Langton Capital – 2020-02-07 – DP Poland, YUM Brands, experiential operators, costs etc.:
DP Poland, YUM Brands, experiential operators, costs etc.:
A DAY IN THE LIFE:
We’ve got a day left to check our roof tiles.
Because the weather Gods have woken up to the fact that it’s the weekend tomorrow and have sent what would have been an interesting (though life-threatening) winter storm over from the east coast of the US to say hello to us tomorrow, by which time it will have warmed up ten degrees or so and will be all the more angry because of it.
So, whilst the US and Canada get snowstorms, we get howling wind and driving rain which, unless you like flying a kite whilst being struck by flying debris and papered with litter, is not much fun at all.
Time to pop down the pub or stoke up the fire and get out a good book? On to the news:
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PRIVATE COMPANY ACCOUNTS: COMPETITIVE SOCIALISING LTD. Competitive Socialising is a player in the ‘experiential’ market. It owns the Swingers’ crazy golf themed bar chain. It has produced numbers to end-April. 7 Feb 2020: See premium email.
PUBS & RESTAURANTS:
• DP Poland has updated on full year trading saying that System Sales rose 13% over the year with LfL sales up 3%.
• DPP says that LfL sales rose by 6% in H2. LfL sales were down 1% in H1 as the group lapped tough comps from 2918 when it had advertised on TV. It adds that 82% of delivery sales from its 69 (2018: 63) stores were ordered online.
• DPP says that the group performance was ‘in line with management expectations for 2019.’ It says that it had £3.6m cash as at 31 December 2019 (£2.0m as at 31 December 2018).
• DPP CEO Iwona Olbryś comments ‘2019 delivered continued expansion and growth in System Sales during the year, notwithstanding the strong comparatives driven by our TV advertising in January and February 2018.’
• Ms Olbrys adds ‘while we continue to experience the impact of competition and labour inflation particularly, we expect to continue to see the positive effects of our well-received marketing campaign, our strong digital presence, and the strength of the Domino’s reputation for quality and service.’
• The company concludes ‘Poland’s delivery market is expanding and DPP is well-placed to participate in this growth. Our confidence comes from our positioning in the market place with the Domino’s brand and our experienced team offering to the market great products, service and price.’
• DPP’s shares were 9p around 2014. They rose to 60p and then fell to 4p. They are currently around 9p.
• YUM Brands has reported Q4 numbers saying that EPS in the quarter was some 51% higher at $1.58. Full year EPS was $4.14, down 12% on full year 2018.
• YUM CEO David Gibbs says ‘I am proud to announce that we completed our three-year transformation of Yum!, having achieved all of our transformation goals and evolved into a more focused, more franchised and more efficient business.’ Mr Gillbs adds ‘2019 was a truly historic year for our company…we delivered results consistent with our long-term growth algorithm with same-store sales growth of 3% and net-new unit growth of 4%.’
• Regarding the current year, YUM says ‘we began 2020 by announcing an agreement to add the Habit Burger Grill to the Yum! family. When complete, this deal should enable us to offer an exciting new investment opportunity to our existing franchisees and expand an award-winning, trend-forward brand through the power of Yum!’s unmatched scale. As we move into the next phase of growth for Yum!, we will continue to focus on our four key growth drivers with a collaborative mindset to fuel strong results for years to come.’
• CFO Chris Turner says ‘fourth-quarter results were a solid end to the year where we met or exceeded each component of our guidance, including full-year 2019 core operating profit growth, which was an increase of 12%, or 11% excluding the 53rd week.’
• Yum has said that the coronavirus outbreak in China will hurt its business this year. At this stage, the company has no idea when stores shut down by the outbreak will reopen. Yum China operates some 9,200 restaurants. Andy Yeung, CFO of Yum China says ‘looking ahead, while it is difficult to fully ascertain the expected impact of the coronavirus outbreak at this time, we can reasonably expect it to materially affect our 2020 sales and profits.’
• Estimating the cost of lost business in China (for Yum or for anyone else) is not possible at the moment as the timings are uncertain. Some businesses are attempting to send staff home or are asking them to take unpaid leave (notably airlines). Other companies with high levels of fixed costs must be thinking of doing likewise.
• As always, there will be an argument as to where the buck should stop. Should the companies take the hit? Should they share the problem with their landlords? And with the local authorities in China, with the government, with the tax-payer?
• Ultimately, this may depend upon the scale of the problem. There are some that are simply too big for individuals or companies to face on their own. A further issue will be whether or not authorities in China will feel that they have to protect foreign companies to the same extent that they protect or bail out their own. The financial problems may not be confined to China.
• Restaurant sales in the US during January up 2.3% LfL given the favourable weather conditions, data from Black Box has indicated.
• MPs from across the political divide requested the Chancellor to back the supporters of the Long Live the Local campaign and cut beer duty at the upcoming budget. Commenting on the debate, Andy Tighe, Policy Director at the British Beer & Pub Association, said: ‘It was great to hear so much cross-party support for beer and pubs from MPs in Parliament yesterday. The Long Live the Local campaign has achieved widespread recognition that the sector remains overtaxed, and that further tax rises in the Budget are unsustainable’.
• Data from Feed It Back has found that the number of reviews referring to Dry January increased 61% in the last month compared to last year.
• Nobu has announced it is set to vacate its Mayfair restaurant in Berkeley Street, 15 years after opening.
• New Zealand wine exports have increased 8% in 2019 to NZ$1.86bn, according to data from Winegrowers.
• Perrier has announced a sustainable innovation programme called Next Packaging Movement, which will see the group invest in three packaging startups.
• The growth of direct-to-consumer wine sales in the US slowed last year. Whilst still in growth, up 7.4% to $3.2 billion, growth is down on the 11.6% in value terms recorded last year. Volumes were up some 4.7%.
• The new polymer £20 note is due to be released on 20th February.
• Amazon has unveiled its electric delivery fleet featuring Alexa and automated emergency braking, with 10,000 of the vans set to hit the road in 2022.
HOLIDAYS & LEISURE TRAVEL:
• ABTA research shows nearly six million people have sought, or are planning to seek, warmer climes this winter, with the Canary Islands remaining the top destination.
• The GBTA reports nine in ten travel managers have employees who travel to China and other international destinations on business trips, with the same number personally concerned about the coronavirus spreading around the world.
• VisitBritain claims Brexit has made marketing Britain overseas ‘difficult’ despite nothing changing in UK relations with the EU this year.
• The Diamond Princess cruise ship off the coast of Yokohama has confirmed a further 10 cases of coronavirus, bringing the total number of infected passengers up to 20.
• CBPE has exited its investment in ABI Holiday Homes to the company’s management team and Pricoa, the private capital arm of Prudential, for a reported three times return.
• Uber has reported a loss of $1.1bn in Q4 last year despite the fact that revenue jumped 37% to $4bn and the number of trips made on its platform rose by 28%. The group invested heavily to expand its Uber Eats food delivery business. CEO Dara Khosrowshahi said he was ‘gratified’ with the progress the firm has made towards profitability. The CEO added ‘we recognize that the era of growth at all costs is over.’
• Uber has said that investment in the Uber Eats subsidiary will now slow down as the group will concentrate on markets where it is the number one or number two player.
• The CEO of the Spanish hotel chain Melia Hotels has been banned from entering the US due to the company’s operations in Cuba. The US has banned Gabriel Escarrer from the US as America steps up its sanctions on the communist-run island.
• STR has found US hotels saw occupancy rise 1.7% to 57.6% during the week of 26 January to 1 February, while ADR was up 2.2% to $127.94 and RevPAR rose 4% to $73.73.
• Warner Music is to IPO in the US. Billionaire Sir Len Blavatnik bought the company for $3.3bn in 2011. It is thought that the company could be worth around $6bn.
• Twitter reports Q4 revenue of $1.01bn, up 11% yoy, with advertising sales up 12% and its core daily user metric up 21% to 157 million.
FINANCE & ECONOMICS:
• The Telegraph reports ‘Sajid Javid has no room for a Budget giveaway’ and it quotes ‘experts’ as saying that he ‘will almost immediately break his self-imposed new spending rules’. The NIESR says he may have to raise taxes if he is to keep some of his spending promises.
• Sterling lower at $1.2938 and €1.1782. Oil down at $55.18. UK 10yr gilt yield down 2bps at 0.59%. World markets heading higher yesterday but Far East lower in Friday trade.
• Trade Secretary Liz Truss says that the UK will ‘drive a hard bargain’ in its trade negotiations with the US.
START THE DAY WITH A SONG:
Yesterday’s song was God Save the Queen from the Sex Pistols, today who sang:
Like a heartbeat drives you mad
In the stillness of remembering what you had
And what you lost, and what you had, and what you lost
RETAIL WITH NICK BUBB:
• Nick is on a short break. Back Wednesday.
TRADING STATEMENTS & EVENTS:
Upcoming results are set out below:
• 6 Feb 20 Stock Spirits AGM
• 6 Feb 20 On the Beach AGM
• 6 Feb 20 Compass Group AGM
• 7 Feb 20 DP Poland FY update
• 11 Feb 20 Cineworld AGM
• 20 Feb 20 Texas Roadhouse Q4 & FY numbers
• 25 Feb 20 Hotel Chocolat FY numbers
• 26 Feb 20 Revolution Bar Group H1 numbers
• 26 Feb 20 Wm Hill FY numbers
• 26 Feb 20 SSP Group AGM (no trading statement expected)
• 27 Feb 20 Marriott Q4 numbers
• 3 Mar 20 Gregg’s FY numbers
• 4 Mar 20 Hostelworld FY numbers
• 4 Mar 20 Gfinity H1 numbers
• 11 Mar 20 Sajid Javid Budget
• 19 Mar 20 Everyman Media FY numbers
• 20 Mar 20 JD Wetherspoon H1 numbers
• 24 Mar 20 888 Holdings FY numbers
• 26 Mar 20 Bank of England MPC meeting
• 9 Apr 20 Hollywood Bowl H1 trading update
• 12 May 20 On the Beach H1
• 13 May 20 Marston’s H1 numbers
• 13 May 20 Stock Spirits H1
• 11 Jun 20 Fuller’s FY numbers
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