Langton Capital – 2019-10-30 – Fatbergs, closures, low-alcohol, cottage holidays etc.
Fatbergs, closures, low-alcohol, cottage holidays etc.
A DAY IN THE LIFE:
Langton is back behind a desk and, having just enjoyed (or endured) a long weekend of walking, it’s hard not to conclude that the best bits of a walking holiday are not necessarily the walking.
Because, if you’ve just made it up Blakey Bank to the ridge above Farndale, the fun only really starts when you spot that bench near the top, remember you’ve got a chocolate bar and a bottle of water in your backpack and you know that The Lion is only just over the next rise.
Of course, it would be better still if you had your car keys in your pocket and your motor was sitting there waiting for you but that would be the kind of cheat that even our politicians might struggle to sell if they were trying to convince themselves that they were burning up a few calories.
Anyway, my hat goes off to those dedicated walkers who at this stage are only on day 13 of a 14 or 15-day Coast to Coast Walk. Though I can’t help thinking that they must be vaguely mad but enough of that, it’s time for the news:
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THE HIDDEN COSTS OF DOING BUSINESS: Sugar taxes, apprenticeship levies, mandated pay-rises, business rate increases etc. are visible – but there are other costs of doing business. 30 Oct 2019. There are no truly free rides as, ultimately, somebody has to pay for everything. See Premium Email.
GENERAL NEWS – PUBS & RESTAURANTS:
• The BBPA has launched its fourth instalment of The Beer & Pubcast, with the episode focusing on low to no alcohol beer. Steve Livens, Policy Manager at the British Beer & Pub Association, commented: ‘In this latest episode of the Beer & Pubcast, we discuss the exciting and increasing range of low and no alcohol beers here in the UK. This innovative category is only set to grow, so in the episode we explore tips and advice on how to promote and sell low and no alcohol beer, making it a must listen for anyone in the pub or bar trade’.
• The UK beverage company Radnor Hills has released a new canned spring water range, following a £3.5m investment into its canning line.
• Burger & Lobster has launched its delivery-only Smack Lobster Roll concept at a third site in London. A spokesperson for the group said: ‘The demand for Smack Lobster has been steadily growing. With ambitious plans in 2020 we hope to see Smack Lobster more readily available to people across the UK’.
• The Peruvian restaurant group, Ceviche has appointed administrators following an ‘incredibly tough’ 18 months of trading, the Sunday Times has reported. Founder Martin Morales commented: ‘After a very successful few years since launch, the past 18 months have been incredibly tough as a result of the challenging economic and political uncertainty’.
• The average cost of a pint in the UK is more than 200% pricier than the continent’s least expensive, which can be found in Prague setting you back a pound.
• In the US, KFC CTO Christopher Caldwell claims the brand will focus on automation and personalization at the drive-thru. KFC launched a new online ordering platform this month, with consumer response said to be exceeding expectations.
• Allegra World Coffee Portal reports iced beverages generated $10.4bn sales at US branded coffee shops during the last year, achieving 7.3% growth, according to its new ‘Project Iced USA 2020’.
• Stating the obvious but, despite the match times, the Rugby should be good for wet led pubs.
• JD Wetherspoon chairman Tim Martin has said that efforts to suggest that the production of pro-leave beer mats, posters and booklets using company money was illegal because it was political expenditure and required shareholder approval was ‘truly pathetic’. Mr Martin said that big business spent much more than the £95k that JDW spent on supporting Remain.
• Disrupters now causing problems for disrupters.
• Grubhub has unveiled a number of aggressive strategies for increasing daily orders. The company says that it has seen that ‘newer diners, particularly those in our newer markets, were not driving as many orders as we expected.’ This is due to new entrants and, most likely, to the fact that early adopters are going to use the service more than later comers.
• Grubhub ended Q3 with 21.2 million active diners, up 29% from the same period last year and up 900,000 from the second quarter. It says ‘we believe online diners are becoming more promiscuous. For years, we saw in our data that a Grubhub diner was extremely loyal to our platform. However, our newer diners are increasingly coming to us already having ordered on a competing online platform, and our existing diners are increasingly ordering from multiple platforms.’
• Airship Services has secured £500k in funding from NPIF Mercia Equity Finance in order to further develop its technology. The company’s first product, Airship, is used by brands such as Leon, Turtle Bay, Revolution & Hydes Brewery in order to ‘help operators understand more about their customers are their visiting habits.’ A second product, Toggle, allows clients to ‘sell and manage gift cards and experiences.’
• UKHospitality has asked the Government to support hospitality businesses to help deliver its first National Food Strategy for 75 years. UKHospitality Chief Executive Kate Nicholls said: ‘A positive and effective National Food Strategy is in everyone’s best interests. For policy-makers looking to promote healthier attitudes towards food, consumers trying to do the same for themselves and their families, and the businesses that provide it’.
• The vegan burger maker Beyond Meat has reported its first quarter of profits, but its share price has fallen following the group stating that it would have to offer more discounts and promotions as competition becomes more intense.
• On the back of Texas Roadhouse’s 4.4% increase in LfL sales, CEO Kent Taylor commented: ‘We are pleased to deliver a solid quarter of results driven by improved restaurant margins and comparable restaurant sales growth of 4.4%. Our operators continue to execute on our core strategy of getting guests in the door and providing a legendary experience’.
HOLIDAYS & LEISURE TRAVEL:
• Safestay has announced that it has completed the acquisition of the ‘Best Western Glasgow City Hotel’, for £3.15 million. Larry Lipman, Chairman, says ‘Glasgow is a popular city and this site is therefore a strong addition to our portfolio, once the conversion is complete from 52 bed hotel to 200 bed hostel, we anticipate Safestay Glasgow will work extremely well for us alongside our 610 bed site in Edinburgh.’
• Vitruvian Partners has acquired a majority stake in Sykes Holiday Cottages, funding Sykes’ plans for UK and international expansion. Vitruvian will replace existing backers Livingbridge following their five-year partnership with the company.
• Thomas Cook Northern Europe, the Scandinavian arm of the collapsed company, expects to have a buyer by Christmas with several bids already made and interest from more than ten potential suitors.
• Wyndham Hotels & Resorts has released results for the three months ended September 30, 2019, reporting that diluted earnings per share fell 19% to $0.47 with net income declining by 22% to $45m. Geoffrey A. Ballotti, president and chief executive officer commented: ‘Our team’s sharp execution against our strategic and operating plans allowed us to deliver solid results in the third quarter, despite a softening RevPAR environment, highlighted by continued expansion of our system size and significant growth in adjusted EBITDA’.
• Per Telegraph, Goals Soccer has called in fraud investigators with evidence being handed over to the Serious Fraud Office (SFO). Goals shares were suspended in March after unearthing an unpaid VAT bill of at least £12m. The shares have since been delisted. Mike Ashley has stepped back from making a bid for the company.
• Sony has canned its Playstation Vue video streaming service, conceding defeat rivals Apple, Disney and AT&T’s WarnerMedia.
• Shares in Fitbit has rose 31% following reports that Google’s owner Alphabet had made a takeover offer.
FINANCE & ECONOMICS:
• HMG will borrow around £16bn more than had been anticipated this year. The Resolution Foundation said that the £27bn of spending ‘headroom’ painstakingly squirreled away by the now ex-Tory former chancellor Philip Hammond was beginning to evaporate.
• The Nationwide reports that house prices in the UK rose by only 0.4% in the year to October. House prices are thus falling in real terms.
• One of Tony Blair’s earliest goals, to get half of school leavers to go on to university, looks to have been realised. But, asks The Telegraph, what (other than loans etc.) have we as a country got to show for it?
• Sterling $1.2869 and €1.1581. Oil $61.34. UK 10yr gilt yield 0.72%. World markets lower yesterday with Far East down in Wednesday trade
• Brexit & politics:
o A study of narcissists undertaken by Queen’s University Belfast has found that, whilst they are often reviled as having no shame and little by way of a moral compass, they are generally happy with their lot. They are not big on self-doubt and rarely get stressed.
o PM Boris Johnson has been granted the three month extension to Brexit that he asked for on 19 October. MPs have backed his call for a 12 December General Election.
o There are four MPs named Julian, all Tory. There are five Jeremys, four Tory and one, apparently, not.
o The UK will not now leave the EU on 31 October.
o The NIESR has said that Boris Johnson’s Brexit deal would leave the UK £70bn worse off than if it had remained in the EU. It says growth would be 3.5% lower in 10 years’ time under the deal. Chancellor Sajid Javid has thus far declined to release economic forecasts.
o The Treasury says it is planning on a ‘more ambitious’ agreement with the EU than ‘NIESR is basing its findings on’.
o Sir Paul McCartney has told German publication Welt am Sonntag that ‘this Brexit thing is a right old mess.’
o The Royal Mint is to destroy millions of 50p coins minted to mark the UK’s exit from the EU (previously scheduled for tomorrow).
START THE DAY WITH A SONG:
Yesterday’s song was Ghosts by Laura Marling, today who sang:
Dirty old river, must you keep rolling, rolling into the night,
People so busy, make me feel dizzy, taxi light shines so bright
But I don’t, need no friends
RETAIL WITH NICK BUBB:
• The Grocer Watch: The widely followed Grocer “33” weekly supermarket pricing survey in Saturday’s The Grocer magazine saw Asda return to winning ways. The Asda basket cost £72.76, just under £2 cheaper than second placed Sainsbury on £74.75. Morrisons was third on £78.17, Tesco was on £78.25 and Waitrose was well off the pace on £83.40 (despite offering a bottle of Amarula Cream Liqueur for £2.50 less than its rivals). The separate Grocer “Mystery Shopper” weekly survey on Store Service and Availability was won by Morrisons, as its 43,500 sq ft store in Speke in Liverpool came top, with 74 points out of 100, in a relatively low-scoring week.
• News Flow This Week: The widely-followed GFK Consumer Confidence survey for October is out first thing on Thursday.
• John Lewis Trading Watch: The autumnal weather should have helped John Lewis last week, but, as the recent discounting frenzy in Home and Fashion came to an end, overall gross sales in w/e Oct 26th fell back by as much as 7.7%, albeit the official excuse was that “we were annualising against promotional activity and a Partnership card spend incentive”…In terms of sales mix, Home sales were down by 19.3% gross and Electricals were down by 7.1% gross, but Fashion/Beauty sales were up by 0.3% gross. The new Cheltenham store opened last October is now LFL, so there is no new space in the current figures, but overall John Lewis LFL sales, however, are down by c1.5% over the last 39 weeks, despite the jump in the previous three weeks: gross sales are now running down by 0.9% cumulatively (the H1 LFL sales fall was 2.3%, with gross Online sales 1.8% down).
• Waitrose Watch: Trading at Waitrose fell back again last week, as yesterday morning’s JLP weekly overview, for w/e Oct 26th, revealed that Waitrose saw a dip of 0.2% in gross ex-petrol sales. That left the last 39 weeks still down by 0.7% gross cumulatively, but store space is fractionally down (after the sale of five Waitrose stores in June and more disposals this month), so that the LFL sales picture won’t look as bad (the LFL sales dip was only 0.4% in H1, with gross sales down by 0.8%).
• Boots Watch: Having seen headlines about a 6.4% drop in Boots UK sales announced by Walgreens in their latest quarterly results on Monday, we made some further inquiries and discovered that 4.5% of the fall in International sales was FX translation…However, LFL sales in the UK were still down by 2.7% over the last 3 months (down 2.0% in Pharmacy and down 3.1% in Retail) and, with gross margins down, Boots’ operating profits in the period were 21% down. Walgreens blamed a “challenging” UK market, but said that market share was held, in a declining market, although Beauty sales outperformed.
• Next: Today’s Q3 trading update (for the 13 weeks to Oct 26th) from Next is slightly better than expected, with full-price sales up by 2.0%, despite a bad start. The “bad Retail/good Online” split is maintained, with gross Retail sales down by 6.3% and Online sales up 9.7%, but the real story is the improvement in October, with overall sales up by an impressive 5.0%. Next point to the benefit of the colder weather in October, but, as we have been pointing out, the increased discounting by its rivals could have mitigated that, so it is reassuring that Next is on track. Full-year sales and profit guidance has been maintained and there is no commentary on the sector outlook or on the impact of the delayed Brexit or on the Dec 12th Election!
TRADING STATEMENTS & EVENTS:
Upcoming results are set out below:
• 24 Oct 19 C&C H1 numbers
• 30 Oct 19 Royal Caribbean Q3 numbers
• 31 Oct 19 Carlsberg Q3 update
• 5 Nov 19 Marriott Q3 numbers
• 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
• 12 Dec 19 Vianet H1 numbers
• 13 Dec 19 Hollywood Bowl FY numbers
• 19 Dec 19 Bank of England MPC interest rate decision
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