A Day in the Life:

Anyway, Langton is back from the US and, although we’re still working somewhat to New Mexico time, we’ve been hit by a raft of trading updates.

We’ll do our best. On to the news:

The News:

ENTERPRISE INNS’ Q3 TRADING UPDATE:

• Enterprise Inns has updated on Q3 trading saying it is ‘maintaining positive trading performance with strategic plan on track’

• It says LfL income in its leased and tenanted business is +1.9% in the 44 weeks to 30 July 2016 and ‘all aspects of the strategic plan [are] on track.’

• Enterprise adds ‘the trading performance and expansion of our managed house operations is progressing well and we expect to have in excess of 100 managed houses operational by 30 September 2016.’

• It says ‘in addition, we continue to grow our portfolio of quality commercial properties and expect to have in the region of 300 such properties by the financial year-end.’

• CEO Simon Townsend reports ‘we are pleased to have maintained our trading momentum through the second half of the year to date.’

• Re Brexit, Townsend says ‘the consequences of Brexit may be far-reaching but to date we have seen no discernible impact on consumer spending and no consequential impact on our trading performance.’

• Enterprise’s CEO concludes ‘whilst mindful of the potential for some economic uncertainty in the months ahead, we are confident in our strategy and the actions we are taking to grow value for shareholders, and we remain on track to deliver our financial and strategic expectations for the year.’

ADNAMS’ H1 NUMBERS:

• Adnams reports H1 numbers saying ‘we saw many positive developments, notably 7% growth in our own beer volumes and our spirits volumes were up by 60% in the first six months of the year.’

• Adnams’ H1 turnover grew by 7% ‘although our first half operating profit was behind that achieved in 2015.’ The group says ‘this was as anticipated and included in our AGM statement. We have noted in previous years that as our profits arise more in the second half of the year, the first half result can be quite volatile.’ The group adds ‘the main reasons for the lower first half result were the expansion of our shop and managed house retail operations, where earnings tend to be stronger in the second half of the year, the increased investment that we have made in marketing and the decline in the Sterling exchange rate.’

• Adnams’ Beer Business has increased volumes saying ‘the fact that we have been able to push our own beer volumes ahead in the last few years in the face of a fiercely competitive market is a great credit to our sales and marketing work and in particular to our success in reading market trends and producing beers that appeal to consumer tastes.’

• Adnams Pubs and Hotels reported mixed trading saying that some units ‘were slightly behind our expectations given the lost income in 2015 resulting from temporary closure for refurbishments at the Swan and the White Horse.’ It adds ‘relatively poor weather conditions during key trading periods did not help and some extra costs were incurred as we have sought to put the right teams in place at each property.’ The group says ‘the leased and tenanted part of the business has seen the impact of having fewer pubs as we have sold a number of smaller outlets in recent years, but underlying trading has been good with like-for-like results ahead of last year and an overall result only a little behind that of a year ago.’

• Overall, Adnams suggests ‘the vote for the UK to leave the European Union has of course created additional economic uncertainty.’ It concludes ‘despite this turbulence we will maintain our eye on the longer term, we need to invest to maintain and grow the Company and our plans to do this remain unchanged.’

PUB, RESTAURANT & DRINKS PRODUCERS:

• Young & Co has announced that Steve Robinson, currently Head of Finance within Young’s, will join the Board and succeed Peter Whitehead as Finance Director on 6 September 2016. Peter will step down from the Board at that date. CEO Patrick Dardis reports ‘we are all extremely grateful to Peter. He has been a hugely effective Finance Director for us for almost two decades, a transformational period during which time a great deal has been achieved.’

• Coca Cola HBC has reported H1 numbers showing FX-neutral net sales revenue grew by 2.4%, or 3.0% taking into account the one less selling day’

• Coca Cola HBC says ‘currencies continue to impact adversely, leading to a 3.4% decline in net sales revenue’. The group says ‘volume in the Established markets declined by 2.8%, partly impacted by unseasonably cool weather’. CEO Dimitris Lois reports ‘we are pleased with the strong performance in the first half of the year. The business delivered robust revenue growth and significant margin expansion, driven by improved pricing and mix trends, good progress on operating costs and a favourable input cost environment.’ Mr Lois concludes ‘we remain confident that 2016 will be another year of currency-neutral revenue and operating margin growth.’

• A report by Oxford Economics suggests the sugar levy will cut just five calories per person per day.

• Fast-food chain Wendy’s has posted disappointing sales of just 0.4% for stores open at least 15 months, versus expectations of 1.9%. Total sales at Wendy’s restaurants fell 22% to $382.7m. Contrary to other research and forecasts, Todd Penegor, the chain’s chief executive, said: ‘The most notable driver behind the sales slowdown appears to be the continued gap between cost of eating at home and cost of dining out, which is now at its widest point since the recession.’

• Research from CGA Peach suggests that some 26.8 million UK consumers have had hot restaurant food delivered to their home or office in the past six months. Almost a third of those respondents claim that they are increasing the frequency with which they do so, highlighting the strength of momentum in the delivery trend, which is being driven particularly by young, city-based adults.

• CGA Peach director Jamie Campbell commented: ‘The delivery phenomenon has huge implications. Those who can deliver high quality food speedily, with efficient service and at a good price point can drive incremental business … Maintaining the quality and presentation of restaurant food is essential, and there is room to enhance the delivery offer further through things like alcoholic drinks.’

• The number of people visiting Scotch whisky distilleries rose by 7% to 1.6 million last year, according to the Scotch Whisky Association. Distilleries reported that the largest proportion of visitors came from Scotland and other parts of the UK, followed by Germany, the USA, and France. Around half of Scotland’s 118 whisky distilleries are open to the public. 

• Campari has posted H1 sales of €743.9m and a 9.4% increase in adjusted net profit to €77.3m.

• An MCA poll of 50 senior sector figures points to confidence in the overall health of the UK eating out sector and concerns over intense competition. The survey found that 88% of respondents think that by 2020, consumers will be eating out more frequently, while 64% believe they will spend a higher share of their income on dining. Nearly three-quarters of the industry figures anticipate more operator casualties due to rising competition, however.

• Wagamama CEO David Campbell has ruled out an IPO of the c120-strong brand in the short term, writes MCA.

• Troubled Central European spirits group Stock Spirits has posted an improved set of first half results, with total revenue of €116m and PBT of €8.4m (2015: €0.2m). The new chief executive, Mirek Stachowicz, who has extensive experience of leading consumer branded companies in Poland and across Central Europe, did note however that Stock’s recovery is ‘still in its early days’.

• Chris Snowdon of the Institute of Economic Affairs has pointed out that a decline in physical activity, rather than an increase in unhealthy food, is more likely to blame for UK obesity.

• Afternoon tea is a major growth area for hotels, restaurants, and cafes, and could also do the same for pubs, according to a Mintel analyst.

LEISURE TRAVEL & HOTELS:

• TUI reports Q3 numbers. Sales down 5.7% at €4.6bn, group EBITA up 1.1% at €180m. EPS12c vs 5c last year.

• TUI trading sees a ‘good Q3 performance, further demonstrating the resilience of our vertically integrated model, coupled with the delivery of our growth plans and merger synergies.’ Group says ‘summer 2016 trading overall remains in line with our expectations.’ It says ‘UK trading remains strong, no apparent slowdown in bookings as a result of the EU referendum.’

• TUI CEO Friedrich Joussen comments ‘we have delivered a good performance this quarter, driven by the strength of our vertically -integrated model and the delivery of our growth plans and merger synergies.’ He says ‘summer 2016 trading remains in line with our expectations, with 87% of the Source Markets’ programme sold to date and sustained strong demand for holidays in the Western Mediterranean, long haul destinations and cruise. We are also pleased with the start to early trading for Winter 2016 / 17 and Summer 2017. ‘

• TUI concludes ‘given the resilience of demand for our holidays, hotels and cruises, the flexibility inherent in our business model, our balanced portfolio of businesses and destinations, and the strength of our balance sheet, we are well positioned to deal with the changing geopolitical and macroeconomic environment.’ It says ‘we therefore remain confident of delivering at least 10% growth in underlying EBITA in 2015 / 16¹, and reiterate our previous guidance of at least 10 % underlying EBITA CAGR over the three years to 2017 / 18.’

• London’s 24hr tube service is to be trialled this weekend.

• Norwegian Cruise Line Holdings has issued a profit warning due to ‘challenging’ market conditions after Q2 income fell from $158.5m to $145.2m despite a rise in revenues. Chief executive Frank Del Rio explained: ‘We are revising our earnings expectations primarily as a result of four factors: continued weak demand from our core North American consumer for European sailings at a time when half of our fleet is deployed in the region, including eight of our highest yielding ships; the effect of a weaker British pound post the Brexit vote; an adjustment to earlier pricing expectations for Miami-based Caribbean itineraries, which continue to outperform prior year despite a doubling of capacity in the low season months; and the impact from maintaining pricing discipline to minimize discounting.’

• Walt Disney has reported a fall of 4% in summer attendance at its US theme parks but global revenues higher. Firm says the shift is largely due to Easter timing

• Disney says ‘operating income growth for the quarter was due to an increase at our domestic operations, partially offset by a decrease at our international operations.’ It continues to say that it saw ‘higher operating income at our domestic operations was due to guest spending growth and lower costs, partially offset by lower volumes.’

• Eurostar train managers are to strike for 7dys later this month in a dispute over working unsocial hours

OTHER LEISURE:

• Rank and 888 have said that, despite William Hill’s rejection of a bid approach, they believe ‘the Proposal represents a compelling value creation opportunity for William Hill and its shareholders and would welcome the opportunity to engage with the board of William Hill on a constructive basis with the goal of consummating a recommended transaction.’

• Rank & 888 see creation of ‘a significant and transformational force in the global betting and gaming industry and the UK’s largest multi-channel gambling operator by revenue and profit with a complementary combination of retail and digital brands and proprietary technology, content and products across sports betting, casino, poker and bingo’. There would be ‘substantial cost synergies – identified cost savings of at least £100 million (net of dis-synergies) per annum the benefits of which, if they were to arise, would accrue to all shareholders’

• Cineworld saw revenues grow by 6.8% to £356.7m as adjusted profit before tax inched up 0.3% to £39.4m in the six months to 30 June. Adjusted diluted EPS increased 5.2% to 12.2p, while the cinema operator’s H1 dividend was pushed up 4% to 5.2p. Cineworld opened four new sites, 45 screens, during the six months to 30 June 2016, and also announced the acquisition of five cinemas from Empire Cinema Limited, in what has proven to be a busy period. The group is contracted to open a further 6 sites, 47 screens, before the end of the year.

• Commenting on these results, Mooky Greidinger, Chief Executive Officer of Cineworld Group plc, said: ‘The film release programme for the second half of the year is promising, with a number of family titles scheduled during the summer including “The Secret Life of Pets”, “The BFG” and “Finding Dory” as well as “Star Trek Beyond”, “Jason Bourne”, “Bridget Jones Baby”, “Fantastic Beasts and Where to Find Them” and “Star Wars: Rogue One” later in the year.’

• Entertainment One, owner of the Peppa Pig franchise amongst others, has rejected a £1bn takeover offer from ITV

FINANCE & MARKETS:

• Neilsen has reported that global consumer confidence held steady in Q2. It reports an index score of 98, the same as Q1. It says ‘global economic growth continues to be sluggish, with wide variation in growth rates.’ Neilsen adds ‘economic concerns such as weak commodity prices and job prospects, and political concerns, such as terrorism and political stability, have been higher among consumers in countries directly affected by situations such as terrorist attacks and soft commodity demand. Still, in many markets consumer spending continues to be a bright spot. Consumer confidence, while below 100 in many countries, has remained stable, on average, over the past several quarters.’

• The Institute for Fiscal Studies has said that membership of the EU is worth around 4% of national income to the UK economy. It says ‘from an economic point of view we still face some very big choices indeed in terms of our future relationship with the EU. There is all the difference in the world between ‘access to’ and ‘membership of’ the single market.’ The IFS says ‘without membership [of the single market] the UK would be likely to lose high-value economic activity and jobs.’

• Some UK government bonds are now yielding negative returns. Gilts maturing in 2019 and 2020 are yielding around minus 0.1%.

• RICS has said that the number of surveyors reporting higher house prices has fallen to its lowest level in 3yrs

• The US government deficit is running at $113bn per month (July figures)

• World markets: UK up yesterday but Europe down. US markets down and Far Eastern markets mixed in Thursday trade

• Oil price a little lower at around $43.80 per barrel of Brent Crude

RETAIL NEWS WITH NICK BUBB:

• Poundland: We flagged on Monday that “bumpitrage” is the new name for the art of buying a stake in a company being bid for, like Poundland, in order to try to raise the price…and the hedge fund Elliott may be pleased to hear this morning that its blocking stake has forced a 5p rise in the recommended offer by Steinhoff, from 220p to 225p, although that will barely make it a profit. Needless to say there is no reference in the statement to this situation and the Steinhoff CEO Markus Jooste, a notoriously tough negotiator, merely says “By offering Poundland shareholders an improved cash offer we aim to bring certainty to the transaction…”.

• DFS: After the upbeat trading update from rival furniture retailer ScS on Tuesday, it is the turn of DFS to update the market today, with its pre-close statement for y/e July and the tone isn’t quite as bullish, notwithstanding the usual comments about being well placed to withstand any economic headwinds etc etc.

• Card Factory: The pre-close update from Card Factory today reports a slowdown in sales growth in the second half (the 6 months to end July), with total sales growth of just 4.8% (after 8.0% in the first half) and LFL sales growth of just 0.2%, but it says that full year profits will be in line.

• Lookers: The Motor dealer Lookers used to pride itself on the defensive balance that its Parts wholesaling division gave the group, but no longer, as it has just agreed to sell the Parts Division for the handsome sum of £120m in cash to a European group, to reinvest in Retail acquisitions. Lookers’ CEO, Andy Bruce, says: “We are already at advanced stages of negotiation on the acquisitions of two premium-branded car dealership businesses and hope to make further announcements on these in the coming weeks”.

• John Lewis Partnership Sales Watch: The great Retail bellwether John Lewis kicked off the second half of their financial year (y/e January) in good form last week, with sales up by 7.3% gross (just under 6% up LFL) in w/e Aug 6th, helped by some decent summer weather. Fashion and Electricals remained strong, with sales up by 5.4% and 11.2% respectively, in gross terms, but the Home department recovered momentum, with sales also up by 5.4%. In the first half of the financial year, John Lewis sales were up by 4.7% (a shade over 3% up LFL), with Electricals up by 8.4%. The warm weather and the start of the Olympics in Brazil also helped John Lewis’s sister company, Waitrose, last week, although overall gross sales were only up by 2.1% (broadly flat LFL) in w/e Aug 6th. Waitrose sales in the first half were up by 2.6% gross (marginally up LFL).

• Yesterday’s Press and News: with Morrisons, Ocado, Boohoo and SCS in focus on the retail beat yesterday, the papers have plenty to get their teeth into yesterday, but the new deal between  Ocado and Morrisons over its new warehouse in Erith (which was another scoop for the very well-informed Mark Kleinman on Sky News, by the way) tops the bill. The Telegraph focuses on the new agreement to let Morrisons pick Online grocery orders from its own stores (“Morrisons to roll out home deliveries nationwide after Ocado contract wrangling”), whilst Lombard column in the FT mocks the “Bubble economics” of the new Morrisons/Ocado deal, noting that ”Soft soap is one commodity Morrison and Ocado can supply plentifully”, as they are still spinning the renegotiated distribution deal as a win-win for both sides, and concluding that “Ocado owns no
shops and may never therefore make a decent profit”.  The FT also highlights that the fashion chain New Look was hit by a sales slide in its first quarter, describing trading in the 13 weeks to June 25 as “tough” after a 7% fall in UK LFL sales contributed to a 4.2% decline in overall revenues. Finally, CityAM highlights that M&S’s management are set to respond tomorrow to staff concerns about cuts to premium pay.