Langton Capital – 2019-02-04 – CAKE, business rates, Punch, tourist taxes, Gfinity & other:
CAKE, business rates, Punch, tourist taxes, Gfinity & other:
A DAY IN THE LIFE:
Actors and politicians, well some of the latter anyway, tend to interview well but, given their chosen profession, it’s hard to fathom whether you’re hearing from the real person or are being reflected the persona that they want you to see.
Hence actors want to save the planet and hug furry animals (whilst snorting coke and punching strippers of an evening) and politicians witter on about trade deals and the like from a position of almost complete ignorance but spend their free time drinking, gambling and doing other things that they wouldn’t want the vicar to know about.
Others, on the other hand, interview extremely badly but what you see is what you get. They’re bad pretty much all of the time. On to the news:
• The BBC has reported that redundant CAKE staff have not been paid for the last month that they worked at the company. Chairman Luke Johnson put a £3m loan into the company to pay the January payroll, but it is thought that this money went to employees in the units that have been retained by the company, rather than in the 70 units that have been shut.
• A spokesperson for KPMG says it is ‘providing them [the staff the company no longer wants] with support, including assisting with claims to the Redundancy Payments Service.’
• Sunday Telegraph reports Pat Val’s administrators, KPMG, are ‘blocking’ a deal with former Druckers boss David Scott.
• Scott will not be granted access to confidential information to allow him to proceed with a bid. Scott had reportedly been looking to rescue ‘at least’ half of the c120 stores that are still trading.
• KPMG reports ‘significant’ expressions of interest. Bids had to be in by noon, last Friday.
PUBS & RESTAURANTS:
• The BII has welcomed the Government’s launch of an impact of Business Rates enquiry, with CEO of the group, Mike Clist stating: ‘This news is very positive and something that we have long been campaigning for. Many of our members’ venues face disproportionately high costs for running their pubs in high street locations, leaving their businesses more vulnerable than in other sectors’.
• Commenting on the announcement about the same Business Rates enquiry, Chief Executive of UKHospitality, Kate Nicholls said: ‘A thorough examination of the effects of business rates has been a long time coming. The system is now completely out of date, doesn’t reflect the realities of business in the 21st Century and disproportionately cripples hospitality’.
• Punch Taverns has invited hundreds of suppliers to come and see the changes made to the organisation since its takeover last year. CEO of Punch, Clive Chesser said: “Following the change in ownership and leadership of Punch last year there has been an incredible effort to enhance and build relationships with long established suppliers and seek out new ones to enable us to grow and move forward, aligned to our strategy’.
• A Canadian music retailer has made a last minute approach to buy HMV out of administration, rivaling the offer already tabled by billionaire Mike Ashley.
• Edinburgh city is to become the first UK city to introduce a tourist tax following a Scottish government budget deal with the Greens.
• CEO of the Scottish Beer & Pub Association, Brigid Simmonds has commented on the Scottish Government’s decision to bring forward legislation for Transient Visitor Levies: ‘This move by the Scottish Government for a ‘Tourist Tax’ is of real concern to the beer and pub sector. In Scotland, our industry supports over 66,000 jobs and contributes £1.66bn to the economy annually – it is also a crucial part of the nation’s tourism offer, with a visit to a traditional pub ranking third on the list of things tourists do when they visit. Any impact on visitors will trickle down directly to our sector’.
• Debenhams is believed to be considering a CVA which could result in around 20 closures and put up to 4,000 jobs at risk.
• Research from WinGB has found that a record breaking 15.6m bottles of wine were produced in England and Wales in 2018.
• Coca-Cola has acquired the Nigerian juice and dairy company Chi.
• Lidl has announced that it intends to open its largest distribution centre in the UK in Doncaster. The 625,000 square foot unit will is expected to provide 400 jobs.
• Amazon has reported it made $131.9bn in sales last year, with Q4 sales up 20% to $72.4bn.
• Shoplifting incidents increased by nearly 8% between 2014 and 2017 according to the Press Association.
HOLIDAYS & LEISURE TRAVEL:
• Abta chief Mark Tanzer warns consumer confidence is ‘clouded by uncertainty’ and that there is a ‘real risk of disruption’ from a no-deal Brexit.
• Abta reports the overall contribution to the UK economy from outbound travel now stands at £37.1bn and 1.8% of GDP, up 36% from £27.1bn in 2014.
• Brittany Ferries’ CEO Christophe Mathieu warns ‘No deal could be a catastrophe for a company like ours.’ at an Abta Brexit briefing.
• Butlin’s will open the world’s first helter skelter water ride at its Bognor Regis resort in April.
• Secret Escapes, a members-only discounts on upmarket holidays group, has held talks with investment banks about a potential £500m stock market float.
• Gambling revenue in Macau (China) has fallen for the first time in more than two and a half years this January. The slowing of the Chinese economy has been given the blame, as gross revenue from games of fortune declined 5% to 24.94bn patacas ($3.1bn).
• Gfinity, the London based esports solutions provider, has announced that it will host the third open event of the 2019 Call of Duty World League season at the Copper Box Arena in London. The event will be hosted on the 3-5 of May 2019. Garry Cook, Executive Chairman, Gfinity, said: ‘In May, London will become the focus of the gaming world. Gfinity is going to put on a show and deliver an experience that will excite the global Call of Duty® esports community. We know the players and fans and the passion they will bring to the Copper Box Arena. London is in for a treat’.
• Sportech acquires LOT.TO, providing Sportech with iLottery, a leading digital gaming platform.
FINANCE & ECONOMICS:
• January manufacturing PMI is slight miss. Markit says ‘the manufacturing sector made a lacklustre start to 2019,’
• Manufacturing PMI 52.8 in January from 54.2 in December. Markit says ‘the trend in production volumes was the weakest registered during the past two-and-a-half years. Although output rose solidly at consumer goods producers, this was largely offset by weaker expansion in the intermediate goods sector and the first decline in investment goods output since July 2016.’
• Markit reports ‘Brexit blight strikes again with the weakest performance in manufacturing production since July 2016 and optimism withers away under the weight of uncertainty as the UK teeters on the edge of departure from the EU.’
• Sterling down at $1.3075 and €1.1424. Oil up at $62.76 and UK 10yr gilt yield up 3bps at 1.25%. World markets up Friday & Far East up in Monday trade.
• The US economy added a stronger-than-expected 304,000 jobs in January.
o IoD reports one in three UK firms are looking to relocate all or some of their operations abroad in the event of a hard Brexit.
o UK manufacturers are stockpiling raw and intermediate materials ahead of Brexit reports Markit.
o Nissan has confirmed that it will not build its new X-Trail in Sunderland. It says this is due to a number of factors but says ‘uncertainty around the UK’s future relationship with the EU is not helping.’
o Politics. Nasty Party denies will call snap election. Opposition (a.k.a. Financial Incompetents R Us) say Bring It On.
o Mad Hatters’ Tea Party continues with some ministers saying a Hard Brexit wouldn’t be the end of the world (though worse than all other outcomes) and others saying the H of Commons should accept a deal that they were three weeks ago saying was worse than staying in the EU.
o Tomato prices could rise 10% in the event of a no-deal Brexit per Spanish growers.
PRIOR DAY LATER TWEETS:
• Later tweets: CAKE ‘increasingly likely to be sold off in chunks’ per FT. Nobody willing to buy the whole. Worth of a PLC could be below zero. Ask BHS.
• CAKE Chairman Luke Johnson & its CEO Paul May are ultimate owners of group’s Tunbridge Wells site. No related party comment, then?
• Discounts extend beyond Jan payday. 50% off (or equivalent) offered by Carluccio, Pizza Express, Giraffe, Café Rouge, Frankie & Benny’s etc
• IoD says 29% of British businesses are planning entire or partial relocation overseas post Brexit to secure access to markets
• Jan manufacturing PMI a miss at 52.8 (ests 53.5, last month 54.2). Markit says more stockpiling & production volume weakest in 2.5yrs
• BDO: High St sales w/e 17 Jan +4.0%. Big split between down 2.3% in physical stores & +29.4% online. Hits footfall & hurts F&B
START THE DAY WITH A SONG:
Last Friday’s song was Sing by Travis, today who sang:
I had to phone someone so I picked on you,
Hey, that’s far out so you heard him too
Switch on the TV we may pick him up on channel two
RETAIL NEWS WITH NICK BUBB:
• Saturday Press and News (1): The big Retail story in the Saturday papers was the Sky News report that Mike Ashley has indeed acquired the bankrupt Sofa.com, albeit, although that has not been officially confirmed, long-suffering Sports Direct shareholders will have been pleased to read in the Times that he has at least not tabled a bid for the bankrupt Patisserie Valerie…And on the back of all his recent punts on failed High Street brands there were a couple of big feature articles about Mike Ashley’s “strategy”. The FT article about Mike Ashley did not mention the Sofa.com deal, but it was headlined “Ashley taps “generational opportunity” for deals”, noting that he looked at buying the Beales department store chain last autumn and that, according to insiders, “at any one time he’s looking at probably 10 or more things” and that “he just looks at each opportunity in isolation”. The
• Saturday Press and News (2): In terms of other Retail stories, the front page story in the Telegraph was the revelation that Philip Green’s lawyer at Arcadia was a “victim” of bullying too…The “Big Shot of the Week” profile in the Daily Mail was of Pentland boss Stephen Rubin, after the news that he is the UK’s biggest taxpayer, flagging that he should be in line for a knighthood. The Daily Mail also had a look at why Ocado is a popular share for stockmarket punters. And the market report in the Telegraph noted that hedge funds like Marshall Wace have stepped up their shorting of Superdry. Finally, the veteran City commentator Neil Collins noted in his FT column that the embattled Intu Properties is priced by the market as “a dog”, on a historic 12% dividend yield, and that the planned sale of 50% of its Derby shopping centre will be a key test of property valuations in the sector.
• Sunday Press and News (1): The big focus in the Sunday papers was on the news that a Canadian music retailer, Doug Putman of Sunrise Records, has made a late bid for the bankrupt HMV and although that story was on the front pages of the Business sections of the Sunday Times and the Sunday Telegraph (given their later print deadlines), the scoop looks to have come from the Mail on Sunday, as its main Business story was headlined “Canadian music mogul jets in to battle Ashley for HMV”, flagging that the new bidder could save up to 90 HMV stores. The Sunday Times, however, had an extraordinary follow-up to the story, via the revelation that Mike Ashley is effectively battling with his friend, the beleaguered Philip Green, over HMV (“Big Emp takes on Little Emp over HMV”), because of Philip Green’s close ties with the vulture fund Hilco (the former owner of HMV)…
• Sunday Press and News (2): The Mail on Sunday also followed up its scoop a week ago that M&S is in secret talks with Ocado about setting up an Online grocery delivery service with the revelation that the real deadline to come clean on what’s going on is not the Ocado final results on Tuesday but March 1st, which is when Ocado’s option to break its Waitrose deal (18 months before the end of the current contract in Sept 2020) will expire. The Sunday Times, however, flagged that Ocado boss Tim Steiner will still face a grilling from City analysts on Tuesday on the nature of the planned tie-up with M&S.
• Sunday Press and News (3): The embattled Debenhams was also in the spotlight, with the Sunday Times flagging that the company has advanced plans for a CVA ahead of the March quarter rent day, whilst the Sunday Telegraph highlighted that it will announce a funding lifeline with its lenders this week. The Mail on Sunday also noted that the struggling Monsoon Accessorize fashion chain is also asking for rent reductions from its landlords and accelerating store closure plans. Separately, however, the Mail on Sunday flagged that the fashion chain Uniqlo is to open its first store outside London in the spring, in Manchester (in the ex-BHS unit in the Arndale centre), despite Brexit fears. Continuing with the fashion chain focus, the Sunday Times noted that Superdry founder Julian Dunkerton is ready to pounce on any signs of further poor performance revealed in Thursday’s Q3
• News Flow This Week: As we move on inexorably into February, we still don’t know whether Ocado and M&S will be in a position to say something about their rumoured deal before theOcado finals tomorrow (although time is running out), but we do know that the slightly delayed Carpetright Q3 trading update should also be out tomorrow, along with the BRC-KPMG Retail Sales figures for January and the monthly Kantar/Nielsen grocery sales figures. Thursday brings the Superdry Q3 update and the latest MPC interest rate meeting/Bank of England Inflation Report.