Langton Capital – 2020-03-03 – PREMIUM – Gaslighting, Gregg’s, rum, plastic, OTAs, TUI, Escape Hunt etc.:
Gaslighting, Gregg’s, rum, plastic, OTAs, TUI, Escape Hunt etc.:
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A DAY IN THE LIFE:
We watched a moorhen, which later proved that it could fly perfectly well, batter its head against a wire fence in our garden for 20 minutes or so yesterday trying to get to our postage-stamp-sized duck pond.
Proof if proof be needed that instincts sometimes don’t leave much room for rational thought but, as moorhens aren’t extinct, they must be doing something right.
That’s at the macro-level, of course. But at the micro-level, this particular creature may not trouble the gene pool any longer as it seems determined to de-select itself from further competition.
Indeed, after it got into the loosely-fenced area and splashed around for a bit, it couldn’t get out and, for all I know, it may still be there periodically squawking and chewing up our aquatic plants then pecking the wire and wistfully looking up at the wide-open blue sky above it and the world beyond.
Still, who are we to talk? We’re closer to our genes than we might like to admit and, if you’ve ever tried to narrowly define the difference between genetically programmed behaviour (instinct) and intelligence, it’s not that easy. On to the news:
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BOOK REVIEW: GASLIGHTING AMERICA. Amanda Carpenter, a disgruntled Republican supporting advisor and journalist, wrote in 2018 about ‘why we love it when Trump lies to us’. 3 Mar 2020.
• Gaslighting, named after the 1944 film Gaslight starring Ingrid Bergman, is making people doubt their sanity or their pre-existing point of view by lying to them, misleading them and by attempting to convince them of the existence of an alternative reality
• Ms Carpenter worked for Ted Cruz. By all accounts he was (and is) a decent politician. But he was comprehensively destroyed by candidate Trump who named him ‘Lyin’ Ted’.
• Carpenter wrote the book in order to try to rationalise what had happened. She widened it to look at what has happened since.
Enter candidate Trump:
• Carpenter says questioning everything is exhausting. She suggests that this allows an energetic liar to get their message across
• She suggests that everyone is minded to accept lies – it makes life easier.
• Trump tends to test the water. He comments on what ‘other people’ are saying and then legitimises gossip.
• He will then move on to discrediting an opponent.
The basic approach:
• Trump will pick an issue that others have shied away from. Whether it be President Obama’s birth certificate, crimes committed by Mexican immigrants or whatever.
• He them promotes a story by referring to what ‘other people’ are saying.
• He will then assess the reaction.
• It he has traction, he will ‘advance and deny’. In this phase, he reiterates and legitimises whatever gossip he is promoting but at the same time denies responsibility for it.
• He may say ‘I don’t know, but people are saying…’
• This may continue for some time. Trump may inject some ‘suspense’. He may say ‘there’s some very big news coming out…’ There will be no detail.
• He will then try to turn the story on its head and ‘victim blame’ if possible.
• Then, at some point and for no obvious reason, he declares total victory.
Why this works:
• The NY Times or the Washington Post or the WSJ may keep a register of ‘public Trump lies’.
• And this may run into the thousands but, at the end of the day, nobody cares.
• Or that’s not quite true. But not enough people care to stop him being elected.
• Trump is happy to ‘win uglier than anyone else’. There is some evidence that the voting public like this ruthlessness.
• Carpenter suggests voters don’t mind being lied to if the ends justify it.
A few examples:
• Trump entered the ‘birther’ row. He promoted the idea the President Obama was not born in the USA.
• He advanced slurs against Jeb Bush and at the same time denied them. He called him ‘low energy’
• He commented on the idea that 9/11 was an inside job, he ‘advanced & denied’ the proposal at the same time
• He ‘didn’t blame George W for 9/11’ but he took every opportunity to say that it happened on his watch.
• Carpenter says Trump must ‘stay in character.’ He is unable to back down from his ludicrous comments. But there is some evidence that voters like this.
• Trump uses unscrupulous labels. Lyin’ Ted, little Mike (Bloomberg), low energy Jeb, Mexican rapists etc.
• He commented that ‘some people said’ Ted Cruz’s father was involved in the murder of JFK
• He threatened to run as an indie – that would have hurt the Republicans. In the end, DT signed a loyalty pledge – he wouldn’t run against the Republican candidate.
• Trump allies say ‘sure, he lies, but who cares?’ Outrage is no defence.
• He has an outfield of deniable Tea Party misfits making ridiculous suggestions.
• He uses ‘whataboutism. Plenty of false equivalence to muddy the water etc.
• He alleges ‘sore loserism’ & uses Twitter as a weapon. He says he is the victim of a witch hunt.
• He revels in being ‘hate-watched’. He will mis-quote sources, he is open to take spoofs as the truth but, because he moves on to the next controversy so quickly, there has been no reckoning
• He plays to very unpleasant fears such as ‘white genocide’ etc. He and his supporters may then try to disguise bad or disgusting behaviour as humour.
• Various other stuff – Russia, Ukraine, rape allegations, inappropriate comments re women etc. etc. None of it matters.
• So, is Ms Carpenter one of the sore losers referred to by Mr Trump? Well, probably. But she has some reason to be (Trump supporters alleged that she was one of many women to have an affair with Ted Cruz. This has been denied & there is no evidence of it happening whatsoever). And being a sore loser doesn’t mean that everything you subsequently say for the rest of your life is wrong or groundless.
PUBS & RESTAURANTS:
• Gregg’s has reported full year numbers saying that it has had a record year with total sales up 13.5% to £1.2bn and LfL sales up by 9.2%. PBT is £108.3m against £82.6m last year.
• Gregg’s is to consider another special dividend. Re current trading, the company says it has had a ‘very strong start to 2020 in January, but significant slowdown in February due to storms.’ It says ‘company-managed shop like-for-like sales [were] up by 7.5% in the nine weeks to 29 February 2020.’
• Gregg’s says ‘2019 was an exceptional year of progress for Greggs, during which we experienced a sustained increase in customer visits as increased awareness and appreciation of our brand gathered momentum. Our exceptional performance was founded on the changes that we have made across our multi-year strategic investment programme, which has delivered transformational change across the business and has now set us up for the next phase of growth.’
• The company adds ‘we made a very strong start to 2020 in January, but in February saw a significant slowdown in sales growth as a result of the storms that have affected the UK. There is some uncertainty in the outlook, particularly given the potential impact of Coronavirus. This aside we expect to make year-on-year progress and will do so from a strong financial position, supporting our investment for further growth whilst also delivering good returns for all stakeholders.’
• CGA’s BrandTrack survey suggests that ‘rum sales growth is outpacing many other popular spirits, putting it in prime position to follow the remarkable surge in consumer interest in gin.’ CGA says that rum sales rose 7.0% year-on-year in 2019, ‘putting it well ahead of other mainstream spirits including brandy (up 3.1%), whiskey (up 0.9%) and vodka (down 0.4%).’
• CGA believes that some 5m consumers now drink rum in the on-trade. CGA says ‘these figures show how rum is an increasingly popular choice for consumers on spirit and cocktail menus. Sales have got a long way to go to match the stellar performance of gin, but its variety and versatility makes rum a major growth opportunity for operators and suppliers in 2020 and beyond.
• CGA says that the price of rum is important to 40% of drinkers while the availability of a favourite brand is important to 34% of consumers and visibility on the bar is what tips it for 29%. CGA says ‘compared to some categories, rum consumers are fairly limited in the number of brands they use and the ways they drink it.’
• McDonald’s has said that it will phase out the use of plastic cutlery in its Australian stores.
• Constellation Brands has announced that it has completed the sale of Ballast Point to Kings & Convicts Brewing Co. The company says ‘the sale of Ballast Point aligns with Constellation’s consumer-led premiumization strategy, which focuses on winning in growing sectors of the high-end of the U.S. beer market with strong brands that drive high growth and high margin performance. This strategy has helped fuel the company’s performance as one of the strongest growth drivers in the U.S. beer market.’
• The Düsseldorf trade show venue Messe Dusseldorf has announced it is postponing all of its shows until May including the largest wine industry trade show, ProWein. Only late last week, the show said that it was going ahead.
• A KFC site in Rotterdam is set to go meat-free for an entire week in order to celebrate the Netherland’’s ‘Week Without Meat’ campaign.
• Five Guys is set to open a new site in Baker Street on 9 March.
• The Agriculture and Horticulture Development Board (AHDB) says the recent prolonged downpours have left land waterlogged and may cause shortages of homegrown produce as farmers are unable to sow.
• Goods Way, a new ‘social hub’, is set to open in Kings’ Cross next week, featuring a live music space, a bar, and five eateries.
• Dishoom will open its first Birmingham site on 1 April within the £700m Paradise development. It will hold 330 covers across its dining room, bar and terrace area.
• SA Brain & Co will sell 40 pubs in order to future proof its business, following a review conducted by property advisory firm Avison Young. Brains currently has 160 pubs.
• Public Health England recommends restaurant wine glasses should be no bigger than 250ml, with researchers at the University of Cambridge finding that people drink less when they are given wine in a smaller glass.
• Tesco is issuing new cards to 600,000 Clubcard account holders, saying it believed a database of stolen usernames and passwords from other platforms had been tried out on its websites, and may have worked in some cases.
• The Hotel, Restaurant & Catering show at London ExCeL kicks off today and will run until Thursday. Re the coronavirus, hygiene advice will be displayed on digital screens and organisers laying on extra hand sanitiser around the venue. Montgomery Events is expecting more than 21,000 visitors over the next three days.
• Montgomery Events says ‘ExCeL have a policy in place that will be put into action should the circumstances arise and we are in regular contact with them so that if the situation changes and it becomes necessary to share additional information with exhibitors and visitors we will act immediately.’
• Over the last week three Jamie’s Italian franchises in Hong Kong and Taiwan have closed, resulting in the loss of 100 jobs.
• Keurig Dr Pepper reports a 49% increase in 2019 net sales to $11.12bn, primarily reflecting the impact of the merger in 2018. Chairman and CEO of KDP, Bob Gamgort, said ‘We also delivered financial results that have exceeded our three-year targets invested in the foundation for long-term sustainable growth’.
• KDP and Nestlé USA have signed an agreement which will facilitate the continued production of Starbucks branded K-Cup pods in North America.
• Le Cordon Bleu will open its first London restaurant this spring on 85 Fleet Street, featuring 90-covers and run by professional chefs.
HOLIDAYS & LEISURE TRAVEL:
• UK Hospitality has repeated its call for the use of parity clauses by Online Travel Agents to be prohibited. It maintains that ‘research shows that, in eight out of ten cases, hotel rooms can be booked more cheaply directly, rather than through OTAs’ (Online Travel Agents). UK Hospitality maintains that ‘parity clauses do not favour consumers and they take commercial power away from the hotels. They have been banned in other European countries and they should be banned in the UK.’
• Consumer magazine Which has carried out work that suggests that eight out of ten hotels it contacted offered cheaper rates than an online travel agent or their own websites. This suggests that some of the better deals never make it onto the internet at all.
• Which says ‘customers shouldn’t be duped into thinking they’re getting the best price from a hotel booking site when more often than not, they can get a better deal by avoiding its commission and booking directly with the hotel.’ It continues ‘hotel booking sites might be a good place to start your search, but you should always call or email the hotel for the best chance of getting the cheapest deal – even in cases where they can’t offer a better price, there’s a good chance they’ll throw in a freebie or two.’
• TUI is planning a hiring freeze alongside a cut in administration costs and the postponement of non-critical projects in the wake of weaker bookings last week due to the coronavirus outbreak.
• TUI says ‘financial year 2020 started exceptionally well in terms of booking trends which continued in January.’ However it adds ‘since the announcement of the first COVID-19 cases in Northern Italy, Tenerife and the related developments in other regions, in line with the industry, we have experienced weaker bookings in the last week, especially for our remaining, near-term and lower volume winter season.’
• TUI still ahead of last year but momentum gone. The company says ‘due to the strong trading prior to last week, year to date bookings remain well above prior year.’
• On the Beach warned on Friday that the negative effects of Covid-19 have increased markedly in recent days. It says ‘the Group experienced a small but noticeable reduction in demand for Summer 2020 travel following the early reports of COVID-19 cases in early February. The reduction in demand has accelerated significantly following the increase in COVID-19 cases in Europe, particularly the spread of the virus to Tenerife.’
• OTB says ‘with the expectation that the spread of the COVID-19 is going to cause significant disruption for a period of time, the Board believes that the Group’s Full Year results for the year to 30 September 2020 will be below current market expectations.
• The company points out that it operates an ‘asset light’ business model, carries little stock and controls its costs tightly. Let’s see how that works out for them.
• Tokyo Disneyland and Universal Studios Japan have closed for the next two weeks as coronavirus takes its toll on attractions and events around the world.
• Amadeus reports adjusted profit of €1,270m, up 13.4% on 2018, in the year to December 31, but warns coronavirus will have an impact on its performance in 2020.
• PWC’s Manhattan Lodging Index reports occupancy down 1.2% for Manhattan hotels in 2019. Q4 RevPAR declined 4.4% yoy.
• Host Hotels & Resorts maintain 2020 guidance despite coronavirus impact. The firm said COVID-19 has ‘negatively impacted its total revenues by approximately $14m, net income by approximately $7m and adjusted earnings before interest, taxes, depreciation and amortization by approximately $7m.’
• Escape Hunt has announced that it has launched a new escape room experience with BBC Studios named ‘Dalek Awakens.’ This will be ‘the second Doctor Who game to be launched, adding to the growing portfolio of proprietary games developed by Escape hunt and building on the initial Doctor Who game which was opened in December 2018.’
• ESC says ‘we are delighted to be creating a second game, Doctor Who: A Dalek Awakens, with BBC Studios.’ It says ‘Doctor Who has a loyal and dedicated fanbase which we have seen from the success of our first game, so to be able to bring some variety to the public with a brand new and innovative game centred around the iconic Dalek is an exciting prospect for Escape Hunt.’
• Apple shares rebounded strongly yesterday.
• Twitter has told its employees to work from home to help stop the spread of the coronavirus.
FINANCE & ECONOMICS:
• Chancellor Rishi Sunak is reported to be considering scrapping Entrepreneurs’ Relief. Business managers currently pay 10% Capital Gains Tax. This compares with the 20% paid by higher rate tax payers.
• The IFS says that scrapping the relief would make the tax system ‘more equitable and more efficient’.
• The IHS Markit Manufacturing PMI for the UK rose to a 10mth high of 51.7 in February, up from 50.0 in January. The measure was in line with expectations. Markit says ‘the UK manufacturing sector remained in recovery mode in February, as reduced levels of political uncertainty following last year’s general election translated into further growth of output and new orders.’
• The number of mortgage approvals in the UK rose to its highest level in nearly four years in January per Bank of England data.
• Sterling lower at $1.2778 and €1.1462. Oil up at $52.39. UK 10yr gilt yield down 4bps at 0,41%. World markets higher in UK, lower in Europe, up in US but down in Far East in Tuesday trading.
• Brexit & politics:
o The government says the NHS is ‘not on the table’ in trade talks with the USA. A ‘good’ trade deal could add between 0.07% and 0.16% to UK GDP ‘in the long term’.
o PM Boris Johnson has asked officials to investigate bullying allegations levelled against Home Secretary Priti Patel. The decision to establish the facts comes a day after the PM said he had full confidence in her.
START THE DAY WITH A SONG:
Yesterday’s song was Tusk by Fleetwood Mac. Today, who sang:
The oil down the desert way,
Has been shakin’ to the top
RETAIL WITH NICK BUBB:
• Travis Perkins: Along with today’s finals, the builder’s merchant and DIY giant Travis Perkins has issued an update on the Wickes DIY demerger, saying that the demerger process is “proceeding smoothly”, despite the doubts about the delay in an improvement in the DIY market (as flagged by Topps Tiles the other day). Interestingly, given Wickes’ high lease commitments, the group has agreed a positive opening cash balance of £130m and the prospectus is due for publication in late March, with the demerger process expected to be completed in Q2. As for the business outlook, Travis Perkins don’t give much away, merely saying that “Whilst there has been an improvement in some of the group’s key lead indicators in the near-term, the group retains a cautious stance, particularly as there is a natural lag between increasing housing transactions and consumer confidence and improvement in the
• Greggs: After an amazing year, it would not be surprising if Greggs slowed down a bit, notwithstanding the interest in its new vegan products, not least because of its reliance on High Street footfall. And with today’s finals it has delivered some news that will interest the bears, as it has said that after a very strong start to 2020 in January, there has been “a significant slowdown in February due to storms”. Nevertheless, company-managed shop LFL sales are still up by as much 7.5% in the nine weeks to 29 February 2020, despite tough comps, so it is no doing that badly…
• B&M: Out of the blue, B&M has announced that its CFO Paul MacDonald wants to step down next year and it has already appointed a successor, in the form of the ex-Asda stalwart Alex Russo, who is currently CFO at the privately owned discount chain Wilko. Why he may have to spend over 15 months on garden leave is unclear, as B&M has said he may not be able to start until June 2021, but Wilko must have some strict non-compete clauses in their management contracts…
• News Flow This Week: The latest monthly Kantar/Nielsen grocery sales figures (for the 4 weeks to Feb 22nd/23rd) will be out at c8am this morning. Tomorrow evening brings the latest quarterly FTSE index review (with Kingfisher and Morrisons both still at risk of ejection from the FTSE 100 index). Thursday then brings the embattled Intu Properties finals (and news on the rescue rights issue) and the John Lewis Partnership finals and Bonus announcement.