Langton Capital – 2019-05-13 – PREMIUM – Easter Tracker, ESC, crowds, GOAL, TCG, SAGA etc.:
Easter Tracker, ESC, crowds, GOAL, TCG, SAGA etc.:
PREMIUM EMAIL – PLEASE DO NOT FORWARD:
A DAY IN THE LIFE:
I had another go at cooking over the weekend and, I have to admit, the best that can be said about my cooking is that it isn’t horrible.
And that’s on a good day. More usually it helps with the family’s ambition to lose weight and simply keeps the dog happy.
I should stick to what I know (at least a little) about. On to the news:
COFFER PEACH TRACKER – EASTER 2018: Easter can move around on the calendar, the weather can vary greatly between March & April, it was hot this year, a heatwave benefits pubs, hinders restaurants – and so it proved this year. 13 May 2019:
• The Coffer Peach Tracker for Easter has sales for pubs & restaurants as a whole down by 3.6% on a LfL basis over the 4dy weekend.
• This was materially influenced by the weather.
• The Tracker says pub & bar chain sales rose by 5.3% for the long weekend but restaurant sales were down by a whopping 19.4% against Easter sales last year
• The Tracker says: ‘the hot Easter weekend delivered starkly different outcomes for Britain’s managed pub and restaurant groups…while pub sales surged in the sunshine, restaurants struggled in the heat.’
• Drink-led pub sales were up by 10.9% over the weekend. This is 1) helpful but 2) it is comparing apples with oranges. Food-led pubs were down by 18.6% and restaurants were down by 19.4% compared with last year
• CGA says ‘you simply can’t escape the fact that weather always has a major influence on the fortunes of the pub and restaurant sector – and what’s good for pubs is rarely good for restaurants.’
• The fact that Easter came hard on the heels of the Beast from the East last year also meant that there was some pent-up demand, as cabin fever would have set in for a number of consumers
• Easter 2018 was up by nearly 6% on Easter 2017. On a two year view, total LfL sales for the industry have gone almost nowhere. The same cannot be said for costs
• For the month of April as a whole, total LfL sales were up by 1.1% on April last year. Pubs were +2.1% but restaurants were down 0.7%
• Coffer Corporate Leisure comments ‘the Easter numbers are difficult to measure because of the contrasting weather year on year and later Easter. The April numbers overall though were down [at least for restaurants] and show the pressure the hospitality sector is under – like many other sectors relying on consumer confidence. Pubs trade well when consumer confidence is low, but the restaurant sector is also affected by the retail woes we are seeing. This could be a difficult summer whilst we have no resolution to Brexit.’
• Regionally, London was down 0.7% on last April as a whole whilst the provinces were up by 1.7%. CGA says that climate change protesters in London may have put off some would-be diners.
• Figures for the rolling 12mths to end-April show London up 2.5%, the provinces up 1.5% and total LfL sales up by 1.7%. This is helpful but inflation for the F&B industry is running at 2x to 3x this rate.
BOOK REVIEW: THE PSYCHOLOGIE OF CROWDS (part II) BY GUTAVE LE BON – PUBLISHED 1895: 125yrs old and counting but still one of the defining works on crowd behaviour. Second part of the review today covers Books II and III. 13 May 2019:
• Crowd behaviour does not equal the sum of its parts, Anonymity within a crowd releases inhibitions etc. This remains a feature within religions and other bodies and principles such as democracy itself. It’s all a bit disturbing.
• The fact that the book was written before the rise of communism, Nazism and the rest speaks to its timelessness. What’s in human DNA is 1) there for a (sometimes unpleasant) reason and 2) is there to stay.
• Whipping up the crowd is as old as the hills. Caesar did it in Rome. Pontius Pilate freed Barabbas to please the mob and various cults, crusades and criminal enterprises have pushed this psychological hot button both before and ever since
Controlling the demon:
• Exciting a crowd is easy, calming it down can be harder.
• Belief is fostered, allowed to germinate and then directed (or exploited). Belief will often involve membership of a club, class, religion or race.
• M le Bon (writing in 1895) suggested that English crowds were somewhat less excitable than those elsewhere on the continent. Perhaps he should have got out more.
• Crowd leaders can be dead, living but accidental (Life of Brian) or, less pleasantly, they may be ‘ringleaders’ or ‘agitators’.
• Crowds ‘warm to rhetoricians.’ They don’t necessarily want the truth. Reason can be dispensed with.
• Attempts at control involve trying to use of ‘affirmation, repetition & contagion’. Prestige is awarded to apostles. They become thought guardians.
• Belief needs to be based on some sort of ‘mysterious absurdity’. Perhaps ‘taking back control’ falls into this category.
• Reasoning and intelligence are demeaned. Race, unquestioning belief and oneness is prized. Beliefs are ‘deep but shifting’. Le Bon says that ‘transient opinions are instilled by suggestion & contagion.’
Those who can’t lead, follow:
• Le Bon says that an ‘active Press’ [let alone the Internet] mean governments find it more difficult to direct opinion.
• Le Bon says statesmen may follow opinion, not lead it. They may have a tiger by the tail.
• Le Bon says suggestibility is an asset, intelligence a handicap when operating within (or at the front of) a crowd.
Quirks & consequences:
• Le Bon says juries will make decisions independent of the identities of their members. Crowds are similar.
• They may permission themselves to do sometimes awful things.
• Crowds are ‘forgiving of passion’ and are ‘impressed by prestige.’
• Those seeking to lead crowds will ‘need to make wild promises. Repetition works e.g. with the criticism of rivals. Should exaggerate verbally & write little down. People are rarely taken to task for their promises.’
• Crowds are swayed by a ‘simplicity of opinion’ and they are open to suggestion. Leaders will be there courtesy of their prestige. A leader doesn’t tend to actually lead opinion.
• Discussing democracy as ‘a crowd’, Le Bon says that it can offer apparent liberties & take away real ones and it creates an administrative caste.
• Le Bon says the State becomes ‘an all-powerful God’. Those who seek to lead it should perhaps also read Kipling’s The Man Who Would Be King
COFFER PEACH TRACKER – EASTER SALES:
• The Coffer Peach Tracker for Easter suggests that the heatwave was ‘good for drink sales, but bad for eating out
• The Tracker shows sales for pubs & restaurants as a whole down by 3.6% on a LfL basis over the 4dy weekend
• The Tracker has pub & bar chain sales up 5.3% for the long weekend but restaurant sales down by a whopping 19.4% against Easter sales last year
• 2018 saw Easter fall in March. This year Easter was mid-April and the weather was very warm for the time of year
• The Tracker says ‘the hot Easter weekend delivered starkly different outcomes for Britain’s managed pub and restaurant groups…while pub sales surged in the sunshine, restaurants struggled in the heat.’
• This is a relatively normal state of affairs. A later Easter will, all things considered, benefit pubs. This certainly proved to be the case this year. More in Premium Email.
GENERAL NEWS – PUBS & RESTAURANTS:
• Several property companies due to report this week giving the market an insight into developments in the face of ongoing CVAs etc.
• The US based breweries, Boston Beer Co. and Dogfish Head Brewing have announced plans to merge their two companies in a deal worth $300m.
• McDonald’s has introduced a vegan burger option in its restaurants in Germany.
• Last year was a record year for international food and beverage operators entering the London market, with 21 new entrants.
• JD Wetherspoon has offered its apologies following one of its staff members asking a breastfeeding mother to cover her baby’s head, The Morning Advertiser has reported.
• USA sales of Irish whisky have soared, with sales increasing 900% in the last 15 years. An estimated 4.7m cases of Irish whisky was sold in america in 2018.
• The investment group, Capdesia Group has purchased a minority stake in Japanese-style grab-and-go chain Wasabi. Wasabi founder, Dong Hyun Kim commented: ‘I have always believed in the potential of the Wasabi brand and I wanted to share that experience with more customers every day. I am pleased to have found the right partner to help us to continue our journey and we look forward to taking Wasabi to the next stage of expansion with Capdesia’
• In the US, an AlixPartners study suggests restaurant operators are being weighed down by tight labour and too many delivery options. Adam Werner, global co-head of AlixPartners’ Restaurant, Hospitality and Leisure Practice said ‘If you peel back the onion, the consumers are feeling jittery,’.
• The Poacher pub in Nottingham, run by Castle Rock Brewery, will take in, and recycle, empty crisp packets.
• Pub chain Head of Steam is to open a third site in Leeds in a former bank. The brand now has units in Cardiff, Tynemouth, Sheffield, Newcastle, Nottingham, Liverpool, Hull, Durham, Manchester, Birmingham and Huddersfield.
• Tesco, Sainsbury’s, Waitrose and Nestle have promised to reduce food waste by 50% by 2030. The Department for Environment, Food and Rural Affairs has estimated that Britain currently wastes 10.2m tonnes of food every year, with 1.8m coming from food manufacture, one million from the hospitality sector, 260,000 from retail and the rest from households.
• Imperial Brands has accused its rival e-cigarette maker Juul of encouraging younger customers to vaping with high-nicotine products being labeled ‘legal highs’.
HOLIDAYS & LEISURE TRAVEL:
• Thomas Cook’s UK long-haul airline business could be sold to Virgin Atlantic. The long-haul business accounts for about 20% of all seats sold by the company with flights from Gatwick, Manchester and seasonally in the summer from Glasgow.
• Heathrow passenger numbers increased 3.3% yoy in April to 6.79m, boosted by the Easter getaway. North America was the top market with new flights to Nashville, Pittsburgh and Charleston helping to push up passenger numbers by 7.5% month-on-month.
• Have a squint at Saga shares. IPO, small putter around then sharp fall on back of multiple profit revisions (downwards)
• Uber partners with Bangalore-based mobility platform Yulu to provide e-bikes in India’s metropolitan cities.
• Latest data from Expedia suggests that UK hoteliers saw an “encouraging start” to the year, as a result of a “healthy rise” in hotel demand from international travellers. This is not what Whitbread & STR are saying.
• Expedia says Q1 demand for trips made by international travellers increased compared with the same period last year. Expedia says that demand in Manchester was up by more than 10% with demand in Edinburgh, Glasgow, Leeds & Cardiff all up by double-digit percentage amounts. Expedia’s numbers may be upwardly skewed if it is taking market share from either direct bookings or from other booking engines.
• Marriott has reported Q1 numbers a little ahead of expectations. The group says that occupancy fell 0.8% in North America with room rates up 2% and REVPAR as a result some 0.8% higher.
• Marriott worldwide REVPAR was up by 1.1% in the quarter, driven by a 1.5% increase in rates against a small decline in occupancy. Revenues rose to just over $5bn in the quarter with earnings coming in at 141c per share against estimates of around 134c. Marriott CEO Arne Sorenson says ‘Marriott’s performance in the first quarter was solid.’ He says ‘we continue to build our company for the future. In the first quarter, we opened our 7,000th property, the 27-story St. Regis Hong Kong. Year-over-year gross room openings accelerated to nearly 19,000 rooms, a first quarter record. Our development pipeline totaled approximately 475,000 rooms at quarter-end, nearly 3 percent higher than a year ago.’
• The number of sea cruises taken by British and Irish holidaymakers is set to increase by 22.5% by 2023, new research from Mintel has found. Mintel estimates 2.04 million British and Irish passengers will take a sea cruise in 2019, making the UK and Ireland market worth £3.2 billion this year.
• STR has reported that the US Hotel industry is expected to see occupancy for April to range between a fall of 1% and an increase of 1%. STR also estimated that RevPAR will range between flat and up 2%, with ADR anticipated to range between 1% down and 1% up.
• The countries in Africa leading the for hotel development have been Egypt, Morocco and Ethiopia, according to data from W Hospitality Group. Egypt led the pack, with 51 new hotels opening.
• Uber Technologies shares have fallen by more than 7% on its first day of trading following its IPO.
• Escape game company Escape Hunt has reported full year numbers to end-December today saying that revenues rose from £0.9m to £2.2m with adjusted EBITDA in its start up phase up recording a loss of £3.1m versus a loss of £0.9m last year. The loss per share is 49.4p.
• ESC CEO Richard Harpham says ‘it has been a significant year of progress with elements of the business reorganised and eight owner-operated sites successfully rolled-out across the UK. I am also delighted to report that the inaugural performance and revenue generated from these sites has been in line with expectations.’
• Mr Harpham says ‘the strength of the Escape Hunt brand helped us secure a major licensing agreement with the BBC, to create Doctor Who themed escape rooms. This was an important milestone for the Group and has helped us to deliver on our strategy of being the premier brand in the escape rooms sector. The demand for experiential leisure is reflected in our success and ability to attract growing footfall and we look forward to opening more UK sites during 2019 whilst expanding our franchise overseas.’
• ESC has also announced a conditional placing to raise a minimum of £4.0 million at 60p per share. The group says it ‘intends to use just over two thirds of the proceeds to fund the roll-out of an additional 16 UK owner-operated sites over the next three years, with the majority of the balance to be used as working capital contingency. To the extent additional funds are raised over and above £4.0 million, these will predominantly be used to accelerate the pace of the roll-out in the UK.’
• Goals Soccer Centres is set to lose its chief executive, Andy Anson, as the company’s shares remain suspended following a £12m accounting error. Mr Anson will replace Bill Sweeney, who resigned in February to become chief executive of the Rugby Football Union.
• PureGym has surpassed the 1m members barrier and has reported profits of £14.4m during 2018.
FINANCE & ECONOMICS:
• The UK economy grew by 0.5% in Q1 per the ONS. The stats body says that there was some evidence of stock-piling and of a rush to complete orders before the 29 March, the date on which the UK had been scheduled to leave the EU.
• NIESR reports ‘the pace of activity picked-up in the first quarter of 2019, with quarterly growth rising to 0.5 per cent after growth of 0.2 per cent in the final quarter of last year.’ It says ‘the improvement in the growth rate reflects temporary factors, such as the influence of additional stock-building on manufacturing output. Within manufacturing, the output of the pharmaceuticals industry increased by 9.4 per cent on the quarter, with at least some of the increase likely to be associated with stock-building abroad ahead of the original Brexit departure date. There was also a strong contribution in the first quarter from mining and quarrying output, which grew by 2.0 per cent on the quarter, but is known to be volatile.’
• NIESR says ‘the economy is on track to grow at the slightly slower pace of 0.3 per cent in the second quarter as some of these temporary factors fade.’
• Trade talks between the US and China ended on Friday without a deal.
• Press reports suggest that Peugot could buy iconic UK brand Jaguar Land Rover.
• Sterling little-changed at $1.3007 and €1.1582. Oil up a shade at $70.83. UK 10yr gilt yield unchanged at 1.14%. World markets mixed on Friday with Far East undecided in Monday trade.
• Politics, Brexit etc.:
o Tory Party said to be trailing 4th in various polls. Cabinet ministers dismiss upcoming EU elections as meaningless and a protest vote.
o PM Theresa May should set a date for her departure this week reports Sir Graham Brady.
o Labour health spokesman Jon Ashworth told Andrew Marr talks between Labour and the Tories over a Brexit deal were not “getting very far”.
o Brexit Party said to be, currently, the most popular in the country
o Remember Bertolt Brecht on the horrors of the past: ‘the womb is fertile still from which that crawled’.
START THE DAY WITH A SONG:
Last Friday’s song was Pretty Fly for a white guy by The Offspring. Today who sang:
I’ll cradle you
I’ll win your heart
With a woop-a-woo
RETAIL NEWS WITH NICK BUBB:
Saturday Press and News: The news that the struggling Select fashion chain has gone into administration (again) was followed up by the Times and the Telegraph, whilst the FT followed up on the news that the struggling Hamleys toy chain has been sold to Reliance Industries of India. Lex column in the FT looked at the Swiss watch market, in the light of the boom in smart watches, thundering that “the decision of retailer Watches of Switzerland to list in London may seem foolhardy”, but noted that upmarket Swiss watches are “still much in demand as luxury goods” and that it is only the bottom end of the market that has been hit. On a different note, the Daily Mail flagged up a survey showing that Aldi’s prices in its new upmarket Local store in Balham are slightly higher than elsewhere in the chain. The Times highlighted that the embattled shopping centre giant Intu Properties is having to
Sunday Press and News (1): The big focus in the Sunday papers was on the annual “Rich List” in the Sunday Times, but the news that the beleaguered Philip Green is no longer a billionaire, on the not unreasonable view that his stake in the embattled Arcadia fashion empire is now “worthless”, was banished to a small article on page 12 of the main paper. Elsewhere, Sainsbury remained in the spotlight, with the Mail on Sunday highlighting that the share price has reached a 30-year low, noting the view of the Bernstein analyst that the City is not convinced about the outlook for Sainsbury’s Bank or the reliance on chunky exceptional items, inter alia.
Sunday Press and News (2): Slightly out of the blue, the Business editorial in the Sunday Telegraph noted that Steve Rowe’s days as CEO of Marks & Spencer may be numbered, particularly if it drops out of the FTSE 100 in the next quarterly index review, with non-exec Katie Bickerstaffe tipped to be a candidate to succeed him. The Sunday Telegraph also took advantage of the fashion model photo opportunity provided by the upcoming Burberry final results, flagging that profits will be 5% down. The Sunday Times highlighted the reliance of Burberry on China, with c40% of its sales thought to come from Chinese customers. The Sunday Times also noted that Kingfisher will update on the boost that B&Q got from Easter in its Q1 update this week and that the two Property companies, Land Securities and British Land, will be giving updates on the value of their shopping centre assets this
Sunday Press and News (3): The Sunday Times also flagged that #MadMike has promised to invest in a new upmarket Frasers department store chain, if landlords give him three-year rent free deals. Separately, the “Inside the City” investment column in the Sunday Times highlighted how much better an investment JD Sports has been than Sports Direct and said that JD shares are still worth buying, despite their strong performance so far this year. The Sunday Times also noted that Tesco is planning to cut thousands of duplicate lines, to help it take on mighty Lidl and Aldi. Finally, the Sunday Times had a feature interview with Cath Kidston, the founder of the eponymous homewares chain, flagging that she is to be inducted into the World Retail Congress “Hall of Fame”, at its conference in Amsterdam this week.