Loungers, Stock Spirits, consumer spending, holidays etc.:

A DAY IN THE LIFE:

The dog’s moulting now, meaning that our house looks rather like the Other World from Stranger Things what with dog hair, which I swear is lighter than air, floating everywhere and most flat surfaces covered with somewhat unpleasant cobwebby fluff.

And he’s a big dog and long-haired at the best of times meaning that 1) there’s a lot of fur to shed and 2) this may take some time.

Of course, this may just be an excuse to do nothing. We could clean up and then push him outdoors with a broomstick on windy days. We could drag him through a hedge backwards from time to time and, if the worst really came to the worst, we could brush out the creature’s dead hairs.

However, I think that might be like watering weeds in the garden in that it might only encourage him to hit his true, hair-shedding potential. Anyway, having removed a couple of dog hairs from my tea, it’s time to move on to the news:

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LOUNGERS H1 NUMBERS: Bar chain Loungers has reported maiden H1 numbers to end-October and our comments are set out below. 4 Dec 2019:

Headline numbers:

• Loungers reports revenues for the 24 weeks to 6 October up 22% at £79.8m. LfL sales growth for the period was 5.4%. See Premium Email

PUBS & RESTAURANTS:

• Stock Spirits Group has reported full year numbers saying that revenues rose by 9.2% on a pro-forma basis and adjusted EBITDA was up 6.4% to £63.2m on the same basis.

• Stock Spirits CEO Mirek Stachowicz says ‘we have delivered a year of good growth as our successful strategy of premiumisation continues to make progress.’ He adds ‘we continue to assess a range of M&A opportunities following our successful acquisitions this year of Distillerie Franciacorta in Italy and Bartida in the Czech Republic, and are committed to pursuing a strategy of both organic and inorganic growth in order to deliver further shareholder value in future.’

• Barclaycard has reported that ‘consumer spending in November shows muted 0.9 per cent growth as Brits plan for a frugal festive season.’ It says the retail sector saw sales fall ‘as clothing, department and electronic stores all dip in spending.’

• Barclaycard reports discount stores did well but says that a ‘third of Brits are planning to spend less than usual on Christmas this year.’

• Barclaycard says that the November decline in real spending after inflation involved spending on essentials flat at 0.0% with fuel spending down 3.1%.

• Barclaycard reports that ‘consumer spending in bars, pubs and clubs saw good growth at 8.7 per cent as Brits enjoyed nights out with friends and family. However, this did not bring any relief to restaurants, which declined by 5.2 per cent. Takeaways and fast food, meanwhile, saw a rise of 11.4 per cent as the colder weather and longer nights saw diners take advantage of food delivery apps over venturing out for a meal.’

• This data is at odds with what the industry is saying on the ground. It could be that the increased use of cards via contactless spending is skewing the figures for pubs. The limit for contactless spending rose to £30 in late 2015, spurring a surge in the use of plastic.

• Barclaycard says ‘consumers remain prudent ahead of the festive season with 36 per cent intending to spend less than usual on Christmas this year, with 42 per cent of those cutting back saying it’s because they are looking to spend less money overall.’ Regarding overall consumer attitudes, Barclaycard’s survey suggests that ‘positive sentiment about the UK economy remains low, with only 31 per cent of UK adults expressing confidence – dropping to just 27 per cent for those aged 18-34.

• Barclaycard concludes ‘throughout 2019 we have seen the nation managing their budgets by seeking greater value for money, and this trend looks set to continue in December. As we head into the busy shopping season, retailers will no doubt be crossing their fingers for consumer confidence to rise enough to deliver some Christmas cheer.’

• Deliveroo has been obliged to withdraw an advert that has been held by the Advertising Standards Authority to be misleading. It featured a woman diving into a Deliveroo bag, the ASA said it might mislead viewers to think they ‘could order food from different restaurants to be delivered together.’

• Deliveroo maintained that the ad was about emphasising ‘choice.’ In September, the ASA banned a Deliveroo ad for implying that Deliveroo operated ‘unrestricted throughout the UK.’

• Re yesterday’s decision, Deliveroo says ‘this advert underlined the huge choice of great restaurants available on Deliveroo. This is growing each day. For the record, you can’t actually dive into your Deliveroo bag, however hungry you are.’

• Hospitality software solutions company Fourth has reported that 68% of UK hospitality employees admit that they require more information about allergies and that 23% are ‘not confident about advising customers with serious allergies.’

• Fourth says that a knowledge re allergens is critical. It says that only 63% of senior staff are confident or very confident that they are handling the issue allergens correctly. Fourth says the data ‘show the urgent and pressing nature of the allergens challenge. While there is some evidence of pockets of progress, and some excellent working practices, as an industry we must collaborate to identify the best approach, and one that gives both our people and our guests absolute confidence and a consistent experience.’

• Major UK franchisee Burger King UK has reported that it has acquired eight new sites with more growth likely. The company has 100 owned sites out of a UK estate of 515 units.

• Dishoom reports ‘with outrageous joy, today we finally confirm that DISHOOM BIRMINGHAM will open its doors in Spring 2020.’

• French champagne producers are beginning to worry that US threats to impose tariffs of up to 100% could be more than just hot air. The export of sparkling wines to the US is worth around €700m per annum.

• US-owned burger chain Five Guys is set to open its 100th UK site next week. The opening of the unit, in St Paul’s, London, means that the company has got to 100 UK sites in just six and a half years.

• Action on Sugar has reported that high street coffee chains are failing to reduce the amount of sugar they include in their drinks. It says that some seasonal beverages contain almost as much sugar as three cans of Coca Cola. The Starbucks’ caramel hot chocolate with whipped cream, includes the equivalent of 23 teaspoons of sugar.

• Flying Firkin Distribution has launched a website to simplify beer ordering. It says ‘we’re delighted to be able to better showcase the unique range that Flying Firkin can offer publicans and organisers of beer festivals across the UK who are looking for a simple, efficient way to get the best beers possible. Another new feature includes practical tips and advice as to how to run a successful beer festival.’

• Choose your markets. The UK’s six richest individuals control as much wealth as the poorest 13 million reports The Equality Trust.

HOLIDAYS & LEISURE TRAVEL:

• More holidays going into the market. TUI has announced an extra 74,000 airline seats for winter 2020 out of Doncaster Sheffield airport. Newcastle airport has re-introduced Sharm el-Sheikh and is to add 38,000 seats.

• HotStats reports that Q4 has been tough to date for UK hoteliers. It says that GOPPAR, a gross profit per room measure, has dropped by 5.3% year on year in October. October is the seventh month this year to lag the same month in 2018.

• Room rates were lower and non-room spending also fell.

• Hyatt reports that it is to add more than 20 new hotels and resorts by the end of next year.

• The Tory Party has said it will spend a further £4.2bn on local train, bus and tram services if they win the general election.

OTHER LEISURE:

• Sky is to build a ‘Hollywood-style’ film studio in north London. It will create more than 2,000 jobs in the process. Sky Studios boss Gary Davey says ‘it is a big enough site to attract very high-end production in both TV and film from all over the world. We are going to fill this thing with projects of all kinds. It means a huge number of new jobs and new investment.’

• Co-founders of Google, Larry Page and Sergey Brin, are stepping back from their day-to-day roles at Alphabet.

FINANCE & ECONOMICS:

• The IHS Markit PMI for the UK construction industry came in at 45.3 in November, up slightly from the 44.2 that it recorded in October. Civil engineering was worst hit whilst house building held up relatively well.

• Markit says ‘UK construction output fell again in November as Brexit uncertainty and the forthcoming General Election continued to send a chill breeze across the sector.’ It says ‘greater hesitancy among clients led to a decline in overall new work for the eighth consecutive month during November.’

• The much larger Services PMI is reported at 9.30am today.

• Noises suggesting that a Sino-US trade deal may not be signed until after the US November 2020 Presidential elections led equity markets lower across the world yesterday.

• Sterling higher yesterday at $1.2991 and €1.1729. Oil higher at $61.25. UK 10yr gilt yield down 7bps at 0.67%. World markets mostly lower with Far East down in Wednesday trade.

• Brexit, politics etc.:

o Donald Trump has said that he would not buy the NHS even if it were served to him on a platter. He says he could work with whomever becomes PM because he is very easy to get along with.

o Trump says he believes Prime Minister Boris Johnson, whom he has called ‘Britain-Trump’, was very capable and would do a good job – but then adds that he does not wish to become involved in the UK election.

o PM Boris Johnson has confirmed that the Tories would bring in a ‘digital services tax’ despite President Trump’s sabre-rattling re France.

o One of Britain’s richest men, Surinder Arora, has warned that Labour’s plans to target wealth could scare investors away from the UK.

START THE DAY WITH A SONG:

• Taking a break due to exam commitments. Back middle of next week.

RETAIL WITH NICK BUBB:

• QUIZ: The struggling fashion chain QUIZ has announced some pretty awful-looking interims today (for the six months to end Sept 30th), with underlying PBT plunging by 85% to just £0.6m, before a chunky exceptional store and lease write-off provision of £7m, which is driven by a calamitous 11% drop in Retail revenues. Management have not spelt out what this means for the full-year results…

• Morrisons: In Oct 2018 Morrisons suddenly announced that the well-regarded Commercial Director Darren Blackhurst was being shunted aside and that the CFO Trevor Strain was taking on additional responsibility for his role, so we are not quite sure what to make of today’s news that Trevor Strain has been promoted to be Chief Operating Officer… and that one Michael Gleeson is to be the new Chief Financial Officer…

• John Lewis Trading Watch: With “Black Friday” a week later this year, the John Lewis sales figures for last week are again rather meaningless, but overall gross sales in w/e Nov 30th surged by as much as 60.4% (after slumping by 43.3% in the previous week), according to yesterday morning’s JLP weekly overview. In terms of sales mix, for what it’s worth, Fashion/Beauty sales were up by 71% gross last week, Home sales were up by 18% gross and Electricals were up by as much as 81% gross…The commentary flagged 2 more meaningful comparisons: sales last week were up by 2.1% on the Black Friday week a year ago and sales for the first 10 days of the Black Friday promotion were up by 9.5% on the same 10 day period a year ago. But with the promotion falling a week nearer to Christmas this year and with it covering 11 days versus only 8 days last year the real bottom-line impact of all the
discounting on the achieved gross profit margin is very obscure…All we know is that   John Lewis LFL sales are down by nearly 2% over the last 44 weeks, as overall gross sales are running down by 1.5% cumulatively (the H1 LFL sales fall was 2.3%, with gross sales 1.8% down).

• Waitrose Watch: “Black Friday” may have boosted Non-Food spending last week, but it is disappointing that w/e Nov 30th saw a fall of 3.9% in gross ex-petrol sales at Waitrose…That left the last 44 weeks down by 0.8% gross cumulatively, but although, unaccountably, Waitrose do not think it useful to provide a weekly LFL sales figure, we think that store space is at least 1% down (after the sale of five Waitrose stores in June and more disposals in October), so it is safe to say that the LFL sales picture will not look so bad (the LFL sales dip was 0.4% in H1, with gross sales down by 0.8%).

TRADING STATEMENTS & EVENTS:

Upcoming results are set out below:

• 3 Dec 19 Gym Group analysts site visits

• 4 Dec 19 Loungers H1 numbers

• 4 Dec 19 Stock Spirits FY numbers

• Est 4 Dec 19 Vianet H1 numbers

• 6 Dec 19 Gfinity AGM

• 6 Dec 19 Whitbread AGM

• Est 6 Dec 19 EasyHotel FY numbers

• Est 7 Dec 19 Games Workshop H1

• 12 Dec 19 General Election

• 12 Dec 19 TUI Group FY numbers

• 12 Dec 19 Fulham Shore 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

• Est 20 Dec 19 Carnival Q4

• 16 Dec 19 Fuller’s H1 numbers

• Early Jan 20 Xmas statements (in the order presented last year) – Stonegate, Morrison’s, Naked Wines, Gregg’s, Sainsbury, Constellation Brands, C&C, Brighton Pier, Everyman, M&B, M&S, Tesco.

• Mid Jan 20 Xmas statements (in the order presented last year) – Revolution Bars, Games Workshop, Gym Group, Cineworld, City Pub Group, Saga, DP Eurasia, Whitbread, Ten Entertainment, Premier Foods, SSP, EasyHotel, William Hill.

• Late Jan 20 Xmas statements (in the order presented last year) – JD Wetherspoon, Hotel Chocolat, Restaurant Group, Starbucks, Fevertree, AG Barr, Fullers, DPP, Domino’s, Hollywood Bowl, Britvic, Rank, Diageo.

• 23 Jan 20 G4M Q3 update

• 24 Jan 20 Marston’s Q1 trading update

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