Everyman, Wm Hill, consumer spending, discounts etc.:

A DAY IN THE LIFE:

So, the mornings are getting darker and, as you need the lights on more, it’s at this time of year that you realise, once again, just how impracticle those light-bulbs that take about ten minutes to warm up, are.

By this we mean that, if you put the landing light on to pop down and feed the dog, and there’s a skateboard halfway down the stairs, you’re going to end up in a mess.

Because finding yourself crumpled in a heap at the foot of the stairs at 5.30am covered in dog food and hungry dog with a couple of twisted ankles and an outraged expression on your face, isn’t a good look.

Just saying but, with the sun still struggling to make an appearance over the horizon, let’s move on to the news:

PUBS & RESTAURANTS:

• Barclaycard has reported that consumer spending grew 4.5 per cent year-on-year in August. It says this is ‘maintaining the strong level seen earlier in the summer’ but, the problem is, it’s not what is being seen on the ground.

• Barclaycard says ‘essential spending rose 6.9 per cent, bolstered by rises in petrol (10.9 per cent) and supermarket expenditure (5.0 per cent).’ This is hardly possible as GDP is around 1.5%. Add in inflation of 2.3% and you get to a figure of less than 4%. There is a little more borrowing going on but it does not fill the gap.

• Barclaycard says that ‘entertainment remained strong at 10.3 per cent, driven by ticket sales as well as pub spending.’ It says that pub spending is up 11.9%. The Coffer Peach Tracker as well as empirical evidence suggests that the real number is between 0% and 1%. Perhaps there is an issue with the movement from cash to plastic.

• Barclaycard says ‘a third of consumers (34 per cent) say they are now planning to reduce their spending after making the most of an unusually hot summer.’

• The card processor reports ‘Brits have been feeling confident enough in their spending power to enjoy summer events and evenings out. However, it’s clear they’ve struck a balance between spending on essentials and treating themselves. Looking ahead, it appears that many consumers are planning to tighten their belts and keep a closer eye on their finances after spending more than usual over summer.’ This does not closely accord with what we are seeing with our own eyes.

• Discounts still heavy with little sign that there is the ability or the desire to row back to full prices. Prezzo 30% off food (aren’t list prices then just 30% too high?), Bella Italia 30% off food, Café Rouge second meal for £1 (about 40% off) and Pizza Hut 33% off food.

• Fuller, Smith & Turner has reported that CFO James Douglas ‘has decided to step down from his position as Finance Director and will retire from the Board in December 2018.’ Mr Douglas is to move to Germany. Fuller’s says ‘the search for a replacement is underway and we will keep shareholders updated.’

• Brokers warn some pub companies are in a “precarious state” due to high levels of debt and fickle customers.

• Drinkaware has given guidance to students ahead of Freshers’ Week. It says eat plenty of food and try not to drink before you go out. It suggests that students should always carry identification (including their new address) and they should keep a track of their spending and their drinking. They should stick with a group of friends, they should drink water from time to time and not consider themselves in a race to get as drunk as possible, as quickly as possible. All good stuff.

• Duncan Garrood, CEO of Bill’s, has taken to LinkedIn to congratulate his staff on their recent store perfomrances. Mr Garrood wirtes ‘this week…we transformed our flagship restaurant in Soho and re-opened it with new decor, menu and service, in just ten days. It looks amazing, the restaurant team are delivering brilliant experiences, customers are loving it and giving great feedback.’

• Mr Garrood writes ‘we then started on the transformation of our next restaurant at Greenwich, which we’ll re-open this week. Amazing energy by our team, and then we have a third one the week after! With all this going on, the remaining restaurants drove up their standards, and LFL sales have improved.’

• The total number of out-of-home bakery visits fell 2% to 1,463m during Q2 2018 as less people went at lunchtime, according to the latest MCA Bakery & Sandwich Tracker.

• Australians are drinking less alcohol now than at any point in the past 50 years, according to data released by the Australia Bureau of Statistics (ABS).

• Cider maker Westons has refreshed its senior team with two new appointments as it attempts to increase production to 60m litres by 2022. The producer of Stowford Press, Henry Westons, Mortimer’s Orchard and Rosie’s Pig has appointed ex-Heineken trading director Darryl Hinksman to head of business development and Steve Hadcroft to manufacturing manager.

• The Department of Coffee and Social Affairs has seven new sites under construction, which would take its UK estate to 26, per MCA. The concept is owned by a holding company on the New York Stock Exchange and also has three new sites soon to open in the US to add to its existing two. However, the holding company’s interim financial update for Q1 2018 shows The Department has an accumulated deficit of $2.16m (£1.92m) and that ‘without further funding, these conditions raise substantial doubt about the Company’s ability to continue as a going concern.’

• Marston’s is introducing a veggie and vegan burger supplied by Moving Mountains that ‘sizzles, smells, tastes and bleeds like meat but is completely plant-based’. The B12 burger, which contains 18g of plant protein, uses natural ingredients, scientific processes and confidential technology to make the burger replicate animal meat in every way. It features oyster mushrooms, pea protein, oats and the vitamin B12 among other plant-based ingredients.

• The NPD Group reports visits to British casual dining outlets were up 7% in the year ending June 2018, accounting for 5% of visits in Britain’s out-of-home foodservice industry. Britons spent some £6 billion on casual dining in YE June 2018, around 11% of total OOH spend, with spending on casual dining growing four times faster than the total market. 

• Fenwick announces it will cut 408 jobs as part of a restructuring plan to compensate for falling pre-tax profits. The company reported a 93% fall in pre-tax profits to £2m in the year to 26 January.

• Amazon reaches £1 trillion on the stock market becoming the second company to do so after Apple hit the milestone on 2 August. 

HOLIDAYS & LEISURE TRAVEL

• Jet2.com and Jet2holidays has announced plans to recruit for more than 2,000 jobs across the UK and a further 1,000 across Europe.

• The number of Britons taking a river cruise increased 21% year-on-year in 2017, according to figures released by Clia UK & Ireland, up from 174,400 to 210,400.

• Dalata Hotels reports pre-tax profits up 8.3% yoy to €35.4m in H1, with revenue up 10.6% to €180.6m. RevPAR increased 7.1% to €89.39 and ADR of €108.88. The company has a pipeline of 2,800 rooms due to open by 2021, including 1,500 this year with new hotels planned in London, Birmingham, Manchester, Bristol, Belfast and Dublin. 

• AccorHotels acquires Mövenpick Hotels & Resorts for €482m. Mövenpick operates 84 hotels with 42 additional hotels in the pipeline due to open by 2021.

• On The Go Tours has sold a majority stake to Alcuin Capital Partners for an undisclosed sum, with founders Jay Lakshman and Scott Braidwood remaining as shareholders.

• Eighty members of the GMB union working at Liverpool John Lennon airport plan to strike for 12 days until the end of October. The airport has pledged to maintain ‘business as usual’ while the workers strike over pay. 

OTHER LEISURE:

• Everyman Media Group reports reports H1 revenue up 32% to £24.9m with adjusted EBITDA increasing 35% to £4.1m. One new venue was added over the 27 weeks ended 5 July 2018, taking the cinema chain to 22 venues operating 69 screens with a pipeline of a further 15 venues. Chairman Paul Wise commented ‘2018 has continued the significant growth in the business seen in 2016 and 2017. This expansion, along with underlying revenue growth and improved efficiencies, delivered an overall performance in line with the Board’s expectations for the period.’

• William Hill has reported that it has entered a US partnership with Eldorado Resorts. The group says ‘William Hill becomes Eldorado’s exclusive partner in provision of digital and land-based sports betting and online gaming.’

• William Hill reports ‘within weeks the partners will open William Hill sportsbooks in five properties across three states – The Tropicana in Atlantic City, New Jersey; The Mountaineer Casino Racetrack and Resort in West Virginia and three casinos in Mississippi – The Lady Luck Casino in Vicksburg, Isle of Capri in Lula and Tropicana Casino in Greenville.’ William Hill CEO Philip Bowcock comments ‘partnering with Eldorado gives William Hill access to one of the largest and most attractive casino footprints with 23 million customers across multiple states. This partnership provides extensive cross sell and profit growth opportunities to both parties. Together, we are positioned to capture the evolving US opportunity – starting with land-based sports betting and extending to digital sports betting and, in some states, online gaming.’

• Green Man Gaming, an online video games etailer, plans to IPO for £100m on the AIM index. The company will use the funds raised to expand into Asia and the Middle East.

• Maoyan Weiying, CHina’s largest online movie ticketing service, plans to IPO on the Hong Kong stock exchange aiming to raise up to $1bn. Maoyan is backed by Tencent and is a key piece in its online-to-offline rivalry with Alibaba.

• Jack Dorsey, CEO of Twitter, will testify in front of Congress on Wednesday to say the company ‘does not use political ideology to make any decisions.’ Dorsey’s written testimony will also say a recent company review showed ‘no statistically significant difference’ between how often tweets by Republican and Democratic members of Congress are viewed by Twitter users.

FINANCE & ECONOMICS:

• The August Construction PMI fell sharply in August from 55.8 to 52.9. Whilst any number over 50.0 implies expansion, the August number was well below estimates of around 55.0. HIS Markit reports ‘August data pointed to a renewed slowdown in output growth across the UK construction sector, with all three broad categories of activity recording a loss of momentum since the previous month.’

• The much larger Services PMI comes out at 9.30am this morning. The numbers thus far released are starting to put downward pressure on full year GDP estimates of a little under 2%.

• Mark Carney has said that he is willing to stay on as governor of the Bank of England if it will help the government get through Brexit. Mr Carney has headed the Bank since 2013.

• Sky poll suggests the public does not think the UK economy is working for young people, or those living outside the south of England.

• Sterling little changed at $1.2859 and €1.1089

• Oil down a fraction at $77.80

• UK 10yr gilt yield up 2bps at 1.43%

• World markets: All down yesterday. Far East down today.

• Brexit etc.:

o Back in the news with a bang. No agreement yet from Brexit supporters what the country wants to get from the process.

o Independent quotes poll saying 2.6m people have dropped their support for Brexit and that the country decisively does not now wish to leave the EU given the lack of certainty and the disruption forecast .

o Boris, Rees Mogg and reportedly Michel Barnier, agree that Brexit proposals are ‘rubbish’.

o Treasury slapped down for suggesting that no-deal Brexit would cost UK 10% of its wealth and that the Chequers proposal would also see the UK worse off than it would otherwise be.

o Debate stifled by browbeating Brexit bullies intimidating opponents, snowflakes, remoaner, traitors & elite jibes (often misplaced or ill-researched) etc. Some now calling for remainer activists to lose their jobs. Some remainers can feel themselves self-censoring.

o Guardian & FT back on Brexit after summer break. Given the turmoil, they both gleefully go off on one. But, as remoaner, snowflake traitors, they would, wouldn’t they.

o Telegraph suggests UK economy is already 2% smaller than it would have been if the Brexit vote had gone the other way. That’s a £45bn hit per annum and growing.

o Independent reports rate of staff turnover at the Department for Exiting the EU is near 50% as half the staff have left in its c1yr of existence. Average age there now is 32yrs.

PRIOR DAYS LATER TWEETS:

• Later tweets: See Langton 60 seconds on ‘Mobile bookings, Time to save Time? Today on website www.langtoncapital.co.uk

• Whitbread shares down yesterday. Concerns splitting co will not be easy overwhelm hopes for further (total company) sales. H1 on 23 Oct.

• Construction PMI slips to 52.9 in Aug from 55. July. Estimates for 55.0. Services (much bigger) out Weds. Mfrg optimism @ 22mth low

• Poor PMI numbers now putting pressure on GDP estimates for the full year, leaving too much to do in Q4??

• Brexit disarray Theresa soldiers on, Boris & Rees Mogg say Chequers rubbish, Raab ‘confident’ but Greening says less popular than poll tax

• IGD says ‘as hot weather faded in August, so did the momentum behind food and grocery sales after a long run of excellent results’

• Barclaycard says consumer spending up 4.5% in August with pub spending +11.9%. Must be skewed by move to card over cash

START THE DAY WITH A SONG:

Yesterday’s song was Kathleen by Catfish and the Bottlemen. Today, who sang:

Powers keep on lyin’,

While your people keep on dyin’

World keep on turnin’

RETAIL NEWS WITH NICK BUBB:

QUIZ: Despite Footasylum’s moaning about the challenging state of the High Street, the fashion chain QUIZ (which is chaired by JD Sports’ boss Peter Cowgill) has issued a reassuring AGM trading update today. There are no figures, but the message is that “the Board is pleased with the Group’s performance during the period which shows continued growth across each of our channels” and, with Christmas to come, “the Board remains confident that QUIZ is on track to deliver market expectations for the full year”. The new stores in Bluewater and Oxford have started well and the only black spot is that QUIZ has had to write-off £0.4m on its House of Fraser concession business. 

John Lewis Trading Watch: Ahead of this week’s exciting rebranding and next week’s depressing interim results, John Lewis regained a bit of lost ground last week, “driven in part by a strong Bank Holiday performance and new seasonal launches”, according to yesterday’s weekly sales overview from JLP. The helpfully autumnal weather and a weak comp in w/e Sept 1st saw gross sales rise by 4.5% (c2.5% up on a LFL basis). Electricals were only up a tad in gross terms, but Home sales were up by 2.1% gross and Fashion sales jumped by 11.4% gross (with Womenswear alone up by 21.7%). After the weak start to the second half of the financial year, gross sales are now running up by 1.3% gross over the last 5 weeks combined (c0.5% down LFL).

Waitrose Watch: Over at Waitrose the cooler weather was unhelpful last week to sales of picnic and barbecue fare (contrasting with last year’s very hot Bank Holiday weekend) and gross sales at Waitrose were 3.0% down, ex-petrol, in w/e Sept 1st (also c3% down LFL). The last 5 weeks overall have been down 0.3% gross, despite the strong start to August for Waitrose.

Dixons Carphone: Ahead of tomorrow’s Q1 trading update, the hard-working IR team at Dixons Carphone has circulated analysts with the LFL revenue consensus, which is for the UK to be flat, the Nordics to be up 1% and Greece to be up 5%, for an overall Group LFL sales total of flat. The business usually manages to beat these consensus sales estimates, but the main interest will be in what the new CEO Alex Baldock says about the impact of the World Cup on pulling forward TV demand and the update on the key negotiations with the mobile network operators (which are rumoured to have gone badly…).

News Flow This Week: The latest FTSE quarterly index review is announced after the market close this evening (based on last night’s closing prices), but no big surprises are expected. Tomorrow brings the Dixons Carphone Q1 update/AGM and the Carpetright AGM.