Langton Capital – 2019-02-22 – Brewdog, Domino’s, Just Eat, Accor, Merlin, public debt etc.:
Brewdog, Domino’s, Just Eat, Accor, Merlin, public debt etc.:
A DAY IN THE LIFE:
Language is a strange and wonderful thing and, when trying to get to grips with a foreign tongue, I think there are various degrees to which one can understand it.
First, there’s total ignorance. That’s easy.
Second, very occasional glimmers of understanding (dos cervezas, por favour etc.)
Third, there’s being able to understand simple sentences (le petit chat noir a faim etc.)
Fourth, you can ask a simple question (pardon, waar is het treinstation?) but you have no idea what on earth the answer is going on about.
Fifth, you can understand most simple written sentences but have trouble getting to grips with same when spoken. Try Danish. It looks comprehensible at times but comes out as a massive mumble.
Fifth, you can understand quite a lot of the spoken language (when people are talking to you like a simpleton), but when they turn to each other and use slang, second or even third contactions (think: the boy done good last night dinnee?), you’re left for dead.
I’m firmly at stage one. Bit light on the news today but let’s move on nonetheless:
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PUBS & RESTAURANTS:
• BrewDog is teaming up with Red’s True Barbecue which will see the latter operating a long-term kitchen residency at the BrewDog bar on Friar Lane in Leicester. Red’s co-Founder, James Douglas said: ‘Since the dawn of time, beer and BBQ have been one of life’s greatest combinations, so taking the UK’s best BBQ and serving it alongside one of the world’s most high profile craft brewers felt like a very natural decision to make’.
• Domino’s has reported weaker-than-expected Q4 sales as competition mounts. The group’s shares fell 9.6% as revenue came in at $1.08bn for the quarter, down on the anticipated $1.1bn.
• The Wendy’s Co has embarked on a $25m investment plan into strengthening the burger brand’s digital capabilities. Todd Penegor, Wendy’s CEO and president ‘We have made meaningful progress over the last couple of years with our consumer-facing digital capabilities. We launched the unified Wendy’s app, initiated the rollout of mobile ordering, began using mobile offers and have rolled out delivery to 60 percent of the North America system’.
• The Mosaic Pub Company has announced that it has will have completed on three new pubs by the end of this week. The Royal Oak completed on Monday, the Jam Circus on Tuesday and The Admiral Hardy should have completed yesterday.
• CRATE Brewery has announced it plans to raise funds in a crowdfunding campaign to support a major refurb of its home in East London.
• Just Eat has stated that it will remove restaurants with poor hygiene practices after an investigation last October found many zero-rated outlets on the delivery app.
• UK and Irish retailers have claimed that it is inevitable that prices will rise if the UK leaves the Eu without a deal.
• The Newport based craft brewer Tiny Rebel has announced major expansion plans that will increase production seven times to 12m litres of beer annually.
• UK distributor Bibendum and Irish wine merchant Gilbeys have stated that they will launch a new partnership in the Republic of Ireland from 1st March 2019.
HOLIDAYS & LEISURE TRAVEL:
• Accor reports 2018 revenue up 16.9% to €3.6bn with EBITDA up 14.5% to €712m, a LfL increase of 8%. Over the past year Accor has acquired stakes in Orbis, sbe Entertainment and Mantis Collection, while also purchasing Mövenpick, Adoria and Manta. The company opened 588 hotels and 100,000 rooms last year, leaving a total of 703,806 rooms in 4,780 hotels at the end of the year.
• Hosbec reports the number of Benidorm summer holidays has ‘dropped dramatically’ in January, blaming Brexit uncertainty as the primary reason.
• Getlink reports 2018 net profits up 16% to €130m with the Channel Tunnel operator claiming to be ‘Brexit prepared’.
• Heathrow reports it welcomed a record 80.1m passengers last year, up 2.7% yoy. Revenues were up nearly 3% to £3bn with adjusted EBITDA up 4.4% to £1.84bn.
• The FCO warns against all ‘non-essential’ travel to Haiti due to an ‘unstable and dangerous security situation’ as protests spring up over the Caribbean country.
• STR has reported US hotel data for the week of 10-16 February, showing that occupancy increased 0.7% to 63.5%, ADR climbed 2.7% to $131.99 and RevPAR rose 3.4% to $83.88.
• Merlin has announced that it is to sell its Ski Resorts business in Australia to Vail Resorts. The company reports ‘the purchase price is A$174 million (£95 million), subject to certain adjustments related to the timing of closing.
• The Merlin sale represents a multiple of 8.8x 2018 EBITDA. The group says ‘the deal is subject to regulatory approval and is expected to close by June 2019. Net proceeds will be used for general corporate purposes.’
• Merlin CEO Nick Varney comments ‘we are pleased to reach this agreement with Vail Resorts, which will allow us to focus on our core business of location based entertainment, specifically theme parks and Midway attractions. It will see the business transfer to a company with a strong track record in ski resort development, and we wish Vail Resorts and the teams in Australia well.’
• Chinese smartphones are gaining ground against Apple and Samsung in terms of market share. Apple sales were down 11% yoy while Samsung sales declined 9% yoy in 2018.
FINANCE & ECONOMICS:
• Public finances in good shape in January with a record surplus of £14.9bn in the month as taxpayers coughed up by the end-Jan personal tax deadline.
• Reports that the chancellor will have an added degree of flexibility in his next Spring Statement. The EY Item Club says ‘a record high surplus on the January public finances provides a much-needed welcome boost for Chancellor Philip Hammond as he faces a worrying backdrop to his Spring Statement on 13 March.’ EY nonetheless says that the economy is ‘clearly struggling.’
• The New Economics Foundation has said that austerity policies have left the UK economy some £100bn smaller than it would otherwise have been. This is only one side of the story as debt, inflation & general decrepitness would have been much increased if HMG had not put on the brakes.
• Sterling relatively unchanged yesterday at £1.3034 and €1.1495. Oil little changed at $67.07. UK 10yr gilt at 1.20% (up 2bps). World markets mostly lower yesterday. Far East down in Friday trade.
• Brexit, politics etc.:
o A feeling of urgency (not to say national emergency) is at last coming to the fore with only 35 of c1,000 days to go till Brexit. Theresa May, who to some appears to have been captured by the ERG, has been meeting with Remainers in a bid to prevent the split in the Tory Party from widening.
o The ‘niceness’ quotient in the Tory Party has arguably been somewhat reduced by the defections.
o Led by donkeys & perhaps worse. Jailed Labour MP Fiona Onasanya is refusing to quit Parliament so that she can keep her £77k salary whilst behind bars. Tory ERG member Chris Davies (not yet found guilty) has been charged with fiddling his expenses & effectively lying and trying to steal.
o Mr Davies tautologically said in one of his recent missives ‘I am a committed lifelong Euro-sceptic and always have been.’ Well? He has been charged with providing false or misleading information for his Commons expenses claims. He has only been in The Commons since 2015.
o Mobs. Strong views but not much grey matter in evidence.
o FT reports if Britain leaves the EU without a deal next month, Europe’s negotiators will reset their clocks to a new cliff-edge date of April 18.
o UK will have to pay €7bn of net 2019 contributions into EU coffers by 18 April (see above). Any failure to do so would “ruin” relations the FT quotes EU officials as saying.
o Liam Fox says no deal must be kept on the table. He also says his Japan trade deal (one of the easier ones as Japan runs a surplus with the UK) will not be ready for 29 March.
PRIOR DAY LATER TWEETS:
• Later tweets: Whilst mostly frozen by Brexit, a committee of MPs has reported that city centres could become ghost towns as shopping habits change.
• Committee suggests changes to rates & taxation of online companies. Level the playing field etc. Welcomed by hospitality industry
• Still some pretty big discounts out there for Half Term. Toby & Harvester (M&B) kids eat for a quid, Bella Italia 40% off etc.
• More politicians leaving the main two parties as they conclude that they are too nasty or too incompetent (or both) to remain members of
• Sainsbury: Is there a big hole where strategy used to be & Mike Coupe a go-go? Non-merger may leave supermarkets having to cut prices anyway
START THE DAY WITH A SONG:
Yesterday’s song was Beck with Devil’s Haircut, today who sang:
And that sweet city woman,
She moves through the light
Controlling my mind and my soul
RETAIL NEWS WITH NICK BUBB:
• Trade Press: Retail Week magazine has not been published this week, but Drapers magazine is out today, with a special Footwear issue. In terms of News stories, Drapers highlight that the Environmental Audit Select Committee published its final report on the sustainability of the fashion industry and that the fashion world is mourning the death of Karl Lagerfeld, but also flag that House of Fraser’s website will re-platform on to the same provider as Sports Direct later this year (to the concern of some House of Fraser suppliers). In terms of features, as well as a profile of the Danish footwear brand Ecco, Drapers have articles about the sourcing deal between Debenhams and Li & Fung and the rise of brands selling direct to the consumer. Finally, the Editor devotes her column to the subject of Fashion sustainability, thundering that “a 1p garment tax is missing the point”.
• BDO High Street Sales Tracker: We flagged on Wednesday that sales at John Lewis were poor again last week and today’s BDO High Street Sales Tracker for medium-sized Non-Food chains for last week, w/e Sunday Feb 17th, is also weak, despite helpful weather, with BDO Fashion Store sales down by 7.9% LFL (down 4.1% LFL including Online). Total BDO LFL sales (including Homewares and Lifestyle sales) were down by 2.4% last week (down 6.6% in Store sales, but up by 18.5% Online).
• News Flow Next Week: With the crunch Brexit vote in the House of Commons due on Wednesday evening, we will get a view next week from “white van man” on the state of the UK economy, via the Travis Perkins finals on Tuesday, plus the Howden finals and the Grafton finals on Thursday, whilst the increasingly beleaguered shopping centre landlords remain in the spotlight, via the Hammerson finals on Monday. Otherwise, there’s plenty of other stuff going on: Monday brings the ABF (Primark) pre-close and the Hotel Chocolat interims are on Tuesday, whilst Thursday also brings the Inchcape finals and the GFK Consumer Confidence survey.