Langton Capital – 2020-01-08 – Gregg’s, crowd-funding, Xmas trading, UK hotels etc.:
Gregg’s, crowd-funding, Xmas trading, UK hotels etc.:
A DAY IN THE LIFE:
We covered Netflix and its impact on the world’s cinema industry yesterday but it’s clear that, even at the personal level, the consumption of media is evolving, I mean take this Christmas’s viewing.
Time was, and not too long ago, either, that we’d have sat around over a copy of the TV or Radio Times and planned out our viewing but this year, the Gavin and Stacey special aside, we didn’t bother, arguing instead whether we should watch a film from Amazon, something on Netflix or the latest episode of London’s Megasewer: A Miracle of Engineering.
None of which is particularly good news for the traditional media outlets but, as they say, you have to move with the times. On to the news:
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PUBS & RESTAURANTS:
• Super-stock Gregg’s has updated on full year and Christmas trading saying that sales for the full year were up 13.5% with LfL sales up 9.2%. The group opened 138 shops in the year andclosed 41. It had 2,050 shops trading at end-2019.
• CEO Roger Whiteside comments ‘we delivered a strong finish to what has been an exceptional year for Greggs. The major investments we have made in recent years to make Greggs an attractive choice in the food-on-the-go market are delivering. Consumers are responding very positively and we have seen increasing visits from both new and existing customers.’
• Mr Whiteside says ‘our record financial performance in 2019 has enabled us to enhance returns to shareholders. I am delighted to announce that we will also be making a special additional payment to all of our colleagues across the business who have worked so hard to deliver this success in what has been a phenomenal year.’
• Re the future, Gregg’s says ‘looking to the year ahead, we face strong sales comparatives and cost inflation headwinds present a challenge. However, with strong momentum in the business we see further growth opportunities across a number of channels as we invest in new ways to make Greggs more accessible and convenient for customers.’
• Re its numbers, the company says ‘we have finished 2019 in a very strong financial position’ and adds ‘with strong momentum in the business there are clear opportunities for further growth as we begin to invest in new ways to make Greggs more accessible and convenient for customers. In particular we expect to scale up successful elements of our trials in the extension of trading hours and by making delivery more widely available.’
• The company mentions cost headwinds and tough comps but, overall, this is a reassuring update’ it says ‘given the strength of trading in the latter part of 2019 the Board now expects that full year underlying profit before tax, after the cost of the special payment to employees, will be slightly higher than our previous expectations when we report our preliminary results for 2019 on 3 March 2020.’
• Anheuser-Busch InBev is reportedly set to replace its long-serving chief financial officer Felipe Dutra. Mr Dutra has been CFO since 2005. The FT reports ‘one of the people said that Mr Dutra’s likely exit was linked directly to frustrations at AB InBev’s performance since its 2016 takeover of SAB Miller, which left the group saddled with more than $100bn in debt. The other said that Mr Dutra, who has been CFO since 2005, was leaving for personal reasons after a long tenure.’
• Ego has announced it is to open its latest restaurant, the Pomeroy, in Amersham in late February or early March.
• It’s an ill wind. The pork shortage caused by the cull following the pig flu virus in Asia has increased profits at global agribusiness Cargill. The outbreak of African Swine Flu has raised pork prices (and prices of substitutes for pork) worldwide.
• The Society of Independent Brewers (SIBA) says ‘the timing could not be more apt for the first Budget under the new Government’ on 11th March, as around a thousand representatives from the beer and brewing industry will be together in Liverpool at BeerX UK.
• Seedrs has said that it raised £283m via its pitches in 2019, up by nearly 50% on the prior year. Whilst this is a trading update, the company, which has a December year end, last year lodged accounts with Companies’ House on 13 September.
• Seedrs says that it completed 250 deals last year, up from 186 in 2018. It says that it helped 7,858 individual investors to exit from their investments on its secondary market. CEO Jeff Kelisky says ‘it’s been an outstanding 12 months for the business. I’m excited to share our 2019 in numbers, announcing record levels of investment which demonstrate tremendous growth while continuing to deliver true pioneering achievements over the course of last year.’
• Seedrs adds ‘our vision has always been to create a marketplace for all investors in private companies, and 2019 has been a real step-change for us as we move towards that… We’re getting very close to becoming the ‘de facto’ standard in the industry on our path to achieving our vision.’ Last year, the company, which is in a growth phase, lost £4m on turnover of £3.2m. As at December 2018, the company had accumulated losses of £15.2m. The company issued a number of shares in June and November last year.
• The Remarkable Pub Company has reported that December like-for-like sales were up 6% for wet sales and up 8% for food. CEO Elton Mouna reports ‘turkey sales were strong, as one would expect, but there was a notable shift to customers seeking an alternative.’ Mr Mouna adds ‘2020 is abundant with opportunities. The sporting calendar alone suggests an excellent first quarter.’
• Lux Rewards, which seeks to ‘connect fine diners with hand-picked local restaurants,’ has raised £120k in its first day on Crowdcube.
• After less than 6 months of trading, the Market Halls site at the intu Lakeside shopping centre has closed. Essex Live reported The Hall closed shortly before Christmas, with staff claiming low footfall meant they took as little as £10 on some days.
• Wonderland Restaurants, a new restaurants group including the former executive chef of three-Michelin starred Alinea and James Bulmer, CEO of The Fat Duck, will open its debut venue this year, in London.
• Peruvian-Japanese fusion restaurant, Waka, will open its third London site this month, located at 3 Thomas More Street near Tower Hill.
• Valoriani UK claims orders have ‘spiked’ in the last six weeks because its ovens keep being featured on TV in an advert for Boundary Mill.
• Majestic WIne reports LfL sales up 4.3% during the three months to 30 December, attributing the growth to a renewed focus on in-store experience and revamped product lines.
• In the US, Burger King is partnering with Impossible Foods to test the meatless Impossible Sausage.
• Foresight Group invests £7.5m in competitive socialising group Roxy Leisure. Roxy has eight sites across four cities under the Roxy Ball Room, Roxy Lanes and Roxy Arcade brands.
• Sky News reports Poundland will soon hire advisers to prepare for an IPO. Poundland has more than 2700 stores in the UK and more than ten countries in eastern Europe.
• Nielsen reports British supermarkets grew by 0.5% yoy in the four weeks to 28 December, the lowest growth over the key Christmas period since 2014. Sainsbury’s was the most successful of the big four, but sales were down 0.4% yoy. Lidl’s sales rose 12.2%, while Aldi’s were up 7.7%.
HOLIDAYS & LEISURE TRAVEL:
• HVS has suggested that there is a ‘tough year ahead for UK hoteliers with key issues to tackle.’ It says the growth in rooms’ supply is ‘increasing competition and dampening revenues despite underlying demand remaining strong.’
• HVS says ‘hotels in the UK provinces found 2019 challenging and there seems to be little opportunity to improve this performance in 2020.’ It says ‘the pipeline of new hotel openings will continue to add further pressure to many hotels which have experienced a decline in occupancy and average room rates, sometimes both.’
• Looking through the downturn, HVS says ‘once the current pipeline has worked its way through and post-Brexit demand levels have picked up positive growth should be seen as we move into 2021 and 2022.’ Demand remains strong. Pointing to themes such as sustainability and the need to provide guests with experiences as well as with a bed, HVS says ‘the world is changing fast and hoteliers need to adapt and incorporate these changes in a creative way in order to survive and prosper.’
• easyHotel has appointed François Bacchetta as CEO, set to join the board in Spring 2020. Bacchetta was previously Country Director for France and Italy at easyJet.
• easyHotel, which remains listed after investor ICAMAP increased its stake in the company to over 50% and which last year reported full year numbers on 6 December, does not yet have a date pencilled in for its preliminary results announcement
• Management platform Deputy reports 9% of scheduled shifts are cancelled for UK hospitality workers and a further 19% are altered suggesting an ‘unpredictable’ employment climate. These findings come ahead of the government’s Good Work Plan. The plan will make changes to UK employment law, including a requirement for employers to give ‘reasonable notice’ for shifts.
• The Advertising Standards Authority has ruled that a half price car hire offer in an Opodo email promotion is misleading, banning the advert.
• Sky has appointed Simon Raggett as Managing Director for Sky Business. Raggett has held several key leadership roles across Sky UK Retail, Home Service, Sales Operations and most recently, Senior Vice President of Customer Service in Sky Germany.
FINANCE & ECONOMICS:
• The US’s trade deficit with the rest of the world fell to a more than three-year low in November as imports declined.
• Sterling lower vs dollar at $1.3115 but level vs Euro at €1.1761. Oil up at $68.90. UK 10yr gilt yield up 2bps at 0.79%. World markets broadly lower yesterday with Far East down in Wednesday trade.
START THE DAY WITH A SONG:
Yesterday’s song was Fade to Grey by Visage. Today, who sang:
“You made your bed all pretty,
You reap what you sow
Backstabbed all your friends
And yes it’s all about who you know”
RETAIL WITH NICK BUBB:
• Sainsbury: Following the better than feared Morrisons update yesterday, the Sainsbury Q3 update (for the 15 weeks to Jan 4th) today is also short on shocks: overall LFL sales were down by 0.7%, but the problem was Argos (with Non-Food sales down by 3.9%) and Sainsbury talk of “strong” Grocery sales, with overall sales 0.4% up, thanks to 7.3% Online growth, whilst Clothing sales were good. There is no comment on margins or profits, ahead of the 9am call with analysts, but embattled CEO Mike Coupe trumpets the fact that “we have a real sense of momentum in Sainsbury’s” and despite competition and economic uncertainty, the business is said to be “executing well against our strategy”.
• Greggs: After an “exceptional year”, there is no sign that Greggs is losing momentum, despite the tough comps and weak footfall trends on the High Street, and today’s Q4 update is strong, with LFL sales up by a heady 8.7%. And after that strong end to the year, Greggs expect underlying PBT for the year to be slightly higher than expected, despite making a special £7m bonus to its employees.
• John Lewis Partnership Trading Watch: Tomorrow’s trading update from JLP will cover the 7 weeks to Jan 4th and although yesterday morning’s JLP weekly overview flagged that last week was a bit brighter (with John Lewis up 3.3% and Waitrose up 0.5% gross in w/e Jan 4th), the damage was done the week before. It’s hard to work out the cumulative sales picture, as JLP no longer provide weekly divisional sales figures, but our impression is that John Lewis was nearly 2% down LFL over the period and that Waitrose was just about flat LFL. John Lewis enjoyed some sales mix benefits at Christmas, but its overall reliance on Black Friday/discounting will have put further pressure on gross margins and profits for the full-year will look pretty thin, leaving the Partnership more reliant than ever on Waitrose’s chunky profit contribution.
TRADING STATEMENTS & EVENTS:
Upcoming results are set out below:
• 6 Jan 20 Chilango CVA proposals vote
• 7 Jan 20 888 Holdings full year update
• 8 Jan 20 Gregg’s FY & Xmas update
• 9 Jan 20 Nichols full year update
• Early Jan 20 Xmas statements (in the order presented last year) – Stonegate, Morrison’s, Naked Wines, Sainsbury, Constellation Brands, C&C, Brighton Pier, Everyman, M&B, M&S, Tesco.
• 14 Jan 20 Games Workshop H1 numbers
• 15 Jan 20 Ten Entertainment trading update
• 15 Jan 20 Revolution Bars H1 & Xmas update
• 17 Jan 20 Gym Group FY update
• 17 Jan 20 Premier Foods Q3 trading update
• Mid Jan 20 Xmas statements (in the order presented last year) – Games Workshop, Cineworld, City Pub Group, Saga, DP Eurasia, Whitbread, 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
• 26 Feb 20 Revolution Bar Group H1 numbers
• 11 Mar 20 Sajid Javid Budget
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