Langton Capital – 2019-02-08 – TCG, TUI, Shaftesbury, Pernod, Carlsberg, bank rate, economy etc.:
TCG, TUI, Shaftesbury, Pernod, Carlsberg, bank rate, economy etc.:A DAY IN THE LIFE: You know on the phone, when something gets a bit touchy or when you’ve been well and truly nailed, you can pretend there’s static on the line or a wee-wah ambulance going by and hang up the phone; well what do you do on Skype? Do you tough it out or run to fight another day? And, as the latter may involve you jerking your head from left to right for a while and saying ‘b-b-b-b-b-b-b-b-b-b-b’, is it something that you could carry off? Or would you look like one of those credits & exit music scenes from a cheap sitcom or soap opera, where the actors are frozen but where you can see them breathing, where they look as though they’re itching to blow their nose? Still, as Skype conversations aren’t recorded – at least to the best of my knowledge – embarrassment followed by denial might be the best course of action. It certainly seems to work for many of the nation’s politicians.On to the news: PUBS & RESTAURANTS: • Shaftesbury, the REIT that owns several hundred pub, bar & restaurant freeholds in the West End, has updated on trading to 7 Feb saying it has seen ‘robust footfall and trading over the festive period.’ • Shaftesbury says it is experiencing ‘resilient demand for our regular space’ and adds that ‘occupancy remains high.’ CEO Brian Bickell comments ‘during the important trading season leading up to and including the Christmas and the New Year holidays, footfall in our locations has been robust and our occupiers generally reported growth in turnover compared with the same period in 2017. In contrast to reports of subdued leisure spending nationally, our restaurants, cafes, pubs and bars were particularly busy throughout the festive period.’ • This it a good performance but it would perhaps be wrong to extend it from a 15 acre site in the West End to the rest of the country. In many areas, overbuilding on the part of developers and easy money on the part of ambitious brand-owners, has led to a glut of restaurants and downward pressure on covers, prices & margins. The high level of discounting is arguably evidence thereof. • Yum! Brands Inc has updated on trading for 2018 as a whole with US journal National Restaurant News saying the operator ‘ended 2018 on a high note, with robust sales at its Taco Bell and KFC divisions and the closing of a deal that arguably returns Pizza Hut to the position of largest pizza chain in the world — a status Domino’s claimed earlier in the year.’ • Pizza Hut grew in size last year on the back of an announcement jointly with Telepizza of Spain that the latter would convert some Telepizza units to Pizza Huts and open at least 1,300 new restaurants over the next 10 years and 2,550 unit over 20 years. • Yum CEO Greg Creed comments ‘combined across our brands and led by over 2,000 world-class franchisees, we opened a record 8 gross new restaurants per day across the globe in 2018.’ • Yum! Brands’ revenue for the year was $5.7 billion, down 3% on the prior year with revenue of $1.56 billion in Q4 (down 1%). • Yum CFO David Gibbs says ‘fourth-quarter results were a strong finish to a solid year, and serve as a healthy foundation for our 2019 guidance. I am also pleased that we made significant progress on our transformation commitments in 2018, having achieved our goal of becoming at least 98% franchised.’ • US restaurants have seen LfL sales increase 2% in January, the industry’s eight successive month of growth. Vice President of insights and knowledge for TDn2K, the group who undertook the research, stated: ‘Winter months are tricky to report on due to the noise in the data coming from weather and the potential effect of holiday shifts. However, it is hard not to remain optimistic about the relative strength of restaurant performance, especially when looking at sales growth over a longer time period’. • Pernod Ricard has reported its fastest profit growth in seven years, as the group comes under pressure from activist shareholders, Elliott Management. Chief executive of the group, Alexandre Ricard stated: ‘They [Elliott Management] came up and said we can improve our operating margin. And actually, I came up and said we can improve our operating margin. That was part of our three-year strategic plan, which we disclosed publicly today and which we had presented to our management back in October’. • The parent company to Dunkin’ Donuts has stated that it should return to growth in its main market this year, after an operational revamp. • Chopstix, the Asian QSR brand, has announced LfL sales up 3.5% for the year ended 30 April 2018, with turnover reaching £24.5m. • Fulham Shore’s Franco Manca pizza restaurant chai is to open a site near St Paul’s in London to take its estate to 44 by its financial year end. • The FT reports former CEO of Premier Foods Gavin Darby is in line for a £1.1m payoff. • Carlsberg has reported revenue up 3% for 2018 to DKK 62.5bn ($9.53bn). The company stated it benefited from the warm summer in western Europe and the world cup. • Chipotle Mexican Grill has seen LfL sales increase 6.1% in its latest quarterly results, with digital sales soaring 65.6%. • Taco Bell has introduced doorstep delivery through Grubhub across the US. • Arc Inspirations, the Northern England based bar group, has reported sales up 29% y-o-y due to the Six Nations rugby tournament. • Propel has reported that Boparan Restaurant Group has appointed KPMG to review its options for its Giraffe & Ed’s Easy Diner chains. HOLIDAYS & LEISURE TRAVEL: • Tui shares were recently down 16% in Frankfurt trading after the group announced slower summer sales. The group has stated that it expects underlying EBITDA to be ‘broadly stable’ for the year ending September 30. • US hotels have seen occupancy stable at 56.7%, up 0.1% for the week ending 2 February, STR has reported. The sector also saw ADR rise 2.3% to $124.95 and RevPAR increase 2.4% to $70.83. • Tipto has found that 53% of UK travel agents have seen an increased demand for long-haul holiday beyond Europe, Travel Weekly has reported. • Thomas Cook CEO, Peter Fankhauser, rules out further large-scale shop closures this year, saying ‘In the last two years we have closed 200 shops. There are no current plans for a large-scale programme to close shops.’ Thomas Cook currently operates 598 shops in the UK. • ACI Europe reports passenger traffic across European airports grew by more than 6% last year, but said Brexit remains an ‘immediate risk’. • Parkdean plans to invest £40.7m across its 67 resorts, introducing additions such as one-bedroom caravans for ‘young couples, empty nesters and retirees’. • Ziser London buys a former town hall building on London’s Fulham Road, intending to transform the venue into a 51,350 sq ft hotel, restaurant, event space and spa. • Brits are set to face mobile phone roaming charges when on holiday in Europe in the event of a no-deal Brexit. OTHER LEISURE: • Facebook has been forced to curb its data collection practices in Germany after a ruling on Thursday, that found the social media network to be abusing its market dominance to gather information on its customers. • Woody Allen has sued Amazon Studios on Thursday, saying that he deserves at least $68m in damages for the studios refusal to distribute his complete movie ‘A rainy day in New York’ and its decision to abandon four previously agreed movies. • Spotify acquires Gimlet Media and Anchor in a move to strengthen its podcast offering. • Snapchat reports Q4 revenue up 36% yoy to $390m with 186m daily users. FINANCE & ECONOMICS: • Bank of England reports growth will be around 1.2% this year, the weakest for 10yrs. It says there is a one in four chance of recession. • Interest rates were held yesterday at 0.75%. The Bank of England is currently signalling just one rate rise this year. • The Bank of England says ‘growth appears to have slowed at the end of 2018 and is expected to remain subdued in the near term.’ • Halifax reports house prices rose by only 0.8% in the year to January, well below the rate of inflation. Prices fell by 2.9% in January. • Sterling up at $1.2947 and €1.1417. Oil down at $61.23. UK 10yr gilt yield down 3bps at 1.18%. World markets down yesterday. Far East lower today. • Brexit, politics etc.: o Theresa May was in Brussels yesterday. She was told that negotiations could not be reopened. An 8wk delay in the Brexit date is being mooted. A French official said that it would object to an extension unless there was some sort of tangible plan in place. o Mr Corbyn has written to Mrs May saying that, if she accedes to permanent membership of a customs union with the EU, he may be able to support her Brexit deal. A Norway Plus model would imply freedom of movement and would be membership of the EU (without a vote) in all but name. EU officials have suggested Mrs May accepts Labour’s proposals. Hard Brexiteers may be livid. o Everyone could end up unhappy as 30mths of effort and of ignoring the real economy may result in what any Ven Diagram analysis would tell you is a worse position than the one we are vacating. o Betting still on a 29 March extension & the passage of Mrs May’s semi-Brexit deal. Bank of England says the ‘fog of Brexit’ is causing ‘tensions’ in the economy. PRIOR DAY LATER TWEETS: • Later tweets: DPP placing at 6p raises £5.8m max. CEO Peter Shaw to leave. Trading tough but group trialing with Pyszne (takeaway.com) • Ei Group Q1 in line, ditto Compass. Thos Cook says will consider sale of airline. Trading down on last year but in line w expectations • Thos Cook shares up on possible sale of airline. Is the co doing this from a position of strength. May not matter in short term but… • Big discounts still around. Toby & Giraffe 2-4-1. Prezzo just cut from 50% off to 40% off. Pizza Hut 35% off and Domino’s 35% off deliveries over £30. • Mrs May is in Brussels today. Jean Claud Juncker, Tusk etc say talks can’t be reopened. 50 days to go, 950 days gone. START THE DAY WITH A SONG: Yesterday’s song was Kiss by Prince, Today who sang: People say that you’ll die faster than without water, But we know it’s just a lie, scare your son, scare your daughter Now here’s the sun, it’s alright! RETAIL NEWS WITH NICK BUBB: MySale: As if Philip Green and Mike Ashley didn’t have enough to worry about with their own businesses, the value of the share stakes they have in the struggling Australian Online retailer MySale has been under pressure and the company has confirmed in its belated first half pre-close update today (for the 6 months to Dec 31st) that it will report a big loss, although it says it will be back into EBITDA profit in the second half, thanks to big cost savings. Trade Press: Retail Week magazine has not been published today, alas, but Drapers magazine is out and it is focused on the Autumn Womenswear ranges. In terms of News stories, Drapers highlight that landlords are braced as Debenhams explores restructuring options including a CVA and that retailers are sceptical about the new Business Rates inquiry by the Government. In terms of features, Drapers have articles about the new Boden HQ building and the growth in Vegan Fashion. Finally, the Editor devoted her column to a review of the Debenhams CVA rumours and lamented that “Debenhams descends deeper into the doldrums”. BDO High Street Sales Tracker: We flagged on Wednesday that sales at John Lewis slumped last week, because of “the snow”, but today’s BDO High Street Sales Tracker for medium-sized Non-Food chains for last week, w/e Sunday Feb 3rd, is surprisingly good, with BDO Fashion sales up by 8.1% LFL (including Online), despite the weather. Total BDO LFL sales (including Homewares and Lifestyle sales) were up by 4.7% last week (down 5.9% in Store sales, but up by 18% Online). BDO have also released their overview of January as a whole today, which focuses on the weak Store sales rather than the strong Online sales… News Flow Next Week: As we move further on into February, the main spotlight next week will be on the provisional verdict of the CMA on the planned merger of Sainsbury and Asda, which is expected at some point. Otherwise, the focus will be on the Dunelm interims on Wednesday, the next Brexit vote in the House of Commons on Thursday (which is Valentine’s Day…) and the ONS Retail Sales figures for January on Friday. |
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