Langton Capital – 2019-12-12 – Fuller’s, Just Eat, Vianet, TUI, capacity increases etc.:
Fuller’s, Just Eat, Vianet, TUI, capacity increases etc.:
A DAY IN THE LIFE:
More research ‘in the field’ last night.
This arduous exercise involved braving the Central Line during rush hour and spending up to £6.50 per pint (more fool me) on numerous beers followed by an almost incredible £9.80 on a gentrified kebab.
And sure, it’s less likely to give you food poisoning that will those slowly turning spindles where the chefs appear to be scraping sweat from a dead man’s leg but £9.80, I ask you.
Anyway, some pubs are filling up and, given where we are in the month, so they should be. The election will be history by tomorrow; let’s drink to that. On to the news:
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TUI GROUP – FULL YEAR NUMBERS STREET: Travel giant TUI Travel has reported full year numbers to end-September and our comments are set out below: 12 Dec 2019:
• Turnover is up by 2.7% in constant currency terms to €18.9bn
• Underlying EBITA is down by 25.6% but, excluding the impact of grounding its Boeing 737 MAX aircraft, it says EBITA was flat at €1,186m. See Premium Email
FULLER’S H1 NUMBERS:
• Fuller’s – solid H1 but tenanted profits tracking lower.
• Fuller, Smith & Turner has reported H1 numbers to 28 September saying it has seen ‘a solid start for our focused premium pubs and hotels business.’ LfL sales were up by 2.7% at the company’s managed pubs with tenanted revenue up 3% but LfL profits down by 3% in this segment of the business.
• The group reports revenue up 6% at £174.8m with comparable (after the sale of the brewing business) profits unchanged at £17.9m and adjusted EPS up 1% at 26.17p. The group made a £164.5m profit from the sale of the Fuller’s Beer Business
• The company reports an unchanged interim dividend of 7.8p per share.
• Regarding current trading & the outlook, Fuller’s reports Managed Pubs and Hotels LfL sales are up 2.1% in the year to date ‘with total revenue up 5.1% for the first 36 weeks.’ It says that Tenanted Inns LfL profits are down 2% for the first 36 weeks.
• The company has completed the acquisition of Cotswold Inns & Hotels, ‘including seven stunning freehold country inns and hotels in the Cotswolds for £40 million.’ It says it is ‘excited by the future – the right team in the place to build the business and take advantage of appropriate, relevant and exciting opportunities.’
• CEO Simon Emeny comments ‘the first half of this year has seen the biggest transformation in Fuller’s history. It has been a time of unprecedented change – and not without its challenges – but we have made good progress and we have a clear view and plan for the next steps in our journey from vertically integrated brewer and retailer to focused premium pubs and hotels business.’
• Mr Emeny says ‘since completing the sale of the Beer Business at the end of April, we have put a new Executive Team in place’ and he adds ‘post period end, we have also completed the return of capital to our shareholders and made a voluntary contribution to our defined benefit pension scheme to the tune of £69 million and £24 million respectively.’
• Mr Emeny says that the 36wk data represent ‘solid results in the context of consumer unease reflecting the ongoing political and Brexit uncertainty.’ He says ‘we hope that the incoming Government helps us to continue to grow our business by overhauling the business rates system, ensuring a manageable level of wage inflation and creating an immigration system that allows us to recruit and invest in excellent team members from both home and abroad.’
• The company concludes ‘Fuller’s is well funded, has a clear vision, a distinctive strategy, a portfolio of extremely high quality assets and an excellent culture – which stands us in good stead to navigate further political and economic turbulence. Against this backdrop, and with an excellent and engaged team of people, we are poised to deliver further growth for our shareholders and our team members, and to ensure even more customers can enjoy all that Fuller’s has to offer.’
PUBS & RESTAURANTS:
• The Competition & Markets Authority has said that it may launch an in-depth investigation into Amazon’s plans to invest in food delivery firm Deliveroo unless the two firms put forward ideas to address its concerns about competition in the food delivery space in the next five days.
• The CMA is concerned that the deal may reduce competition. It says that the move may stop Amazon from launching its own food delivery operation, which could have cut prices for customers in the future. The CMA says ‘millions of people in the UK use online food platforms for takeaways, and more than ever are making use of similar services for the same-day delivery of groceries.’
• It says ‘there are relatively few players in these markets, so we’re concerned that Amazon having this kind of influence over Deliveroo could dampen the emerging competition between the two businesses.’ Amazon had previously tried to enter the UK food delivery market.
• Takeaway.com has updated on its bid for Just Eat saying it ‘has received valid acceptances representing approximately 13.53 per cent. of the existing issued share capital of Just Eat and extends its offer for acceptance until 1.00 p.m. (London time) on 27 December 2019.’
• Vianet has reported H1 numbers saying that revenue is up by 9.5% at £6.4m with pre-exceptional PBT up by 7.3% at £1.19m. The company’s Chairman, James Dickson, says ‘Vianet’s IOT platform investment and focus on growth areas is delivering an earnings breakthrough and I am pleased to report that this has resulted in an 11.1% increase in operating profit for the six months to 30 September 2019, compared to the same period last year. Encouragingly, on a like for like basis, this growth was closer to 20% as H1 2019 did not include employee performance related bonus provisions.’
• Software company Stampede has reported ONS data as suggesting that the number of pubs in the UK actually rose by 320 this year over last. It says this compares with an average yearly decline of 732 per annum on average since 2010.
• The largest increase in pub numbers is reported to have come from units generating revenues of between £10k and £20k a week with another significant number of extra pubs in the £20k per week plus bracket.
• Toro Dorado Quality Steaks, a steakhouse specialist based in Amsterdam, has launched its first restaurant in London after securing a £2.3m funding package from HSBC UK. Director Khalil Qaiser says ‘like Amsterdam, London is a melting pot of culture and diversity and that’s why we are so excited to now be welcoming customers to our second exclusive location, slap bang in the heart of the city.’
• Millesime Bio, a trade show devoted to organic wine, has reported that around 976m bottles of organic wine are expected to be consumed around the world by 2023. This represents an increase in consumption of around 34% since 2018. The world’s top five wine consuming countries are the USA, France, Italy, Germany and China.
• Bedlam Brewery has reported numbers to end-March to Companies House showing that retained earnings fell by £340k. There is no P&L lodged with Companies House but retained earnings would normally fall because a loss had been recorded. Shareholders’ funds fell from £519k to £181k as at March this year. The company raised further share capital in May, August and November this year.
• All 27,000 chickens on a farm in Suffolk are to be destroyed after a strain of bird flu was detected at the site. There will be a one kilometre restriction zone on movement of domestic birds around the location.
• New owner Fortress Bank has confirmed that the 140 Majestic stores that had been earmarked for closure under the previous owners will all now remain open.
• The Breakfast Club has appointed founder of Draft House pub co Charlie McVeigh as its chairman. The 12-strong chain is looking to expand further.
• McDonald’s is to sell Veggie Dipper in the UK in the New Year. It says that it is the chain’s first ‘fully vegan’ meal.
• US restaurants saw Thanksgiving week transactions fall this year reports NPD. It says that transaction numbers fell by 7% against 2018, when Thanksgiving fell nearly a full week earlier. Casual dining and quick service transaction numbers were down by 8% whilst transactions rose at midscale and family restaurants. NPD says ‘the majority of consumers eat their Thanksgiving dinner in their or someone else’s home.’
• D&D London has teamed up with data supplier SevenRooms to improve guest experiences by capturing data across the ‘guest journey’. D&D says ‘in this era of dining out, consumers are spoilt for choice. And with competition high, we are constantly trying to find new ways to offer experiences that keep our customers coming back.’
• William Grant & Sons is to add a new rum infused with banana peels to its portfolio. It is effectively recycling the discarded banana peel used to prepare empty whisky casks for final maturation.
HOLIDAYS & LEISURE TRAVEL:
• AlixPartners has said that this is ‘an uncertain time for the UK hotel market.’ It says REVPAR growth is slowing and costs are mounting. AlixPartners says ‘delivering profit growth, upon which many previous investment and lending decisions have been based, appears increasingly challenging.’
• AlixPartners says ‘in 2012 the hotel sector began a period of exceptional year-on-year RevPAR growth.’ It says ‘this peaked in 2015, when London and the regions reported 10% and 17% increases respectively.’ This growth is slowing, partly due to a slackening in demand and partly as a result of an increase in supple.
• AlixPartners says that ‘while London continues to flourish, revenue growth in the regions has stalled.’ It says ‘REVPAR in the regions declined for the first time since 2012 in the 12 months to H1 2019. With macroeconomic uncertainty intensifying, even London faces a more sluggish growth outlook.’
• A survey of independent travel specialists has suggested that a third of UK seasonal jobs in ski resorts and summer activity holidays have disappeared because of fears over Brexit.
• Up to a third of customers owed money following Thomas Cook’s collapse are said to be still waiting for refunds.
FINANCE & ECONOMICS:
• The Fed has said it will not raise interest rates until it sees evidence that inflation in the US is picking up.
• Sterling up at $1.3214 and €1.186. Oil higher at $64.01. UK 10yr gilt yield down 2bps at 0.78%. World markets up yesterday with Far East up in Thursday trade.
• Brexit & politics:
o Voting today. Both main party leaders hyperactive yesterday.
o Michel Barnier has said that PM Boris Johnson’s pledge to strike a trade deal with the EU by the end of 2020 is ‘unrealistic’.
START THE DAY WITH A SONG:
Back with a song, today who sang:
Maybe maybe it’s the clothes we wear,
The tasteless bracelets and the dye in our hair
Maybe it’s our kookiness
Or maybe maybe it’s our nowhere towns
RETAIL WITH NICK BUBB:
• Superdry: After the Ted Baker warning on Tuesday, investors in Superdry will have been nervous about what another premium fashion retailer would say about current trading, but today’s interims (for the 26 weeks to Oct 26th) don’t look quite as bad as expected and the start to Q3 is said to have been “encouraging”, despite the inevitable caution about the short-term outlook. Julian Dunkerton, the Founder and Chief Executive Officer, says: “At this halfway point in our financial year, I am pleased with the progress we have made to comprehensively reset Superdry”.
• Dixons Carphone: Today’s interims from Dixons Carphone (which are also for the 26 weeks to Oct 26th) look pretty awful, with adjusted PBT down from £60m to £24m, with Mobile losses worsening and Q2 trading weak, but the statement is headlined “Performance robust, good progress on transformation” and the full-year guidance has been maintained. Alex Baldock, the Group Chief Executive, says: “We’re on track to deliver what we promised this year, and with our longer-term transformation. In a tough UK Electricals market, we’ve gained significant share…Our big International business also registered market share gains in every territory, with solid sales and margin improvements…Mobile is challenging as expected. As promised, this will be the trough year for Mobile losses, and it will be break-even by 2022”.
TRADING STATEMENTS & EVENTS:
Upcoming results are set out below:
• 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 Vianet H1 numbers
• 13 Dec 19 Hollywood Bowl FY numbers
• 16 Dec 19 Fulham Shore H1 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
• 29-31 Jan 20 – Springboard charity Snow White pantomime at Leicester Sq. Theatre
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