Langton Capital – 2019-07-10 – JD Wetherspoon, private co’s, spin, veganism etc.:
JD Wetherspoon, private co’s, spin, veganism etc.:
A DAY IN THE LIFE:
I had to cut the grass last weekend but, as I started out, I ran over a length of rope, which snagged in the cutters, causing the machine to break down.
I then came in the house to get out my shabby and no doubt badly out of date tools when the handle fell off the tool cupboard leaving it locked with no apparent way of getting in.
An hour later and I’d located my B-team tools, had dismantled the locking mechanism and I was in. I then got the mower up on a wobbly plank balanced on a breezeblock to get under it and tugged and cut away at the rope until it was freed.
So far, so good.
But all the bumping and jarring had pulled a couple of electrical connections loose, so they had to be tracked down and reattached, after which the thing started but promptly ran out of petrol.
By now it was definitely beer o’clock but, in a supreme effort of will, I managed to get down the garage, procure some petrol, get the mower started and began to cut the grass only to be unceremoniously dumped on my backside when an apple tree branch speared the collar of my shirt and drag me from my seat.
But such is life and, as nobody saw it, I can claim it didn’t happen. On to the news:
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JD WETHERSPOON – FULL YEAR UPDATE: LfL sales strong, nothing on margins, 1,800 words on Brexit etc. Outlook unchanged. 10 July 2019:
JD Wetherspoon has this morning updated on trading for full year to 28 July and our comments thereon are set out below:
• JDW reports that for the 10 weeks to 7 July 2019 like-for-like sales increased by 6.9% and total sales increased by 6.6%.
PRIVATE COMPANY RESULTS: London Union PLC, which is controlled by Henry Dimbleby and Jonathan Downey, has reported FY numbers for the year to 30 December 2018 to Companies House. 10 July 2018: See Premium Email.
PRIVATE COMPANY RESULTS: Mission Mars, which runs the iconic Albert Schloss amongst other venues in Manchester and elsewhere, has reported FY numbers for the year to 30 September 2018 to Companies House. 10 July 2018: See Premium Email.
INTERPRETING THE NEWS: News is often given a bit of a spin, a nudge in the ‘right’ direction. There are no certainties but it often pays to read between the lines. Here we consider today’s stories. 10 July 2019: See Premium Email.
GENERAL NEWS – PUBS & RESTAURANTS:
• The Old Vic theatre in London has announced plans for a £12m arts hub extension.
• The Mexican restaurant Chiquito has launched a new vegan menu. Managing Director of the restaurant group, Angelo Gabrilatsou commented: ‘We are particularly proud of our new vegan menu. It stays true to our core objectives by driving innovation, accessibility and fun. Having guest choice at the heart and understanding growing trends, this menu allows Chiquito to be more accessible to guests that seek vegan options’.
• A new deal between Diageo, Molson Coors and Sky Sports will enable licensees to claim 50% off their Sky Sports bill if they stock Diageo and Molson Coor drinks. Frank Atkinson, Sky Business’s sales and commercial director said: ‘With Diageo joining the Sky and Molson Coors Partnership, new and existing customers can now enjoy even bigger savings and even more choice, serving up more of the sports and drinks that matter most to their customers’.
• PepsiCo reported Q2 numbers yesterday saying that it was seeing a ‘present pay back’ on investments it had made in both its drinks and snacks companies. Net revenues rose 4.5% to $16.5bn, with net income up from $1.82bn to $2.04bn. ‘Core Pepsi is what is driving the improved performance in soda,; Chief Financial Officer Hugh Johnston told Reuters.
• BrewDog CMO Jon Evans has told Marketing Week that the company was not ready to bring a chief marketing officer on board. Mr Evans left BrewDog after 3mths last year as it appeared that it wasn’t working. Mr Evans says ‘BrewDog is an amazing business. But what became fairly obvious, it was too early in their evolution to have a CMO.’
• Evans adds ‘James [Watts, co-founder of BrewDog] is the engine behind the business; he is the ideas, and does things in the way that he does. We got on famously, we just agreed it was a bit early on in their lifestyle to have a CMO.’
• The burger group, Patty & Bun has announced its intentions to launch two new brands and to introduce several vegan dishes. Patty & Bun’s founder Joe Grossman said: ‘Complacency is death in restaurants. You need to be constantly striving to improve’.
• The London based bar Black Rock is opening what it claims to be the city’s first whisky hotel later this summer.
• Hard Rock Cafe has announced it will open a new site at Piccadilly Circus in July 2019.
• Young’s pub company acquires the freehold interest in The Tunbridge Wells Bar & Grill from an investor, whilst simultaneously also acquiring the leasehold interest.
• Ocado declared yesterday that it is still ‘business resilient despite losing 10% of [its] capacity’ due to the fire that consumed its Andover warehouse in February. Ocado also said that ‘all losses will be covered’ via its deal with Morrisons which temporarily allows Ocado to use the whole storage capacity at a warehouse in Erith which is shared between the two retailers.
• Ocado says customers are ever more interested in fast delivery and low costs as opposed to brands, and will use its deal with M&S (commencing no later than September 2020) to add thousands of new products to the 50,000 that it already offers for delivery
• Crowdcube has reported another quarter of record revenues. It accounts for around 50% of equity crowdfunding issuance. In spite of this significant revenue growth, Crowdcube still generated a loss of £3 million in 2018, albeit down from a £4.7 million loss in 2017, this 8yrs after the company was incorporated.
• Seedrs lost £3.4 million (2016) and £3.3 million (2017), and AngelList made losses of £213k (2016) and an increased loss of £327k (2017). The latter has been in existence for 9yrs. Crowdfunding as a business model remains a relatively recent phenomenon with the first crowdfunding website being launched in 2001.
• Marks & Spencer has admitted that it is paying the price for ‘not shutting stores 10 or 20 years ago’. Chief executive of the group, Steve Rowe has commented that the planned 110 stores closures were ‘not finite’.
• Amazon warehouse workers in the US are planning to take strike action on the first day of the company’s Prime Day sales.
• A report by Retail Economics for law firm Womble Bond Dickinson suggests online shopping could more than double its share of the retail market by 2028. The report claims the internet is expected to account for 53% of retail sales in 10 years’ time.
HOLIDAYS & LEISURE TRAVEL:
• Kenwood Travel reports increased bookings to many destinations worldwide despite Brexit uncertainty. Florida was the most popular long-haul summer destination with bookings up 17%, whereas Dubai was the top city break destination. European countries dominate the list of the fastest growing destinations, with bookings to Cyprus almost doubling this summer.
• Frasers Hospitality UK, owner of Hotel du Vin and Malmaison, reports a pre-tax loss of £90.8m for the year to 30 September 2018. Turnover remained broadly similar yoy at £144.6m with director Guus Bakker saying the group faced ‘some of the most challenging trading conditions seen for over a decade’.
• France will introduce an ‘eco-tax’ for all flights from French airports with the tax only applying to outgoing flights. The ‘eco-tax’ is expected to raise around €180m from 2020 with economy class tickets on flights within France or the EU having a tax of €1.50 imposed.
• Marriott is facing a $124m fine for failing to protect customer data, in the second major penalty proposed this week by the UK regulators.
• Sir Richard Branson has announced his intentions to float his space tourism venture Virgin Galactic in the stock market at a valuation of $1.5bn.
• Travelport has named Greg Webb as the group’s successor to outgoing chief executive Gordon Wilson.
• Buzzlines Travel, the Hythe based travel firm, has ceased trading and has cancelled all planned upcoming trips. Buzzlines released a statement: ‘It is with deep regret that we must inform you that Buzzlines Travel has ceased trading and is unable to fulfil its commitments whilst entering in to a formal insolvency procedure’.
• Elegant Hotels’ shares fell around 5% yesterday on news that the company was in dispute over plans to develop a hotel in Antigua. The group has received a termination notice regarding its management contract of the hotel on a ‘partially open’ basis.
• Ten Entertainment, the operator of 45 bowling and entertainment centres, announced its sales increased 9.6% over the 26 weeks to 30th June 2019, with LfL sales up 7.4%. The group commented that adjusted EBITDA performance in H1 should be in line with expectations. CEO Duncan Garrood said: ‘The business has shown strong growth in the first half driven by the continuous improvement of the quality of the customer proposition and accelerated investment in digital marketing’.
FINANCE & ECONOMICS:
• Sterling edged lower to 6mth lows yesterday on further worries regarding a possible disorderly Brexit.
• Sterling lower at $1.2452 and €1.111. Oil up at $64.81. UK 10yr gilt yield unchanged at 0.72%. World markets mixed.
• Brexit, politics etc.:
o BBC says that even HMG’s own advisors re a technological solution to the Irish border problem post Brexit are not playing ball. The Business and Trade Union Alternative Arrangements Advisory Group is reportedly refusing to sign off on its terms of reference.
o FT reports that pro-Brexit politicians may be hostile to a civil service that they do not consider patriotic enough and not sufficiently pro-American.
o President Trump has called the UK ambassador to the US ‘wacky’ and a ‘pompous fool’. And a ‘very stupid guy’. He has said that Mrs May’s Brexit plans were ‘foolish’. He calls the current UK Brexit situation ‘a disaster’.
o MPs have confirmed that the botched Ferry Project was ‘rushed and risky’ and has cost the taxpayer £85m.
o Boris Johnson repeatedly refused to say whether he would resign if Britain did not leave the EU on October 31 yesterday evening in his debate with Jeremy Hunt. The latter portrayed Johnson as evasive.
o Johnson got a few blows in. Many votes will already have been cast. The BBC debate is Friday.
START THE DAY WITH A SONG:
Yesterday’s song was Ashes to Ashes by David Bowie, today who sang:
And when I next saw you
My heart reached out for you
But my arms stuck like glue to my sides
RETAIL WITH NICK BUBB:
Dunelm: Back on June 20th Dunelm flagged that Q4 trading had been much stronger than expected, thanks to the helpfully cool weather and weak comps, and that full-year profits would be up to as much as £124-126m and today’s formal Q4 update (for the 13 weeks to June 29th) sets out the detail: LFL sales were up by a healthy 15.4% and gross margins were 240bps up. Net debt was down to only £25m, but Dunelm says there were some timing benefits to that outcome and it has not been drawn on the hoped-for special dividend ahead of the finals on September 4th.
Superdry: The delayed Superdry finals look broadly in line with expectations, with “underlying PBT down 57% to £42m, before a chunky £130m onerous lease and impairment charge. But shareholders will groan to hear that the new financial year is to be “a year of reset”, with revenue expected to be slightly down, particularly in the first half. The analysts meeting at 9.30am should be lively.
AGM Watch: Yesterday brought the Marks & Spencer, Kingfisher and N Brown AGM’s and, as expected, there was no real drama, but the scale of the shareholder’s vote against the Director’s pay reports were interesting…At N Brown the vote against was minimal and at M&S it was less than 2%, but at Kingfisher it reached as high as 24%, forcing the company to promise to engage more closely with shareholders, to understand their concerns about management incentives.
News Flow This Week: Tomorrow brings the Pets at Home AGM and the Game Digital/Sports Direct formal offer acceptance date.