Langton Capital – 2020-01-15 – PREMIUM – Xmas Tracker, Revolution Bars, Everyman, Ten Entertainment etc.:
Xmas Tracker, Revolution Bars, Everyman, Ten Entertainment etc.:
PREMIUM EMAIL – PLEASE DO NOT FORWARD:
A DAY IN THE LIFE:
Not for the first time I had to question my working definition of ‘idiot’ yesterday (basically most everyone but me) after I leaned on a plate and launched a serving of pilau rice into the air in the office yesterday.
And yes; pilau rice? Office? They don’t mix well, particularly since said serving landed almost perfectly in my lap. But I was hungry, what can I say and, as the rice was (more or less) dry and I was able to swivel neatly around and deposit most of it in or around my long-suffering waste paper bin, I had high hopes that no harm had been done.
However, as the scalding rice 1) wasn’t as dry as I had hoped and 2) was a fluorescent shade of yellow, I’ve got a bit of a problem for the rest of this week as it’s dried into a sort of speckled pattern that looks, for all the world, like three has been an unspeakable, curry-flavoured explosion inside a pair of trousers.
And, poor though my fashion sense is, I can see that’s not a good look.
Hence M&S Finsbury Pavement (350yds and a 5-minute walk from Langton’s global HQ) could be in receipt of forty quid for a new pair of trousers some time very soon. And those aren’t just pounds, those are Langton pounds. On to the news:
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COFFER PEACH SALES TRACKER – DECEMBER & CHRISTMAS: The Coffer Peach Tracker suggests there was a degree of festive cheer around last month. 15 Jan 2020:
• The Tracker suggests that ‘positive festive trading cheers eating and drinking-out market.’
• LfL sales nationally and across both pubs and restaurants combined were up by 2.5% on last year.
• The period covered is the six weeks to 5 January.
• The Tracker comments ‘Britain may have fallen out of love with shopping on the High Street over the festive period, but consumers continued to go out to eat and drink over Christmas and the New Year.’
Comments from the sponsors:
• CGA says ‘it has been a challenging year for the eating and drinking-out market, so these figures will be a welcome boost for operators.’
• It says, quite rightly, that ‘Christmas and New Year is a vital time for the industry, so to see positive growth is good news.’
• Best to play your Joker on a big month. A knockout January wouldn’t really move the dial.
• CGA continues ‘these results underline the fact that the public still wants to go out to enjoy themselves over the holiday period, but also emphasise how important this time of year is to the health of the market, and that operators have to keep creating good reasons for people to go out.’
• RSM says ‘operators will be celebrating a festive gift that ends a challenging year on a welcome high. Like-for-likes improved for both restaurants and wet-led businesses despite strong performance in the same period last year on top of the heavy rain and the political uncertainty affecting much of December.’
• RSM says ‘with consumer confidence finally improving, brands will look to carry this sales momentum into the New Year by capitalising on the trends for veganuary and alcohol alternative drinks without resorting to heavy discounting.’
• Langton analysis, which on this issue comprises checking our inbox for offers and looking in restaurant windows, suggests that discounting is actually more prevalent now than it has been for some time
Food versus drink:
• Given the number of positive trading updates that have come out from wet-led operators, it is perhaps unsurprising that pubs outperformed restaurants
• This is a maintained trend – though the degree of outperformance, pubs were up 2.7% but restaurants were up by 2.3%, was perhaps lower than might have been expected
• Across managed pub and bar groups, drink sales were up 2.4%, with food up 2.2%.
• The Tracker says ‘while the whole market performed well, the star performers were bar businesses, which saw a collective 3.9% uplift in like-for-like sales.’
• It’s good that a good month was good.
• But January, not that it is much of a month at the best of times, looks challenging.
• Nonetheless, the Tracker says ‘there is a post-election sense of optimism, and food and drink consumers have driven the first wave of this during the pre-Christmas period.’
• A Boris Bounce, particularly with the National Living Wage going up by 6.2% on April Fool’s Day, would be very welcome
• If Brexit is ‘done’ and confidence returns, then hospitality operators could expect to perform more strongly
• Coffer Peach says ‘this year, we are starting to see cautious confidence in the market although expect that any uplift in trade and consumer confidence will be steady rather than spectacular.’
• It says ‘we expect market activity in 2020 to see an increase on 2019 levels.’
• Whilst the rate of new openings has slowed, total sales were up by 5.4% y-o-y in the six week period
• This suggests that capacity rose by around 3.0%. With GDP flat, delivery taking market share, this rate of expansion may be difficult to sustain without cannibalization from existing sites
• Also, the 2.5% mentioned is not as good as the Christmas figures that we have been seeing from some private companies over recent days
• Private companies such as Mission Mars, Coaching Inn Group, Remarkable Pubs, Brewhouse & Kitchen and others have reported good numbers ranging typically between +5% and +8%.
• In addition, since one of the larger contributors to the Tracker, M&B, has said that its Christmas LfL sales were up 5.6%, some others in the Tracker must have performed less well
• Of course M&B was talking about a three-week period and the above Tracker covers six-weeks.
• We hear from Revolution Bar Group today and from Whitbread, Restaurant Group, JD Wetherspoon, Fuller’s and Marston’s later in the month
PUBS & RESTAURANTS:
• Revolution Bars has updated on its H1 and Christmas trading saying that it saw record Christmas trading.
• RBG says that, for the 4wks to 31 December, LfL sales were up by 4.0% with sales per venue averaging over £65k.
• For the H1 as a whole, RBG says total revenues rose by 3.4% with LfL sales up by 1.2%. The group says ‘sales growth in the period was driven primarily by the annualisation of the five venues opened during H1 FY19.’
• RBG says that October and November trends were in line with those seen in financial Q1 but that December saw a step-up in business. Given that the company addresses primarily the youth market, this may not have been relief at the re-election of a Tory government but may have been somewhat more fundamental. LfL sales were on an accelerating trend.
• The company says that Revolucion de Cuba ‘achieved strong like-for-like sales growth throughout the period whilst there was a further strengthening in the Revolution brand like-for-like sales trend over the course of the period.’
• RBG says H1 numbers, to be reported on 26 February, should be in line with expectations. RBG announces that, post its H1 end, it ‘has exchanged contracts with real estate investment company Aprirose, landlord of nine of the Group’s properties, to surrender five leases of loss-making sites and re-gear a further four leases with a small net rent reduction but with a 25 year term.’
• RBG CEO Rob Pitcher says ‘I am delighted with our Christmas trading and the steady improvement in our like-for-like sales performance over the first half is further evidence that our key initiatives are driving both operational and financial improvement. Considerable strides have been made in rebuilding customer loyalty and driving sales and profit from the existing estate, creating a stronger business with significant cash generation. Whilst external cost pressures persist, we will continue to manage cautiously, using excess cash to reduce indebtedness below one times EBTIDA before we will consider further expansion opportunities.’
• RBG’s numbers provide some further evidence that there was a pick-up in trading across parts at least of the industry during December.
• Amazon, which has been barred from integrating any of its businesses with those of Deliveroo while the CMA undertakes a Stage II investigation into potential competition impacts, is reported to have offered Deliveroo a loan. Amazon is said to have led the last funding round. Any loan may be in addition to its current commitment.
• Bloomberg says the size of the loan is unclear. Deliveroo remains heavily loss-making. Bloomberg says ‘Amazon’s loan will be converted into equity if the CMA approves the original deal.’ Deliveroo reported that it had £185m in cash and cash equivalents at the end of 2018, which is a long time ago. It has raised equity since that date but, at its given rate of losses (and investment), it may need more.
• Unite union Greene King employees are set to strike after rejecting a 2% pay rise offer from the company.
• Big Fernand, a Parisian burger brand, has relaunched in London in South Kensington at 37 Thurloe Place.
• Beyond Meat chair, Seth Goldman, claims plant-based protein could come to represent 13% of total supermarket meat sales in the next decade, speaking at the NRF Big Show in New York.
• In the US, Carrols Restaurant Group reports same-store sales at Popeyes up 21.2% in Q4, driven by the launch of a new chicken sandwich.
• Soho House Group is to open a multi-storey site on the Strand in London later this spring. The site will feature a rooftop pool and a restaurant and bar encased in a glass box with views of the Thames.
• US wine consumption fell 0.9% in 2019, the first fall in 25 years, despite total volume and value sales of alcohol increasing. Sales of alcoholic drinks in the US were up 0.3% by volume and by 2.5% by value (to $167bn).
• After losing an appeal, Dominic Chappell has been ordered to pay £9.5m into the BHS pension schemes. Mr Chappell bought the High Street chain from Sir Philip Green for £1 before it closed down in 2016.
HOLIDAYS & LEISURE TRAVEL:
• Hostel operator Safestay announces that it has completed the acquisition of the ‘AthenStyle Hostel’ in Athens, for €1.5 million.
• Responsible Travel demands a ‘radical review’ of tourism to cut the carbon impact of holidays after a company-commissioned report showed how holiday ‘foodprints’ – what travellers eat – can even outstrip the impact of flying.
• The government is reported to have offered to cut Air Passenger Duty on UK domestic flights in an attempt to keep regional carrier Flybe from going into administration. APD is currently charged at £13 per flight. FlyBe’s tax debt is said to be around £100m at present.
• This arguably stands at odds with the treatment handed out (or not handed out) to Thomas Cook. In addition, Willie Walsh, outgoing CEO of IAG, has written to the government saying that the move is a misuse of public funds. The BBC has seen the letter and says Mr Walsh points out that one of Flybe’s biggest shareholders Virgin Atlantic, is part owned by the US’s Delta, one of the world’s largest and most profitable airlines.
• The CAA will undertake a Market Power Determination (MPD) in relation to Manchester airport ‘to decide whether the market power test is or is not met’ after receiving a request from an unnamed ‘interested party’.
• December London hotel REVPAR hitting records but would be wise not to lose sight of the fact that occupancy is actually falling.
• Ten Entertainment has updated on FY trading saying that sales for the year will be £84.1m, up some 8.0% on a LfL basis compared with the prior year. It says calendar 2019 will have been ‘another year of significant profitable growth.’ Total sales grew by some 10.2%.
• Ten says some ‘70% of the estate is now benefiting from the cost efficiencies delivered through the Pins & Strings technology re-engineering programme.’ It adds that ‘four sites were refurbished in the year, including one prime location that has received additional investment as a concept site format to trial new entertainment Duncan Garrood, Chief Executive Officer, commented:
• Ten’s CEO Duncan Garrood, says ‘Ten Entertainment has had another strong year, delivering profitable sales growth. Our ever-evolving offer, providing family entertainment underpinned by tenpin bowling, is thoroughly enjoyed by increasing numbers of customers.’ Mr Garrood concludes ‘we continue to innovate, increase our footprint and improve the quality of our offering which positions us well for future growth.’
• Everyman has updated on full year trading saying that sales rose by 25% to £65m with ticket prices up around 1% at £11.37 and spend per head on other products and services up 13% at £7.13. Everyman says this was ‘driven by service and menu development.’
• Everyman says it ‘continues to source exciting opportunities for future investment.’ It has signed on three venues since the publication of its H1 numbers on 24 September with four more ‘confirmed for 2020.’ CEO Crispin Lilly says ‘this is a solid result for the year. After record admissions in 2018, UK box-office fell by 1.9% in 2019; despite this we grew each of our key performance metrics and also increased our overall market share of the UK box-office.’
• The group concludes ‘we remain positive on the outlook for the cinema industry, the Everyman brand and for the Company in 2020. Our teams continue to deliver great results across all areas of the business and we are well placed to deliver to expectations in 2020.’
• The Gambling Commission will ban people from using credit cards to place bets from 14 April. Commission research showed 22% of online gamblers using credit cards are classed as problem gamblers.
• Stockbroking research suggests Aston Martin needs a £500m cash injection in the short term in order to stabilise its position. Aston Martin is reported to have had discussions with a number of potential trade and financial investors.
FINANCE & ECONOMICS:
• Telegraph quotes some observers cautioning that a global debt mountain could trigger another financial crisis. There 1) always has to be something to worry about but 2) there is a lot of debt out there. We (globally) are borrowing from the future to spend – or hopefully invest – today.
• Sterling higher at $1.3021 and €1.1698. Oil virtually unchanged at $64.32. UK 10yr gilt yield down 3bps at 0.72%. World markets mixed.
• Brexit & politics:
o PM Boris Johnson considering, admittedly on the hoof, a ‘Bung us a Bob for a Big Ben Bong’ campaign to pay for the clapper of Big Ben to be put back in order that it can ring in Britain’s exit from the EU an hour before the end of this month.
o FT says PM Johnson has toned down the rhetoric regarding the feasibility of achieving an all-encompassing trade deal by the end of this year.
o Serious question for you. Apart from the fact that the words are spelled differently, what’s the difference between rhetoric and a lie. Is it that the one is never meant to be believed in the first place?
START THE DAY WITH A SONG:
Yesterday’s song was Africa by Toto. Today, who sang:
“Soon it will all be over, and buried with our past
We used to play outside when we were young
And full of life and full of love”
RETAIL WITH NICK BUBB:
• QUIZ: The headline of today’s trading update from the struggling QUIZ fashion chain (for the 7 weeks to Jan 4th) is “Proactive actions to manage margins and enhance cost efficiencies offset softer Christmas sales”, which kind says it all. But although the profit performance was “broadly in line with the Board’s expectations”, thanks to cost-cutting, it is disappointing to hear that overall sales were down by 9.3%, with the Stores down by 7.0% gross, after trade softened post-Black Friday.
• John Lewis Trading Watch: We flagged a week ago that the John Lewis Clearance Sale got off to a reasonable start in w/e Jan 4th, but overall gross sales in w/e Jan 11th slumped by 5.8% (down 5.5% LFL), according to yesterday morning’s JLP weekly overview…John Lewis blamed the mild weather and tough comps in Home (versus a big competitor promotion last year). In terms of sales mix, Fashion/Beauty sales were down by 1.5% gross last week, Electricals were down by 2.8% and Home sales were down by 13.6%. Over the last 50 weeks, overall gross sales are now running down 1.6% cumulatively (the H1 LFL sales fall was 2.3%, with gross sales 1.8% down).
• Waitrose Watch: Last week, w/e Jan 4th, saw another painful-looking fall in gross ex-petrol sales at Waitrose, of 2.5%, pulling the last 50 weeks cumulative run-rate down to -0.8%, but JLP revealed last week that store space is running as much as 1.7% down (after the sale of five Waitrose stores in June and more disposals in October), so the LFL sales picture does not look so bad, even though the position is boosted by decent Online Grocery growth, ie LFL sales were only 0.8% down last week (the LFL sales dip was 0.4% in H1, with gross sales down by 0.8%).
• News Flow This Week: The Studio Retail EGM to approve the sale of the Education division is being held this morning. Tomorrow brings The Works interims, the ABF (Primark) update, the Halfords Q3, the N Brown Q3 and the Signet (US) update. And on Friday we get the ONS Retail Sales figures for December.