Langton Capital – 2019-02-19 – Intercontinental, Gregg’s, half-term trading, discounts & other:
Intercontinental, Gregg’s, half-term trading, discounts & other:A DAY IN THE LIFE: Much to the irritation of various people close to me, I tend to throw away my socks in ones rather than in pairs. It’s my Yorkshire heritage, I suppose. I mean many a muckel macks a muckel, it’s a waste to throw away a perfectly good garment and, after all, who’s going to be staring at your feet in any case? So, you can get away with black and nearly-black and with the various shades of grey that are cluttering up my sock drawer but black with brown? Probably not and, as we all know, red and green should never be seen. Anyway, I’m sporting stripes with spots at the moment but, as mentioned above, I’m fully expecting to get away with it. On to the news: LANGTON PREMIUM EMAIL: Spiel: When we’re technically competent enough we’ll open up our website for historic stories. Interest here has been very substantial, but we’d like to keep the list down to a manageable size. Get on board while stocks last. Spin: For less than the price of a coffee and a newspaper per week, we can have an interactive relationship, you and I, with more Langton Comment, from the archive pieces & 60-seconds, Questions, Questions etc. Super spin: We will also thrill readers with our accountancy insight. And, for special occasions, we’ll serve up what we’ve found while trawling through Companies’ House, joint directorships, overdue numbers, winding up notices etc. Facts: Langton is to produce a premium version of its email from 1 March priced at just £295 (plus VAT) for a single subscriber or £495 (plus VAT) for multiple subscribers. The free email will be largely unchanged. Drop us a line to join in. PUBS & RESTAURANTS: • Half term offers. Giraffe, kids eat free. Harvester, kids eat for a quid. Prezzo 30% off and, for those who don’e want to leave the couch, Domino’s is offering 35% off orders over £30. • See Greggs below. Trading quite good at the moment (for some, anyway). We’ll soon be lapping the snow. Half term feeling tentatively OK. Might be a bit rocky in Swindon. • UK households are reported to be more downbeat about their finances. Worries about job security are becoming a feature reports IHS Markit in its household finance index report for February. • CAMRA has reported that 14 pubs are closing each week, four less per week than compared to last year. • Pragma has reported that the global wellness market was worth $4.2 trillion in 2017, with #wellness reaching 24.6m posts on Instagram. • Staff shortages are expected to lead to bigger pay rises this year of 2.5%, the Telegraph has found. • Million Pound Menu’s Bubble& is set to open a new cafe bar in Amersham later this month. • PepsiCo has announced net revenue up 2% to $64.66bn in 2018. CEO of the group, Ramon Laguarta commented: ‘We are pleased with our results for the fourth quarter and the full year 2018. For the year we met or exceeded each of the financial objectives we set out at the beginning of the year’. • The BBPA has welcomed the launch of several consultations by the government to reduce waste and plastic. Chief Executive of the organisation, Brigid Simmonds commented: ‘We support a Deposit Return Scheme (DRS) for plastic bottles, but we also believe that enhancements to the current recycling schemes which collect cans and glass from residential and business properties can ensure we continue to achieve the high targets set by government’. • SIBA responds to the consultations published by DEFRA by saying ‘new reforms to producer packaging responsibility and a deposit return scheme for cans and bottles will hit small brewers much, much harder and in a grossly disproportionate way compared to global producers. We’d like to see a de-minimis threshold introduced, taking the smallest and most burdened producers, like independent brewers, out of scope.’ • UKHospitality demands industry input into deposit return schemes, with CEO Kate Nicholls saying ‘we must emphasise that any additional measures must be proportionate and that further taxes on an already burdened sector are likely to undo that good work. Any new DRS measures introduced must also be consistent with those due to be introduced in Scotland.’ • Charlie McVeigh addressed delegates at The Morning Advertiser’s MA500 event, saying ‘The challenges that businesses are facing are because, in my opinion, they have lost sight of the customer and, essentially, their branding….It’s all about doing the simple things well because, in the end, it’s really about the culture of service and the culture of consistency.’ • Amazon is set to launch its first international Amazon Go stores in London, with the number of sites and exact location still yet to be confirmed. • The independent think-tank, The Centre for Cities has commented that Britain’s high streets are ‘not dead’ and that city centres can be transformed into industry hubs instead of places to shop. The group’s report stated: ‘The main challenge for poorly performing high streets is not the internet. It is the lack of skilled workers and demand to make the shift away from retail and towards high-knowledge and leisure services’. GREGGS UPDATES ON VERY STRONG TRADING: • Greggs says FY figures should be ahead of expectations. It has updated on trading in the first weeks of 2019 saying it has seen an ‘exceptionally strong start’ to the year. • Greggs says total sales are up 14.1% for the seven weeks to 16 February 2019 with ‘company-managed shop like-for-like sales up 9.6%’. • Greggs says its ‘exceptional sales performance [has been] boosted by publicity surrounding launch of Greggs’ vegan-friendly sausage roll.’ The group says ‘the performance builds on the strong finish to 2018, and has been supported by extensive publicity surrounding the launch of the vegan-friendly sausage roll at the start of January.’ • Greggs reports ‘customer transaction numbers have increased, with additional sales mainly comprising savoury products such as the vegan-friendly sausage roll and our other iconic sausage rolls and bakes.’ • Greggs says ‘the rate of growth has eased slightly in February but the strength of trading is likely to have a material impact on the first half result for 2019, particularly as comparative sales growth for 2018 was weak due to the extreme weather. Sales comparatives then strengthen in the second half of the year. Overall the Board now anticipates that 2019 full year underlying profit before tax (excluding exceptional charges) is likely to be ahead of its previous expectations. HOLIDAYS & LEISURE TRAVEL: • Intercontinental Hotels has reported total group revenue up 6% to $4.3bn for the year to 31 December 2018, while operating profit declined 7% t0 $670m. Keith Barr, CEO of the group commented: ‘We have made excellent progress in 2018 executing against the strategic initiatives I set out a year ago to accelerate our growth, whilst delivering a strong financial performance.’ • IHG continues ‘the investments we have made have had a significant impact, allowing us to further evolve our established brands, move quickly to strengthen our portfolio both organically and by acquisition, and create real momentum in our business’. • Abta warns of ‘significant unresolved issues’ regarding Brexit that the government still needs to address. Representatives from the association attended a meeting at the Foreign Office on Friday. • Which? warns of ‘instability’ in the travel sector after flybmi suddenly went into administration. Airlines UK warned that the demise of flybmi should act as a ‘wake-up call’ to government over the damaging impact of Air Passenger Duty. • Sky reports Britons are stocking up on Euros ahead of Brexit, according to data from Post Office Travel Money. Sales in the currency are up 3% yoy so far in 2019. • Best Western Hotels & Resorts has announced that it has acquired the 300 strong global hotel brand, WorldHotels. David Kong, President and CEO of Best Western Hotels & Resorts said: ‘There is tremendous synergy between Best Western and WorldHotels. By joining forces in this new partnership, we will create competitive advantages for both companies’, • Royal Caribbean Cruises has announced that it has entered into an agreement with French shipbuilder Chantiers de l’Atlantique to order a sixth Oasis-class ship for delivery in the autumn of 2023. OTHER LEISURE: • Saudi Arabia Crown Prince Mohammed Bin Salman has denied being interested in buying Manchester United for £3.8bn. • 888 Holdings has acquired the Mandalay operations of JPJ Group for £18m. The sale will allow JPJ Group to focus on its UK strategy via the expansion of Jackpotjoy. FINANCE & ECONOMICS: • Chancellor may be forced to abandon his borrowing targets warns KPMG. It sees a £12bn ‘dent’ in financing due to a global slowdown. • China’s automobile trade body has announced that vehicle sales in January were down by 15.8% on the same month last year. This comes after 13% fall in December and a 14% fall in November. • UK households are reported to be more downbeat about their finances. Worries about job security are becoming a feature reports IHS Markit in its household finance index report for February. • HIS Markit says its index reading of 43.4 was down from 44.7 in January. Markit says ‘the headwinds that fragile consumer finances present to the wider economy’. It adds ‘the impact on confidence caused by Brexit uncertainty continues to pose a notable risk to the domestic economy, also highlighted by job security perceptions becoming increasingly negative in February.’ This before the Honda news. • Honda is to close its Swindon plant by 2022. An official notice is expected today. A wind-down could commence sooner. Some 3,500 people work at Honda directly with perhaps twice that number in the supply chain. • A swing around from c10k tax payers to c10k benefit claimants could cost around £150m to £200m per annum. • Sterling little changed at $1.2902 & €1.1417. Oil unchanged at $66.36. UK 10yr gilt yield up 1bp at 1.17%. World markets down in Europe yesterday but up elsewhere. • Brexit, politics etc.: o Seven MPs give up on Labour. o As Honda leaves its Swindon plant, the BBC reports the ‘pact’ that the UK had made with Japan some 35yrs ago (that it would be a flexible-labour way into the EU single market) has perhaps been broken. Swindon voted Leave in 2016. o Reciprocal health care agreements may not survive Brexit reports the BBC. Insurance companies will be rubbing their hands. o Michael Gove says he will suspend farming reforms in order to allow farmers to concentrate on Brexit. o Liam Fox has said Japan may sign a trade deal with the UK ‘quickly’. It will be looking to sell us Hondas from Japan shortly. Not sure Mr Fox understands how the balance of payments works. PRIOR DAY LATER TWEETS: • Later tweets: January Tracker. LfL sales down 1.8% on month (down c3.7% in real terms). Pubs > restaurants & drink > food. London less good • January is always a quiet month. February is little better. Half term in February & Valentine’s Day, usually a boost • Pubs & restaurants both negative. Pubs down 1.4% & restaurants (overbuilding, shoddy product) down 2.5%. • Daily Mail says 6 people, incl. three junior staff members, are facing arrest due to the £40m hole in Patisserie Valerie’s accounts • Flybmi has ceased operations. May put price of flights up. Could help Thomas Cook in its search for a buyer for its airline. • ABTA says are ‘significant unresolved issues’ for travel businesses ahead of Brexit. Which? warns of ‘instability’ in travel sector • There’s no fool like a rich fool. Bullying public school billionaires making crazy Brexit promises? Surely not…? START THE DAY WITH A SONG: Yesterday’s song was Head Over Heels by Tears for Fears. Today who sang: I’ve got so much honey the bees envy me, I’ve got a sweeter song than the birds in the trees Well I guess you’d say What can make me feel this way? RETAIL NEWS WITH NICK BUBB: Greggs: The final results from Greggs are only a couple of weeks away, on March 7th, but the business is on a roll and it has come out with a trading update to flag that it has had an “exceptionally strong” start to 2019 and that full-year profits are already looking to be ahead of expectations. Sales growth is said to have eased slightly so far this month, but, even so, over the 7 weeks to Feb 16th LFL sales are up by an impressive 9.6%, boosted by the publicity over the launch of Greggs’ vegan-friendly sausage roll!
Footasylum: If 2018 was an “annus horribilis” for McColl’s, then it was even worse for the recently floated Footasylum, with a series of profit warnings sending the share price crashing and the market has given up on it recently. Clearly, it must have always been a possibility that its erstwhile rival JD Sports would take an interest, but it showed no sign of doing so, perhaps because Footasylum is pretty small and perhaps because JD was busy with its big US acquisition. In fact JD waited until we’d sent out yesterday’s “Daily” to announce at 8.20am that it had bought an 8.3% stake for investment purposes and planned to go up to 29.9%. The market took a while to register that JD had paid 50p for the shares, a huge premium to the overnight close, but the price soon shot up in heavy volume. It is unclear as we write who JD bought the stake from and whether JD was buying more in the market
Retail Sales Watch: All the focus in the sector now is on how well February (the 4 weeks to Feb 23rd) turns out on the High Street, given the spring-like weather, but we haven’t seen the final word yet on how good the outcome was for January…The wretched Office of National Statistics (ie the ONS or what we mockingly call the “Planet ONS”) reported on Friday that non-seasonally adjusted total Retail Sales by value were up by 3.5% last month (ex-petrol), held back by much weaker Small Retailers growth…But the BRC-KPMG measure of gross sales (which focuses on Large Retailers, but doesn’t capture the likes of Amazon) was up by 2.2% (up by 1.8% LFL). So, who was right? The ONS or the BRC-KPMG? Well, the consultancy group, Retail Economics (RE), which was founded by Richard Lim (who used to run the monthly BRC-KPMG Retail Sales survey) has just come out with its own detailed overview and their News Flow This Week: The provisional verdict of the CMA on the planned merger of Sainsbury and Asda is expected at some point this week, but it is too late now to beat the Wal-Mart/Asda Q4 results this afternoon. Otherwise, we get the much-awaited Intu Properties finals tomorrow and the CBI Distributive Trades survey for “February” on Friday. |
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