Langton Capital – 2019-02-26 – Discounts, Hotel Choc, kitchen costs, franchises, 5-a-side soccer etc.:
Discounts, Hotel Choc, kitchen costs, 5-a-side soccer etc.:
A DAY IN THE LIFE:
The use of cash must be in something of a downward spiral when even I’ve got around to using contactless payments for most transactions.
Because I swear my number cash withdrawals must have fallen by at least two thirds since the contactless limit was raised to £30 and I realised that bar staff were holding PDQ machines towards me and frowning embarrassedly when I tried to pay them with a twenty quid not.
So, now it’s just barbers and, well, hardly anyone else who gets to see Langton flash its cash but getting a six-page or eight-page Amex statement can be something of a shock and trying to work out what all those £9.60 and £10.40 payments are is a veritable no-hoper.
Still, anything that looks like a round of two pints of beer probably is a round of two pints of beer and I’ve made my peace with that. On to the news:
LANGTON PREMIUM EMAIL:
Spin: For less than the price of a coffee and a newspaper per week, Langton is to produce a premium email. It will have an interactive relationship with subscribers, with more Langton Comment, from the archive pieces & 60-seconds, Questions, Questions etc. See our coverage of Powerleague below for an example of a slightly evolved style.
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:
• It’s half term in bits of the North of England this week but the heavy food-discounts continue.
• Toby & Harvester (M&B) are offering kids meals for a quid, Cafe Rouge (CDG) is offering a second meal for £1. Bella Italia (CDG) & Prezzo are 40% off mains. Pizza Express is 25% off. Frankie & Benny’s (RTN) is 40% off click & collect.
• Per Pragmatist, the hotel and fast food sectors are shifting towards a fully franchised model. Operators such as Subway are already almost entirely franchised. Others operate on a one third managed, two thirds franchised basis – but this is shifting in favour of franchised units. Within the hotel industry currently around 70% of all hotels within the US are branded or ‘flagged’, significantly relying on their central brand to secure ‘heads on beds’.
• In the fast food sector companies such as Restaurant Brands International (RBI) have moved to fully franchised models. As the owner of the Burger King, Tim Hortons and Popeyes brands, it operates over 25,000 restaurants across the world. After 2014, RBI operated as a 100% franchised business, with units owned and run through franchise agreements.
• Leicestershire brewer & pub company Everards has reported numbers for the year to end-Sept 2018 to Companies’ House saying that operating profit before non-recurring items rose by 23.3% to £3.7m with revenues from the 172-strong pub estate up by 2% compared with last year.
• Everards benefited from a substantial one-off gain from the sale of its Castle Acres site in Leicestershire. Group turnover was £29.6m, down £1.8m on last year. The group reports that its development at Everards’ Meadows should commence this summer with the brewery that is to be constructed on site set to commence production in summer next year.
• Everards says that trading for the first 3mths of the current year has ‘started well’.
• Catering company Lincat has confirmed this morning that it is to include Synergy Grills in its suites of products. Lincat says it has seen ‘unprecedented’ pre-sale demand for the multi-patented units. Synergy Grills use much less gas and do not have a fat tray. The fat carbonises and can be swept up with a domestic vacuum cleaner, thus saving on 40m to 1hr of labour per day.
• Foodservice Equipment Journal quotes Lincat marketing manager Helen Applewhite as saying ‘Synergy Grill has never before allowed its British-made, advanced grill technology to be used by another company, until now. Since we announced the partnership in January and unveiled plans for our new grills, we’ve seen unprecedented demand for them and experienced strong pre-order sales.’
• Ms Applewhite continues re Synergy Grills ‘the grill has become, for many, an essential part of quality food delivery and we are delighted to be able to offer it within our Opus 800 Series.’
• Hotel Chocolat has reported H1 numbers saying revenue rose 13% to £80.7m with underlying EBITDA +10% at £17.3m.
• Hotel Chocolat reports EPS +7% at 9.6p with an unchanged H1 dividend of 0.6p. CEO Angus Thirlwell says ‘this has been another period of progress for Hotel Chocolat with strong growth in sales, profits and cash generation. The critical Christmas period was again successful.’
• Hotel Chocolat says ‘growth in the UK continued to deliver improvements in profitability which have enabled us to invest in the launch of two new start-ups in New York and Tokyo, both of which are showing encouraging early signs, in terms of customer response and the initial store sales performance.’
• Hotel Chocolat concludes ‘recent trading, including the Valentine’s period, is in line with the Board’s expectations and we continue to make good progress against our key strategic objectives of opening more stores, improving our digital capability and increasing our production capacity whilst testing and learning in two large new territories.’
• Crazy Eight is set to open a new shuffleboard bar in Shoreditch, offering high end cocktails and handcrafted pizza.
• Tiny Rebel brewery will build a new 30,000 sq ft distribution centre in Newport, enabling it to increase its capacity by seven times and brew more than 12 million litres of beer annually.
• Amazon announces it will create more than 1,000 apprenticeships in the UK over the next two years.
• Cameron’s Brewery has added Sutlers Bar in Fossgate, York, to its estate of pubs. The acquisition takes the total number of bars in its managed division to 29. Sutlers opened in 2015.
• Data released by Altus Group shows that insolvent companies cost the taxpayer £298m in payments to former members of staff last year. The amount paid was up by almost a third on the previous year, £70.63m higher than the £227.44m paid during 2017.
• Hammerson announces it will offload more sites despite a tough commercial property market, with the aim of raising more than £500m this year.
• Harrogate Distillery will export its spirits to China after making a deal with a local distributor. The distillery produces gin which it sells under its own Whittaker’s brand, as well as Cassis Gin for UK-based department store Fortnum and Mason.
• Rockpool investments appoints Rufus Hall as its new chairman and managing director of its Epic Pubs, Heroic Pubs and Aspley Pubs businesses.
• BJ’s Restaurants Inc reports same-store sales up 4.5% in Q4, up 1.6% yoy. Customer visits increased 1.1%, the fifth consecutive quarter of positive traffic for the company.
HOLIDAYS & LEISURE TRAVEL:
• Steve Norris, Flight Centre Travel Group corporate managing director for Europe and Africa, said ‘We’ve had record trading months. February is strong [and] we saw our largest year-on-year growth to date in the UK in January.’
• The European Hotel Valuation Index (HVI) compiled by HVS shows hotel values across Europe up 3% in 2018. ‘While there has been geopolitical uncertainty and instability in Europe, the influence of this on investors, developers and lenders within the hotel sector seems to be continually lessening,’ commented Magalí Castells, senior associate with HVS and co-author of this year’s HVI.
• HVS reports that hotel values across Europe rose by 3.0% in 2018. It says this was down on 2017’s 3.9% but saw a number of cities recover. Hotels in Lisbon, Moscow, Paris, Brussels and Berlin filled the top five positions in terms of % growth in value.
• Kuoni reports long-haul destination sales up 4%, saying 2019 will be the ‘year of the long-haul trip’. The Maldives topped it’s Worldwide Travel Report as its top performing destination.
• The biggest shareholder in Eurostar, France’s SNCF railway company, plays down Brexit uncertainty with head of the company, Guillaume Pepy, saying it is working to ensure smooth travel ‘whatever the [Brexit] scenario’.
FIVE A SIDE FOOTBALL, POWERLEAGUE ETC.:
• Do companies with good news to impart often delay their reporting of it?
• 5-a-side football site operator Powerleague has reported overdue numbers for the year to end-December 2017 to Companies’ House. Although now very historic, the accounts give an insight into trading at Powerleague, saying ‘over some years the group has been suffering from a consistent decline in sales and profits’.
• It never rains but it pours.
• Powerleague says worsened trading was due to ‘the inability to invest in the estate…compounded by the loss of commercial income’.
• Powerleague says that it would have had to cease trading in November last year had its parent company not taken over some of its bank loans and the company undertaken a CVA.
• Powerleague is reporting a post exceptional loss of £16.7m. Quite a feat on revenues of £33.7m (up 3.1%). The loss, which does included £11m of exceptional costs (largely impairment of asset values).
• The formerly listed Powerleague has lost an accumulated £21.8m since its incorporation some 14yrs ago in March 2005. It has positive shareholders’ funds only due to a £15m issue of shares.
• Still-listed rival operator Goals Soccer Centres raised money at 100p in June 2016. The shares are now trading at 56p.
• Ten Entertainment Group plc has announced the appointment of Antony Smith as Chief Financial Officer. The group says ‘Antony joins as CFO Designate on 18 March and formally takes up his position as CFO and joins the Board effective 1 April, succeeding Mark Willis who will leave the Group on 31 March.’
• Per Guardian, gambling firms plan to set up a new trade body to lobby politicians as the sector faces tougher regulation going forwards. It is speculated that the Remote Gambling Association and the Association of British Bookmakers are set to merge.
• The Centre for Economics and Business Research (CEBR) claim that competing for a Premier League title could increase a city’s economic growth by 1.1%. It said this would be worth £220m to Manchester, while Liverpool is in line for a £133m boost if they win.
FINANCE & ECONOMICS:
• Sterling up vs dollar at $1.3125 but down a shade vs Euro at €1.1558. Oil up at $64.72. UK 10yr gilt yield 1.19% (up 3bps). World markets up yesterday but Far East lower in Tuesday trade.
• Brexit, politics etc.:
o Mrs May will speak to MPs today after her latest meeting with EU leaders. BBC reports she is facing a rebellion of cabinet ministers who want Brexit delayed. Guardian says EU prefers a 2yr delay. Cabinet maybe two months. Mrs May says a deal is ‘within her grasp’.
o Meaningful vote scheduled for 12 March. Cooper Letwin amendment (to extend Art 50 if no meaningful vote by 13 March) heard the day after. Labour swinging towards a referendum, the terms of which are yet to be detailed.
o Tory hardliners still want to crash out. Claims that food prices will fall undermined by Michael Gove, who suggests that they will rise to transfer income from taxpayers to farmers. ABF (the clue is in the name) says a hard Brexit means ‘there could be very severe consequences on the availability of food.’ Engineering body ADS says a no-deal Brexit would be a ‘full blown economic crisis’. Insurance body the ABI says it ‘would be a be an unforgivable act of economic and social self-harm’.
o HMG will ‘very shortly’ publish analysis of the impact of a no-deal Brexit on business and trade.
o Brexit supporter & economist Roger Bootle, writing in the Telegraph, says ‘the adverse effects of Brexit will be front-loaded and the benefits back-loaded.’
PRIOR DAY LATER TWEETS:
• Later tweets: CGA & AlixPartners say number of managed restaurants in the UK fell last year for 1st time in 9yrs. Expects further drop this year.
• CGA reports the closures have been driven because a ‘sustained decline in the wider licensed sector [has] continued’
• CGA reports that London restaurant numbers continued to rise (up 1.5%) whilst those in the provinces fell by 0.9%.
• Michael Gove says consumers & taxpayers will support farm incomes via tariffs post Brexit. So much for food price drop windfall?
• Mrs May under pressure to delay Brexit. No, says ERG. Three months say less-mad Brexiters, two years (reportedly) says EU
START THE DAY WITH A SONG:
Yesterday’s song was Do You Really Want To Hurt Me by Culture Club. Today, who sang:
So, in your broken home he broke all your bones,
Now you’re taking it time after time
RETAIL NEWS WITH NICK BUBB:
Travis Perkins: In the light of all the Brexit uncertainty, it’s worth having a look at what the builder’s merchant giant Travis Perkins says today in its finals, given the importance of the apocryphal “white van man” to the UK economy. And although there is much talk about “uncertain market conditions”, the business is focused on self-help measures to underpin its performance and the outlook is for flat operating profits in 2019. Operating profits in 2018 were only just about flat, excluding chunky exceptional costs and write-offs, but that masked an improvement in H2 of just over 10%, as cost cutting kicked in. Interestingly, the struggling Wickes saw improved trading in H2, as it chased increased market share in kitchens and bathrooms, whilst Toolstation continued to grow well (although profits were only).
Hotel Chocolat: Today’s Hotel Chocolat interims show further decent progress, with revenue up 13% and underlying EBITDA up 10%, and the company reports that the New York and Tokyo start-ups are showing encouraging signs and that “recent trading, including the Valentine’s period, is in line with the Board’s expectations”.
News Flow This Week: Tomorrow brings the finals from CapCo (the owners of Covent Garden and Earls Court). Then on Thursday we get the monthly GFK Consumer Confidence survey, the Howden finals, the Grafton finals, the Inchcape finals and the Zalando finals/Capital Markets Day in Germany.