) risk were it to buy the company as a whole.
• The net worth of a PLC can be well below zero as Dominic Chappell found out when he bought BHS.
• FT says neither Mike Ashley nor Rcapital have made formal bids. Bids need to be in by noon today.
• Parcels of stores may be of interest to trade buyers. Some of the 70 closed stores are said to be under offer, despite high levels of rent. Buyers will be getting a chunk of the refit costs for free. Though agent Savills may demand premiums for some well-located sites with F&E (toilets, kitchens, extraction etc.) already in place. This, of course, only if the rent is not too high.
Related party transactions:
• Patisserie Holdings Chairman Luke Johnson & its CEO Paul May have been revealed as the ultimate owners of the group’s Tunbridge Wells site.
• A glance at the accounts when all of this blew up did not disclose any related-party transactions. But nor did it throw up the second set of options sold by Messrs May and Marsh last year.
• The Tunbridge site is owned by Tunbridge Freeholds, a company equally held by Messrs Johnson & May. There is no comment as to the rent.
• The FT says that the related party transaction, which is disclosable under law, was not considered material. The Telegraph suggests that the c£40k rent p.a. on the store was never actually paid. This would leave the landlords queueing up with other creditors.
• Blog Investors’ Champion continues to dig into the group’s accounts, companies on which Messrs Johnson, May & Marsh serve as directors etc.
PUBS & RESTAURANTS:
• Discounts extending beyond Jan payday. 50% offers (or near equivalent) & 2-4-1s offered by Carluccio, Pizza Express, Giraffe, Café Rouge, Bella Italia, Frankie & Benny’s, Chiquito. Prezzo 40% off, Pizza Hut 41% off, Jamie’s 30% off & ASK 25% off.
• Fair enough, we’re only just pasy payday but, if consumers are ever going to feel ‘flush’ in the period from about 2 Jan to 27 Feb, then this is the week. Plastering consumers with 50% off deals when they’ve just been paid could set the bar rather low for later in February.
• GfK reports that UK consumer confidence held at minus 14 in January, the same as December. The rate is 5pts below that in the same month last year. GfK says ‘we’re feeling slightly more confident about our personal finances, thanks to the effect of strong employment, low interest and inflation rates, and rising household incomes. However, concerns about the wider economic prospects for the country continue to weigh and depress the Overall Index Score.’
• GfK reports minus 39 for the ‘General Economic Situation over the next 12 months’
• Comptoir Group has updated on FY trading saying that it was ‘in line with market expectation with the expected strong finish to the second half of the year.’ The group says ‘two additional Comptoir Libanais sites successfully opened in 2018; Birmingham (March) and London Bridge (November). The Company also opened its second franchise site with HMS Host in Cheshire Oaks (November). The Company ended the year with 27 managed restaurants and 4 franchise sites.’ Comptoir concludes ‘the Company retains a strong balance sheet and the Directors continue to be excited by the prospects of the Group.’
• The Savills Leisure Property Forum has been told that experiential concepts could be significant users of retail space over the coming years. This is true but it’s a question of scale. You won’t find enough axe-throwing bars or trampoline centres to fill the void left where phone, CD, DVD, games, electrical & clothing stores used to be.
• Savills says that the ‘experiential’ market (probably a number of pretty discreet markets) is fragmented. It says there are 170 separate operators, across 340 locations meaning that ‘the market is diverse and fragmented with only three brands occupying more than 10 sites.’ The units will need to make a profit at some point. A glance at Companies House shows that a number of operators are currently struggling to do so.
• London’s Night Time Commission has stated that the high street could be saved by the use of empty space for exhibitions, live performances and pop-up markets. The Mayor of London, Sadiq Khan, said: ‘London’s night-time economy is integral to our success as a city – employing 1.6m and contributing billions to our economy. It plays a huge role in the daily life of Londoners and is a big draw for visitors to our capital, but for too long it has been an afterthought. I’m determined that London is a city that works for all, 24-hours a day, and that’s why I’ve been working hard to champion the night-time economy and asked the Night Time Commission to help realise our ambitions’.
• Commenting on the same topic as above, Kate Nicholls Chair of the London Night Time Commission said: ‘like the Mayor, we believe the capital can be so much more at night – with more chances to shop, to rest, to explore, to innovate and to grow. We can extend the opening hours of our traditional cultural offerings to reach more Londoners and we can bring underused spaces to life at night and help tackle the decline of our high streets. To do this we must improve planning for the night and that’s why we want to see every borough, with the support of the Mayor, set out a positive vision for their night-time economy, to drive forward improvements at all hours and retain the special character of each area’.
• UKHospitality has also welcomed moves to help promote the late-night sector, with Late Night Consultant Jon Collins stating: ‘Late-night hospitality is a crucial part of the wider sector and nowhere is that more apparent than in the capital. The report provides a clear framework for partnership work to ensure the sector continues to thrive and achieves even more’.
• The Chief Executive of the BBPA, Brigid Simmonds commented on the London Night Time Commission report: ‘High streets in boroughs across the city are an important part of London’s economy, but many are struggling. We therefore welcome this report by the London Night Time Commission, which recognises the vital role the night-time economy can play in revitalising London’s high streets’.
• Evening Standard launches platform to help counter harassment, bullying and discrimination in the hospitality workplace.
• Heineken and the East London Pub Co have invested £2.2m into the Gun in Spitalfields London, the most the group has ever invested in a single pub from its Star Pubs & Bars estate.
• Dark Star, the Sussex based craft brewer, has installed a new canning line at its brewery site in Partridge Green, with Managing Director, James Cuthberston stating: ‘It’s fantastic to have a customised canning solution installed at the brewery. The new line allows us to be as fanatical over the quality of our canning process as we are over the brewing process. We will also have the freedom to can many more of our beers throughout the year and there are already plans in place to work alongside key retailers to produce some bespoke products’.
• Aunt Bessie’s will open its doors on National Yorkshire Pudding Day (3 Feb) to show fans its production site which produces 639m Yorkshire puddings a year.
• The Treasury select committee launches an inquiry into the impact of business rates policy, examining whether alternative tax systems might be more appropriate. Alternatives would include a tax based purely on land values.
• Ei Managed Investments venture, the Old Spot Pub Company, will open two sites in February, taking the venture to seven sites in total.
• The chicken restaurant Yard & Coop is expanding into Yorkshire with a site in Leeds.
• MatchPint reports 11,513 rugby fans have already used the app to find a pub showing the Six Nations opener, England vs Ireland. This marks a 101% increase on last year.
• Crussh extends its 100% vegan trial at its Soho site, adding new plant-based breakfast lines to its menu.
HOLIDAYS & LEISURE TRAVEL:
• CEO of Etoa, Tom Jenkins, warns of chaos for Brits at EU borders in the event of a no-deal Brexit. Jenkins said the EU will ‘impose [passport] checks that run 60 90 seconds longer than now… arrivals will soon back up spectacularly.’
• The World Tourism Association for Culture and Heritage (WTACH) has been created to tackle the effects of over tourism as global tourism continues to grow.
• Hotstats reports UK hotel profit per room increased by 6.7% in December, driving 1.6% growth in GOPPAR for 2018.
• Travel Trade Gazette reports an increase in the number of bookings before the Brexit deadline day.
• STR reports US hotel occupancy down 0.6% to 58%, ADR down 0.3% to $124.05 and RevPAR down 0.9% to $71.93 for the week ending 26 Jan.
• Uber suspends its service in Barcelona after the Catalan government imposed a 15-minute delay before passengers could be picked up. Spain’s Cabify has also suspended its services after the new regulations.
• Paddy Power has announced the purchase of Adjarabet, the Georgian online market-leader in betting. CEO Peter Jackson comments ‘this bolt-on acquisition is in line with our strategy of establishing podium positions in attractive online markets. Adjarabet’s leading brand presence and strong management team has established it as the clear number 1 in the fast-growing, regulated online Georgian market. Together with our Group’s technology and sports capabilities, we are confident that Adjarabet will be strongly positioned to continue to build on this success’.
• PayPal reports Q4 revenue of $4.2bn, slightly below analyst expectations. However payment transactions rose 28% in the period, driven by the acquisitions of iZettle and Hyperwallet.
• Hollywood Bowl opens a new site at intu Watford bringing the company to 59 sites. The entertainment centre represents an investment of £2.4m.
• Macau gambling revenues fell 5% in January to $3.1bn, marking the first decrease in two and a half years.
• The government will publish a review into telecoms security in March, recommending whether Huawei should be banned from UK networks.
FINANCE & ECONOMICS:
• Jamaica welcomed a record 4.3m tourists last year.
• US Fed now in a ‘wait and see’ mode.
• Chinese factory output contracted for a second month in January.
• Italy is now officially in recession having recorded a second quarter of negative growth.
• UK car industry on ‘red alert’ as investment halves in 2018 over 2017.
• Nationwide reports house price growth of just 0.1%, the lowest in 6yrs and well below inflation.
• Sterling down vs dollar at $1.3096 but up vs Euro at €1.1453. Oil down at $60.91. UK 10yr gilt yield down 4bps at 1.22%. World markets mixed.
• Brexit etc.:
o Europe still apparently saying no.
o Foreign Sec Jeremy Hunt says “extra time” may be needed to get a deal across the line. Downing St says an extension to Art 50 is not being considered. Sir Graham Brady says he could ‘accept’ a delay, provided a deal had already been agreed.
o PM aiming to woo Labour MPs by paying money into ‘deprived areas’ that voted for Brexit. FT suggests Mr Corbyn would like to see Mrs May’s deal pass in a move that would allow him to blame the Tories for any subsequent problems.
o UK & Chile said to have signed a ‘continuity agreement’ re trade.
PRIOR DAY LATER TWEETS:
• Later tweets: Stale CAKE. Bids by Friday, but who will buy? Litigation, legacy issues etc overhanging. Some, perhaps many, sites are over-rented
• Cheaper food post Brexit? Perhaps. But 1) UK farmers could go bust & 2) is it food, chlorinated chicken etc., that you’d want to eat?
• Tyson Foods, one of the US’s biggest poultry companies, recalls 16 tonnes of chicken nuggets contaminated with blue rubber
• GfK says UK consumer sentiment held at minus 14 in Jan, same as Dec. But 5pts below this time last year. Says it’s a case of ‘wait & see’
• Nationwide says house prices up 0.1% in year, down c2% in real terms. Real price falls due to ‘uncertain economic outlook’
• Eve Std platform counters harassment, bullying & discrimination in hospitality workplace. Some faced strikes etc but deny pay poverty wages
• Chinese factory slowdown, EU slowdown, US slowdown, UK slowdown. Theme emerging? It’s 10yrs since last recession….
• UK car industry on ‘red alert’ as investment halves. Brexit issues combine with wider economic slowdown to exacerbate concerns
• Discounts post Jan payday. 50% or 2-4-1 at Carluccio, Pizza Express, Giraffe, Café Rouge, Bella Italia, Frankies & Chiquito
START THE DAY WITH A SONG:
Yesterday’s song was I Melt With You by Modern English. Today, who sang:
Lately, nothing seems to be going right,
Solo, why do you have to get so low
You’ve been waiting in the sun too long
RETAIL NEWS WITH NICK BUBB:
ScS: The sofa retailer ScS has just announced that it has pulled out of the discussions about buying the struggling Online furniture retailer Sofa.com. Does that mean that “Mad” Mike Ashley has bought instead?
Consumer Confidence Watch: Yesterday’s GFK Consumer Confidence survey for January showed that the overall index was surprisingly stable, at -14, despite the political chaos in Westminster. Joe Staton, the Client Strategy Director at GfK, said: “We’re feeling slightly more confident about our personal finances, thanks to the effect of strong employment, low interest and inflation rates, and rising household incomes. However, concerns about the wider economic prospects for the country continue to weigh and depress the Overall Index Score”. But polling was done in the first half of the month and February’s poll is unlikely to be so phlegmatic…
BDO High Street Sales Tracker: We flagged on Wednesday that sales at John Lewis dipped last week, but today’s BDO High Street Sales Tracker for medium-sized Non-Food chains for last week, w/e Sunday Jan 27th, is still pretty good, with BDO Fashion sales up by 5.5% LFL (including Online), despite the cold weather. Total BDO LFL sales (including Homewares and Lifestyle sales) were up by 4.0% last week (down 2.3% in Store sales and up by as much as 29.4% Online).
News Flow Next Week: As we move on inexorably into February, there are a couple of uncertainties about next week: one is when the slightly delayed Carpetright Q3 trading update will come out and the other is whether Ocado and M&S will be in a position to say something about their rumoured deal before the Ocado finals on Tuesday. Otherwise, the focus will be on the BRC-KPMG Retail Sales figures for January first thing on Tuesday and the monthly Kantar/Nielsen grocery sales figures a bit later on Tuesday morning. And Thursday brings the Superdry Q3 update and the latest MPC interest rate meeting/Bank of England Inflation Report.