Langton Capital – 2019-07-15 – TCG, June Tracker, DPEU, crowd-funding, Gfinity etc.:
TCG, June Tracker, DPEU, crowd-funding, Gfinity etc.:
A DAY IN THE LIFE:
So it’s only now, now that it’s much too late, that I’ve been looking into the running costs for a Bearded Dragon.
Because, though the thing spends pretty much all of its time simply looking at me to judge whether it could manage to eat me and passing food through its rear end, it seems to be costing a lot of money.
Every second package from Amazon or elsewhere not seems to contain locusts or some ornament or other for its cage and heaven knows what it costs to heat its cage.
And this all while the frogs and toads in the garden, which at least would eat some of the pests that destroy our veg, would come for free. On to the news:
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JUNE TRACKER: Cooler (not to say wet and horrible) weather benefits restaurants but does little for pubs. 15 July 2019: See Premium Email
PRIVATE COMPANY RESULTS: Hippodrome Casino Ltd has one, very large casino in London. It has reported full year results to 31 Dec 2018 with Companies’ House. 15 July 2018: See Premium Email
GENERAL NEWS – PUBS & RESTAURANTS:
• The June Coffer Peach Tracker concludes that restaurant sales rose 6.1% on a LfL basis in June whilst pub sales declined by 1.2%. See also Premium Email.
• DP Eurasia has updated on trading for the 6mths to end-June saying its store numbers are up 64 to 736 and group sales are up 9.9%.
• DP Eurasia says it ‘expects the full year Adjusted EBITDA for 2019 to be in line with expectations.’
• DPEU CEO Aslan Saranga says ‘we are pleased with our performance for the first half of 2019 amidst challenging trading conditions. Following pro-active steps at the start of the year, we have been able to put the slow start in Turkey behind us, posting 7.7% like-for-like growth in the period. Our 4.7% like-for-like growth in Russia reflects the strong comparatives due to the 2018 FIFA World Cup. We remain confident in delivering high single digit like-for-like growth in Russia as we moved to a simplified menu, increased investment in our digital channels and refocused local store marketing activities as of July. Our search for a CEO of our Russian Operations is continuing and we are targeting an appointment by year-end.’
• DPEU concludes ‘we remain on target for store openings for the full year in both our main markets and the Board expects the full year Adjusted EBITDA for 2019 to be in line with expectations.’
• Manchester brewer and pub company JW Lees has filed its accounts for the year to 31st March 2019 saying that revenue rose 10.7% to a record £78.4m.
• JW Lees, which operates 142 pubs, inns and hotels, alongside a Free Trade and National Accounts business, says that LfL sales across its 39-strong Managed estate rose +1.9% with total sales in the Managed estate growing +14.2% ‘as it saw the benefit of recent acquisitions and refurbishments.’
• JW Lees 103-strong Pub Partnership estate ‘saw like-for-like net income growth of +2.1% with average EBITDA per pub up +4.5%, reflecting the improved quality of its pubs which are now all on a strict five-year refurbishment cycle.’
• Underlying EBITDA rose +41.8% to £10.3m with PBT up +51.1% to £6.8m compared with £4.5m the previous year.’ CEO Managing Director, William Lees-Jones said, “we always planned for 2019 to be a great year for JW Lees after two years of significant CAPEX and associated closures of larger properties like the Alderley Edge Hotel. We remain totally committed to our model of running Managed Houses, Pub Partnerships and Free Trade and have now grown our Hotels & Inns business to 291 bedrooms.’
• JW Lees concludes ‘we have had a slow start to 2019, with retail sales down 1.2% in the first 14 weeks of the year but it was always going to be tough going compared to last summer’s heatwave and the optimism that Gareth Southgate and the England team inspired by getting to the semi-finals of the World Cup in Russia.’ See also comments on current comparative sales in Premium Email.
• Falling footfall on the high street is impacting retailers’ revenues, with consumers moving toward shopping online. However, costs are sticky and rents, rates and labour tend to rise. The LDC reports the 2018 retail vacancy rate increased by 0.3% to 12.7%.
• The government is setting up the ‘High Street Task Force’ to help tackle this. The committee will be fully operational by July 2020 and will be led by Manchester Metropolitan University’s Institute of Place Management (IPM).
• Just Eat has bought City Pantry, the office catering marketplace that allows companies to order in food for staff, company events and meetings, for £16m in cash with a possible further payout depending on 3yr numbers.
• The Evening Standard reports more than 70 former Jamie Oliver Restaurant Group staff are suing the company for up to £1m regarding an allegedly flawed redundancy process.
• Craft beer start-up Hop Stuff has been sold to Molson Coors in a pre-pack administration deal. The deal will see up to 1,300 investors from crowdfunding wiped out after putting in £1.5m. See Langton comments on Crowd Funding, innovative funding solution or massive money-bonfire?
• Heston Blumenthal’s UK restaurant business made losses of £1.7m last year, sparking fears among staff that it could ‘do a Jamie Oliver’.
• Anheuser-Busch InBev has decided to not sell up to $9.8bn in shares in its Asian business after weak investor appetite.
• The chef of Temper, Neil Rankin is launching a new vegan burger restaurant that will focus on fresh ingredients as he claims other brands use ‘heavily processed’ meat substitutes. The restaurant will operate under the Simplicity Burger brand and will open in Shoreditch in October.
• The managing director of the grab-and-go chain Wasabi, Frederic Lluch has stepped down from his post after two years, the Caterer has reported.
• Compass Group has acquired the foodservice operator Dine Contract Catering after taking a 75% in the firm.
• KFC has become the first UK fast food chain to sign up to new European welfare standards for farmed chicken.
• The ACS Local Shops Report from 2018 claims 30% of independent convenience stores offer some type of coffee machine in store, with only 12% having a barista coffee offer.
• US restaurant LFL sales fell 0.01% yoy in June, according to Black Box Intelligence. Same-store sales growth for Q2 was 0.2%, which represents a 0.7% decrease quarter-on-quarter.
• MEATliquor is bringing back the Grilled Chicken Caesar Salad from 15 July at MEATmarket.
HOLIDAYS & LEISURE TRAVEL:
• Thomas Cook shares fell by 59% on Friday on fears that the proposed refinancing, involving a debt for equity swap and a cash injection from major shareholder Fosun, could virtually wipe out existing equity holders.
• No solid terms (other than the desire to raise £750m) have been mentioned. The terms of the debt for equity are unknown. Thomas Cook’s theoretical value at present could easily be less than its debt suggesting that, whilst debt holders may have to take a haircut, there would be little if anything left for equity.
• The FT suggests ‘the rescue, if agreed, would be a relief to customers, suppliers and staff. But Fosun’s chances of turning the group round are slim.’ It says ‘current shareholders…therefore, cannot expect much in the way of a sweetener to agree to the restructuring. Using peer group multiples, Citi reckons the airline and tour group has an enterprise value of £745m compared with the bonds’ face value of £986m. The gap is negative equity.’
• The paper continues ‘with as much as £1.6bn of debt liable to be converted to shares, existing equity investors will be left with a tiny stub. They may be able to participate in the recapitalisation, Thomas Cook suggests. They should only do so if their travel preferences extend to hot and risky places the Foreign Office advises against visiting.’
• Hotel News Now comments on the US market, saying ‘it seems clear that we are in the early stages of a downturn’ and forecasting occupancy to be flat to down 1% over the next 12 to 18 months.
• Gfinity PLC is to raise £5.25 million at 4.5p per share saying this is ‘oversubscribed following strong demand from both new and existing investors.’
• Gfinity says the ‘placing follows [a] period of strong growth, under new leadership, with the Company expecting to slightly exceed market expectations of revenue and Adjusted EBITDA for the year to 30 June 2019.’
• The net proceeds will ‘provide capital for further growth and to strengthen commercial capability, enabling the Company to take advantage of a leading position it has created in the fast growing esports sector.’
• Gfinity is loss-making and, though the concept appears in tune with changing demand trends, it will need to make profits at some stage.
• The company says ‘following the introduction of a new executive leadership team, from May 2018 onwards, the Company has refocused resources to the areas driving the greatest commercial performance, in particular in growing its commercial and account management capability.’
• Gfinity says ‘the Company reiterates its target of achieving Adjusted EBITDA break-even by 2021. Revenue is expected to be driven by significant increased activity in managed services and wholly and part owned and operated solutions. Annual operating expenditure is expected to reach and remain relatively stable around £10-12 million in the medium term.’
• Facebook was fined $5bn by the US Federal Trade Commission on Friday, regarding the social media company’s handling of user data in the Cambridge Analytica scandal.
• Moody’s reports that Eldorado Resorts’ agreement to sell two casinos is credit positive
FINANCE & ECONOMICS:
• Acting IMF chief David Lipton has suggested that new monetary stimulus by the world’s top central banks to sustain the flagging global economy is justified, he says ‘our view is that if the economy needs support, you provide support — but not inappropriate policies that contribute to the slowdown, just in order to be in a position to fight the very slowdown that has been created.’
• China’s economy grew at 6.2%, its slowest pace since the early 1990s, in Q2 this year.
• Sterling up a fraction at $1.2565 and €1.1146. Oil down a shade at $66.62. UK 10yr gilt yield unchanged at 0.84%. World markets – UK & Europe lower Friday but US higher. Far East up in Monday trade.
• Brexit, politics etc.:
o UK now in dispute with EU, US, China, Iran etc. Still looking to cut trade deals with all of the above. It’s almost as though it would be in our interest to be a part of a bigger trading bloc. Perhaps one involving our nearest geographic neighbours.
o Germany plus model looking the best for the economy. I.e. stay in the single market, don’t have to join the Euro, opted out of Schengen, Thatcher rebate etc. etc.
o Bank of England may have to cut interest rates to virtually zero in the event of a no-deal Brexit says official Gertjan Vlieghe. Sterling would then presumably take the strain, cost of imports rise, trade deficit widen etc.
START THE DAY WITH A SONG:
Last Friday’s song was Monster by The Automatic. Today, who sang:
Now once, I was down-hearted,
Disappointment, was my closest friend
But then you, came and it soon departed
RETAIL WITH NICK BUBB:
• Saturday’s Press and News (1): The profit warning from the once highly regarded Manchester-based car dealer Lookers was the main talking point in the Saturday’s papers (even though the share price was only 9% down, the same fall as at its struggling rival Pendragon).The FT headline was “Lookers hits trouble with its profits MOT” and the headline in the Times was “Look away now: top car dealer in profit warning”, whilst the Business editorial in the Times pointed out that the Lookers share price has now halved since May, even though the company says that the FCA investigation, the change of FD and the profit warning are all unrelated events…
• Saturday’s Press and News (2): The FT interviewed Greggs’ boss Roger Whiteside on the back of the opening of its latest “drive-through” outlet (on the outskirts of Newcastle), noting that the company is looking at home and office delivery trials (“Greggs gorges on growth after vegan roll success”) , The Guardian followed up the departure of M&S Clothing boss Jill McDonald with a detailed feature on the persistent supply chain problems in M&S Clothing: “Clothing chief pays price for M&S’s “Jeansgate” debacle”. The FT also had a “Small Cap” feature on how High Street retailers are trying to benefit from the collapse in property rents, focusing on Superdry, Halfords and Ted Baker. And the Times had a feature on the cost of #MadMike’s “scattergun buying spree” ahead of the Sports Direct final results next week (“Big move upmarket doesn’t come cheap”), noting the change in
• Sunday’s Press and News (1): The big focus, in Retail terms, was on Sports Direct in the Sunday’s papers, ahead of next week’s results, with the Observer flagging that “The cost of Ashley’s aspirations will soon become clear”, quoting our view that the company has said nothing about its trading performance since the interims in December, but the core UK Sports Retail business is likely to have been disappointing and House of Fraser pretty disastrous. The Sunday Telegraph also highlighted the big losses expected at House of Fraser, whilst the Sunday Times also stuck the boot in (“Ashley reels from year of chaotic takeovers”), noting that there is a total lack of visibility about the company…
• Sunday’s Press and News (2): The Sunday Times flagged that Travis Perkins is accelerating its plans to sell its Wickes DIY division, after replacing the company’s CEO. The Mail on Sunday had plenty of Retail stories, as usual, following up its story last weekend that ASOS is looking to make 100 redundancies at its HQ with the news that ASOS is also looking at a similar number of job cuts in its Watford call centre. The Mail on Sunday also flagged that there has been plenty of buying interest in the struggling Jack Wills chain (although its rival Crew Clothing is said to be no longer involved in discussions) and that M&S has poached the former Top Shop fashion guru Maddy Evans to help its focus on younger women. Oliver Shah looked at the sacking of M&S Clothing boss Jill McDonald in his column in the Sunday Times, noting that her failure reflects poorly on CEO Steve Rowe,
• Sports Direct: As flagged in the weekend press, Thursday was meant to be “D-Day” for #MadMike, via the much-awaited Sports Direct finals, but, sensationally, the company has just announced that it is has had to postpone the results because the auditors haven’t finished the accounts, with the main reason being “the complexities of the integration into the company of the House of Fraser business, and the current uncertainty as to the future trading performance of this business”, There may be something in what Sports Direct say about company audits generally taking longer because of increased regulation (Superdry’s results were delayed by the complexity of its onerous store impairment provision), but the company hasn’t updated the City since its interims in December and HoF is clearly a disaster area, so this is a serious situation. The company hasn’t even been able to give a new date for
• News Flow This Week: Tomorrow brings the Burberry Q1 update and then on Wednesday we get the Watches of Switzerland finals and the Koovs finals. Thursday brings the Hotel Chocolat update, the AO.com Q1/AGM and the ONS Retail Sales figures for June. The British Land AGM is then on Friday.