Langton Capital – 2019-10-17 – Mexican food, Domino’s, JDW, tips, whisky, TCG etc.:
Mexican food, Domino’s, JDW, tips, whisky, TCG etc.:A DAY IN THE LIFE: Is it just me or is it a tad irritating to be lectured on climate change by celebrities and their flunkies who’ve been jetting around the world on various junkets looking at forests and lakes and mountains and the like? Maybe they’re ‘raising awareness’ or whatever but I’d like a slice of that and, unless you’re going to do a Thunberg and swim to America or wherever you’re going, then can’t you do the whole thing on Skype and give a speech down the local WMC? Or they could talk about recycling plastic, eating less beef and generally being a bit more respectful of the planet in a rain-soaked English city (where the rest of us are). Or plant a few trees on their land or even do a bit of an Elton John and quietly give away a chunk of their money to good causes whilst not making a song and dance about it? Anyway, that’s all probably another topic best avoided so, with Boris Johnson in Brussels today finding out that this negotiation wheeze isn’t just about presenting a one-sided wish-list in a firm voice, on to the news: LANGTON PREMIUM EMAIL: Corporate Offer: Premium email just £295 (plus VAT) for a single subscriber or £495 (plus VAT) for multiple subscribers. Drop us a line to get involved. Retail Offer: Easy in, easy out. £30 per month (inclusive of VAT, £25 net) via PayPal. Email us for details or check here. ADVERTISE WITH US: Langton’s free email now carries adverts. See front page of website for today’s copy & contact us for further details. Part II (of II) on MEXICAN RESTAURANTS: The number of Mexican, Better Burger and East Asian restaurants in the UK has mushroomed. Here we look at the former. Have the operators been making money? 17 Oct 2019: See Premium Email. GENERAL NEWS – PUBS & RESTAURANTS: • DOM says trading has ‘stabilised’ but it intends to exit each of its four international markets. • Domino’s Pizza Group has updated on Q3 trading saying that group system sales rose by 3.4% in Q3 and UK & ROI sales were 3.9% higher. Domino’s calls this latter performance ‘solid’. • Domino’s has opened 12 new stores in the UK & ROI in Q3. It adds that online sales in the UK are +7.2%. • DOM says its ‘review of International markets [has been] concluded’. It says ‘the Board has decided to exit the markets in an orderly manner.’ It says ‘the search process for the new CEO continues and the process for the new Chair, led by Ian Bull, has commenced, with recruiters appointed. The Board intends that both processes are progressed as quickly as possible.’ • Current DOM CEO David Wild says ‘we delivered a solid performance in our core UK and Ireland markets, with system sales up 3.9%, against a market backdrop that remains challenging.’ • DOM cautions that ‘normal working practices continue to be impacted by our franchisee dispute. As we said at our interim results, this situation is complex and we expect a resolution to take time, certainly into 2020. We remain committed to working with our franchisees to agree sustainable win-win solutions.’ • DOM says ‘although the financial results have stabilised, the performance of our international business remains disappointing. Over the past six weeks we have completed a review with external consultants, assessing each of our four international markets and the future prospects for our businesses. We have concluded that, whilst they represent attractive markets, we are not the best owners of these businesses. The Board has therefore decided to exit the markets in an orderly manner.’ • Excluding the UK & ROI, international system sales were down 2.9% in Switzerland, down 1.0% in Iceland, down 0.3% in Norway and up 25.0% (only up 1.0% LfL) in Sweden. DOM says ‘the trading performance of our German associate was encouraging.’ • JDW yesterday reported that directors John Hutson, Su Cacaioppo and Ben Whitley received 14,412 shares between them under an unapproved SIP award and sold all but 849 of them immediately. The directors still hold a number of shares in the company either personally or under other schemes. The company has recently been buying shares back. group’s shares have risen by around 50% from recent low of 1069p in December last year. • Fourth has undertaken research into the hospitality industry’s performance by region. It says it has unearthed ‘information across a number of areas, including diners’ biggest bugbears, tipping and what consumers really look for when choosing a restaurant.’ • Fourth suggests that ‘Londoners have been revealed as the most generous diners, leaving a 10.57% tip on average, with the data showing they are also the most likely to dine out during the week, eating at restaurants on average 2.4 times a week.’ • Fourth says ‘diners from Northern Ireland are least likely to leave a generous tip, offering on average just 6.86% of the total bill.’ • Fourth suggests that meal price ‘is the most common source of irritation at restaurants’ and adds that attitudes to rude service varied with diners in London more tolerant than those elsewhere in the country. • Fourth concludes ‘while it’s clear that the UK’s dining scene continues to prove popular with consumers because of its vibrancy, quality and choice, our survey unearths some of the habits, idiosyncrasies and frustrations experienced by diners across the country.’ It says the survey ‘demonstrates is that operators with estates across the UK need to be pragmatic to the cultural nuances and demands of each region.’ • The CMA has launched an investigation into the $575m Amazon lead investment into Deliveroo. Amazon had tried and failed to launch a food delivery platform in December 2018. • The first stage of the CMA investigation into the Amazon investment into Deliveroo will decide whether the deal has created a serious lessening of competition in the British food delivery market. • Chick-fil-A has opened its first UK branch. This has attracted the attention of LGBT rights campaigners after the chain caused controversy in the US by describing the definition of marriage as anything different to that which is in the bible was akin to ‘shaking a fist at God’. • Rose wine sales in the UK off-trade declined by 2.5% y-o-y, according to data from Kantar, while 63% of all still wine bottles are bought for under £5. • In the US, Taco Bell has voluntarily recalled about 2.3 million pounds of seasoned beef from its restaurants and distribution centres in multiple stores across the Midwest, East Coast and Southeast, after a customer found a metal shaving in their food. This marks the second supplier issue to impact the chain in recent months. • The WTO has formally granted the US authorisation to implement tariffs on a number of goods made in the EU, including wine, Scotch, Irish whiskey and liqueurs. • Distilleries have been flying whisky across the Atlantic to the US before Trump’s trade tariffs kick in, whisky is usually shipped to the US due to its weight. • Google has stated that local marketing on its platform can drive guest traffic to restaurants better than national ad campaigns. The group stated that 89% of diners research where to eat on their smartphones. • Jessops has filed for administration, as the group looks to restructure its obligations and cut outgoings. It has filed a notice of intent to appoint ReSolve as administrators, a move that affords the company creditor protection for a period of 10 days. • SSP Group has opened its first outlets at Brazil’s two main international airports, Rio de Janeiro and São Paulo International Airport. • Nearly 12,000 Asda workers are currently facing lossing their jobs next month after refusing to sign controversial new contracts. Vertical Aerospace’s mission is to make air travel personal, on-demand and carbon-free. • The liquidators of Thomas Cook’s British operations have kicked off a process aimed at raising tens of millions of pounds from an auction of dozens of airport take-off and landing slots. HOLIDAYS & LEISURE TRAVEL: • The business, energy and industrial strategy (BEIS) committee chair, Rachel Reeves, said Thomas Cook’s directors were guilty of a ‘series of misjudgments’ that ‘guided’ the company ‘into the rocks’. The former boss claimed the prime minister’s office was aware of a financial rescue plan that could have saved Thomas Cook but ‘didn’t want to set a precedent’. • London Luton Airport Limited (LLAL) want to build a second terminal and increase passenger numbers to 32m a year by 2039. Opponents say the plans are ‘reckless and irresponsible’ at a time when the UK should be reducing air travel. • Six Confederation of British Industry (CBI) regional councils have called on the government to ‘be bold and deliver’ HS2 ahead of a critical review of the project. OTHER LEISURE: • Netflix has warned investors that the group faces ‘headwinds’ in the next few months as rivals Apple and Disney launch competing services. • Apple has released a new iOS update – its fourth since September – following user complaints about bugs. FINANCE & ECONOMICS: • The ONS has reported that UK CPI has remained at a 3yr low of 1.7%. Fuel costs fell with the price of certain household goods, such as furniture, rising. The NIESR says that ‘underlying inflation remained unchanged at 1.0 per cent in the year to September 2019, as measured by the trimmed mean, which excludes 5 per cent of the highest and lowest price changes.’ • The NIESR says ‘headline CPI inflation remained unchanged at 1.7 per cent in the year to September 2019. Our analysis of more than 130,000 goods and services included in the basket, suggests a pause in inflationary pressure.’ • The NIESR adds ‘underlying inflation fell in most of the United Kingdom regions. On this basis, we expect CPI inflation to settle just below the Bank of England’s target of 2 per cent in the coming year.’ • Sterling up at £1.2821 and €1.1574. Oil unchanged at $58.95. UK 10yr gilt yield up 1bp at 0.71%. World markets mixed. • Brexit & politics: o Negotiations continue both in Brussels and London as the UK team seeks a deal that it can both accept from Europe and sell in the UK. o The FT says that all of this noise ‘distracts from the issue that ought to be of primary concern: that Mr Johnson’s proposed Brexit pact is bad for the UK economy and will leave most British citizens poorer.’ o FT quotes former Foreign Office head Simon Fraser as questioning ‘are we losing sight completely of what a lousy long-term choice Brexit is for this country?’ the FT says that Mr Johnson’s deal is economically worse than that proposed by his predecessor and that both deals would make the UK worse off than it would be staying in the EU. START THE DAY WITH A SONG: Yesterday’s song was Blossoms with Your Girlfriend, today who sang: Oh she may be weary, Them young girls they do get wearied Wearing that same old shaggy dress, yeah, yeah RETAIL WITH NICK BUBB:
• WH Smith: Today’s finals for y/e Aug are the swan-song for the retiring CEO Steve Clarke, but he is going out with a bang, as the big news is that the group is stepping up its presence in the US with another major acquisition: the Marshall Retail Group is being acquired for $400m (£312m) in cash, with half the consideration being financed by a £155m placing of new shares. The multiple is 13.7x EBITDA, but that comes down to only 10x after synergies and the deal will be usefully earnings enhancing. We had never heard of Marshalls, but that may be because it operates 170 gift shops under a whole variety of different brand names in casino-resorts and airports, including Flight Stop, Larimer Street Market, Baggallini and Ciao! WH Smith has also announced that it just won its first US airport locations. Given the strong results and the exciting acquisition, the share placing should be well
• Planet ONS Watch: In “the real world”, as per the overall BRC-KPMG figures for September (the 5 weeks to September 28th), Retail Sales were disappointing last month, given the impact of Brexit uncertainty and the warm spell at the end of the month, but we will find out at 9.30am this morning what “seasonally adjusted” life was like on the High Street on that strange parallel world, the Planet ONS (aka the bizarre world of the Office of National Statistics in Newport), via their official Retail Sales figures…Now, City economists (who still, unaccountably, treat the dubious-looking ONS figures as the gospel truth) generally expect a small dip of 0.1% in month-on-month seasonally adjusted sales volumes, but our friends at Capital Economics have pencilled in a 1.0% fall in September (to give year-on-year volume growth of 2.4%), for what it’s worth. We will be focusing, as usual, on the • John Lewis Retail Report: John Lewis released its seventh annual Retail Report to the press yesterday, looking back on spending trends in the past 12 months and what shaped the year that has been. John Lewis themselves summed up the last year as “The UK waged war on plastic waste and embraced the Joy of Missing Out (JOMO) over the Fear of Missing Out (FOMO)”, but the papers put their own twist on things. The Daily Mail, for example, flagged that a “New age of modesty” is dawning, in which “we appear to be turning away from excess, uncomfortable fashion and displays of wealth”. But the Guardian highlighted that “TV shows prove the best shop window in tough times”, noting that TV shows such as “Peaky Blinders”, “Fleabag” and “Stranger Things” have heavily influenced what shoppers have bought over the last year. TRADING STATEMENTS & EVENTS: Upcoming results are set out below: • 17 Oct 19 Domino’s Q3 trading update • 18 Oct 19 Intercontinental Hotels Q3 trading update • 18 Oct 19 Coca Cola Q3 numbers • 21 Oct 19 Gfinity FY numbers • 22 Oct 19 Whitbread H1 numbers • 22 Oct 19 G4M H1 update • 22 Oct 19 On the Beach FY update • 23 Oct 19 Texas Roadhouse Q3 numbers • 24 Oct 19 C&C H1 numbers • 31 Oct 19 Carlsberg Q3 update • 6 Nov 19 Sajid Javid’s maiden Budget • Est 7 Nov 19 JD Wetherspoon H1 update • 7 Nov 19 Bank of England MPC interest rate decision • 12 Nov 19 G4M H1 numbers • 13 Nov 19 Coca Cola HBC Q3 update • 14 Nov 19 Young & Co H1 numbers • 20 Nov 19 SSP FY numbers • 21 Nov 19 William Hill Q3 update • 21 Nov 19 DART Group H1 numbers • 21 Nov 19 Hotel Chocolat AGM • 27 Nov 19 Marston’s FY numbers • 27 Nov 19 Britvic FY numbers • 27 Nov 19 On the Beach FY numbers • 28 Nov 19 Greene King H1 numbers • 4 Dec 19 Loungers H1 numbers • 4 Dec 19 Stock Spirits FY numbers • Est 6 Dec 19 EasyHotel FY numbers • 12 Dec 19 TUI Group FY numbers • Est 12 Dec 19 Fulham Shore H1 numbers • 12 Dec 19 Fuller’s H1 numbers • 13 Dec 19 Hollywood Bowl FY numbers • 19 Dec 19 Bank of England MPC interest rate decision LANGTON CAPITAL: Made in Hull. Like all the best things. Langton Capital is a financial advisory company providing insightful views on the UK and global leisure industry and the wider consumer sector in general. Subscription to the daily email is free. Unsubscribing is painless. We provide daily off the shelf and bespoke research. We have helped with transactions, fund-raisings, disposals and other corporate issues. We have a good ear, we are impartial, independent and not half bad at what we do. If you think that we could help you or your business, drop us a line. |
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