New entrants, prices, inflation, interest rates & other:

A DAY IN THE LIFE:

A couple of thoughts for you on a Friday, totally unrelated.

First, you’re sharing a bar of chocolate and you have four squares left. You snap them and they break two and a half to one and a half squares; what do you do? Do you a) play the martyr, stay silent & take the smallest bit? 2) do you play the martyr as above & make sure the world knows it? 3) do you take the largest bit, stick your chin out and say nothing? Or 4) do you hope that people are distracted, hand the small piece to you opposition and say ‘you have the big bit, I’ve had nearly enough?

Well, in the age of post truth politics, I think we know which course of action our politicians would favour.

And second, why are companies saying they’re ‘thrilled’ and ‘excited’ these days? Surely they mean ‘satisfied’. I’ve rarely seen an excited business leader outside of a sanitorium and nor would I want to see companies run by giddy fools or wide-eyed evangelists. Unless the shares can be guaranteed to go up, that is, and why is Tesco suggesting that its customers will be ‘delighted’ with the proposed takeover of Booker?

I would have thought they would have been ‘suspicious’ but maybe the IR people have been taking a leaf from the politicians’ book. If you say something frequently and with enough conviction, some people will believe it. On to the news:

LANGTON RESEARCH:

Langton has produced a piece of research on the outlook for 2017. It looks into the macro trends, etc. We’ll be making it available next week but, if you would like a copy ahead of the weekend, drop us a line.

There’s no charge but preference (as always) will go to those who offer us beer, food or money. Or tell us a good joke, feed us information or whatever. If you would like to advertise in these documents going forward, please let us know.

PUB, RESTAURANT & DRINKS PRODUCERS:

• Chipotle shares fell 2.5% in after-hours trading on Thursday after softer-than-expected revenue in the three months to 31 December of $1bn. The company attributed the modest revenue growth to the 72 new restaurants it had opened during the quarter. Same-store sales for the full fell 4.8%, although this was an improvement on the 20.2% decrease seen in October Profits, however, slightly edged out expectations of $15.75m, coming in at $16m for the quarter but a steep decline from the year-ago period, when it clocked income of $67.9m.

• SIBA has said it is vital that Britain’s independent brewers’ export activities are protected over the course of Brexit negotiations.

• The UN Food and Agricultural Organization said that rising sugar and grain prices pushed its food price index up by 16.4% year-on-year to the highest level since February 2015. Wheat, corn, and rice prices also rose.

• The Bank of England has said that it is looking at the behaviour of lenders in the face of ballooning levels of personal debt. Governor Mark Carney has said that households should not be persuaded to take on ‘reckless’ levels of borrowing. The UK savings rate is at its lowest since the 1960s.

• Amazon shares fell 4% despite record Q4 sales of $43.7bn (+22%) as concerns over the company’s growing costs and weak outlook took hold. On the earnings call, Amazon signalled big investment plans for the current year, and said it would invest heavily in original video, Amazon India, and the Alexa voice platform. In the current quarter, profit is likely to be lower than it was during the same period last year, with net income forecast at between $250m-$900m. In the first quarter of 2016 it reported first-quarter net income of $513m.

• Dishoom is in talks to open a sixth site in London, just off Kensington High Street, per MCA.

• Spanish delivery chain Telepizza, which operates c1,400 stores across 14 countries, has secured its first site in the UK at the Treaty Shopping Centre in Hounslow. Telepizza is aiming to have a total of 300 sites in the UK by that point.

• The ALMR has urged the government to ensure that licensed hospitality businesses are guaranteed a clear voice in response to the publishing of yesterday’s Brexit white paper. ALMR Chief Executive Kate Nicholls said: ‘The government must secure the right to remain for non-EU UK workers and ensure that any developments relating to travel avoid a labour shortage. Licensed hospitality is dependent on workers from the EU and any restrictions that undermine an employer’s ability to find the right staff could have consequences for pubs and bars, for the high street and for the wider economy.’

• Brigid Simmonds, of the BBPA, meanwhile, commented: ‘Initial responses to a survey of BBPA members show that 27% of the workforce are from overseas, and this rises to 40% and more in metropolitan areas. Kitchen staff are a particular area of concern. The White Paper recognises the need to understand the impact on different sectors, and we will be working to ensure that the Government has a clear understanding of the needs of the hospitality sector for the skills, and soft skills, that are so essential for our needs.’

• New research comprising 48 studies of more than 1.7 million people in the United States, the United Kingdom, Australia, France, Italy, Portugal and Switzerland shows that poverty significantly reduces life expectancy. The report posits that poverty should be regarded as a major health risk factor as, among poor people, about 15% of men and more than 9% of women died before age 85, compared with more than 11% of men and about 7% of women who were wealthier.

LEISURE TRAVEL & HOTELS:

• Upmarket UK holiday park operator Park Leisure is being sold for £103m to a consortium led by private equity firm Midlothian Capital Partners. Park Leisure runs ten sites from Cornwall to Wales, Yorkshire and Northumberland with static luxury homes available for sale only.

• STR reports on US hotel market in week to 28 Jan. Says occupancy +1.4%, ADR +2.3% and REVPAR +3.8%.

• Travel Counsellors has reported a record month of sales for January with bookings topping £48m for the first time.

• The World Travel & Tourism Council (WTTC) has called President Trump’s 90-day ban ‘wrong’ and ‘misguided’ and urged the US administration ‘to reconsider’. Meanwhile The UN World Tourism Organisation (UNWTO) has expressed ‘deep concern and strong condemnation’, while the Pacific Asia Travel Association (Pata) says it ‘fundamentally opposed any form of blanket travel ban’ based on nationality.

• The dad at the centre of a Supreme Court case into term-time holidays has told the travel industry ‘to prepare for the worst’, saying it is not worth parents booking term-time trips away.

OTHER LEISURE:

• Facebook has posted revenues of $8.81bn in its fourth quarter, surpassing expectations, as the group’s monthly active users climbed to 1.86 billion.

• FPE Capital is selling self-service ticketing business Ticketscript to Eventbrite.

• Snapchat to IPO in listing valuing the loss-making co at between $20bn and $25bn. Boss Evan Spiegel will become really, really rich.

FINANCE & MARKETS:

• The Bank of England yesterday left UK base rates unchanged at 0.25%

• The Bank has increased its estimate for growth in the UK dor 2017. It expectes growth of 2% (was 1.4%)

• UK gilt yields fell on the belief that rates would, indeed – and despite increased growth & inflation – remain lower for longer

• Sterling down on the news. Bolsters overseas earners in the FTSE100

• Bank chooses asset bubbles over raising rates. Rates to remain lower for longer per market interpretation of Bank’s comments

• Bank says rate of unemployment could fall to 4.5%. It is currently 4.8%. If EU nationals go home, this could lead to inflation as labour will be scarce

• Bank’s Carney accepts UK stronger than anticipated. Says its own actions are something to do with that. Mr Carney said yesterday ‘the thing that we missed is the strength of consumer spending and consumer confidence associated with that, that has been present all the way through this process.’ He says of consumer spending ‘after an initial wobble in terms of consumer surveys … it bounced back pretty quickly. Consumers have not been affected by any of the associated uncertainty around Brexit.’

• Bank’s Carney says that, though fears were overdone, Brexit will not be without consequences

• Brexit principles outlined. Have cake, eat it. NIESR says securing good trade deals could be more easily said than done

• David Davis said yesterday that a negotiated rather than accrimonious divorce deal is best for both the EU and the UK

• Construction PMI down slightly to 52.5 in Jan from 54.2 in Dec. Any number >50.0 implies growth.

• Brent up a shade at around $56.80

• Sterling down on low interest rates for longer comments at Bank. Trading around $1.2525 to the dollar

• Sterling around a cent lower vs Euro at c116.5c

• UK 10yr bond yield in sharp drop to 1.39% from 1.46% yesterday. Savings being sacrificed in order to bolster growth

• World markets: UK up yesterday on $$ earning stocks & weak Pound. Europe down, US down & Asia lower in Friday trade

TODAY IN A NUTSHELL – TWEET VERSION & YESTERDAY’S LATER COMMENTS:

• Chipotle shares fell 2.5% in after-hours trading on Thursday after softer-than-expected revenue in Q4

• SIBA has said it is vital that Britain’s independent brewers’ export activities are protected over the course of Brexit negotiations.

• UN Food & Agricultural Organization says food prices +16.4% on the year, fastest rate of growth since Feb 2015

• The Bank of England has said that it is looking at the behaviour of lenders in the face of ballooning levels of personal debt

• Upmarket UK holiday park operator Park Leisure is being sold for £103m to a consortium led by PE firm Midlothian Capital Partners

• Travel Counsellors has reported a record month of sales for January with bookings topping £48m for the first time.

• Snapchat to IPO in listing valuing the loss-making co at between $20bn and $25bn. Boss Evan Spiegel will become really, really rich.

• The Bank of England yesterday left UK base rates unchanged at 0.25%. Ups 2017 growth estimate to 2.0%. Cautions on personal debt

• Bank says jobless rate could fall to 4.5%. Is now 4.8%. If EU nationals go home, this could lead to inflation as labour will be scarce

• Bank’s Carney says that, though fears were overdone, Brexit will not be without consequences

• David Davis said yesterday that a negotiated rather than accrimonious divorce deal is best for both the EU and the UK

• Construction PMI down slightly to 52.5 in Jan from 54.2 in Dec. Any number >50.0 implies growth.

RETAIL NEWS WITH NICK BUBB:

• Sports Direct: You remember the beleaguered Sports Direct saying a month ago that the management team didn’t have the “bandwidth” to run too complicated a group and that it was going to focus on moving the UK operation upmarket and buying back its shares? Well, “once a M&A junkie always an M&A junkie”, because Mike Ashley is up to his old tricks again…and yesterday, after the overnight news from Reuters that Sports Direct is in talks to bid for the bankrupt Eastern Outfitters (the parent of US discount chain Bob’s Stores and outdoor retailer Eastern Mountain Sports), it was also revealed that Sports Direct has taken a 11.2% stake in the equally troubled French Connection, through CFD’s. Neither deal is very big, to be fair, and we note that Sports Direct bid for the bankrupt US sports retailer Sports Authority last year and that it is trying to build up an upmarket Fashion
division (with Cruise and Flannels etc), but it is not obvious that Mike’s fiddling around with stakes in Debenhams etc has done him much good of late and you’d have thought that he would have better things to do…

• Trade Press: The front cover of Retail Week magazine flags up a flagship report, Retail 2017, produced with Manhattan Associates, about how the sector’s leaders are feeling, thinking and investing in the year ahead. But the main focus is on the Tesco/Booker deal: the main News story is that Tesco boss Dave Lewis has shrugged off suggestions that the competition authorities could hamper its proposed takeover of food wholesaler Booker, whilst the Editor notes in his column that when the news hit the screen the similarities with Iceland’s ultimately ill-fated deal with Booker, back in May 2000, were striking. RW also flags that ex-JS man Luke Jensen is to lead the Ocado Smart Platform business and that Habitat is testing a standalone mini-format in Leeds, whilst it has an overview of the Swedish travel bookshop Pocket Shop that opened before Christmas in Liverpool Street Tube station.
The main News story in Drapers magazine is that clothing suppliers have warned they are approaching breaking point as retailers pile on the pressure to keep their prices and Drapers has launched a pricing survey for brands, agents and distributors, to establish the impact of input cost pressures.

• News Flow Next Week: The BRC-KPMG Retail Sales survey for January is out first thing on Tuesday and that morning also brings the latest monthly Kantar and Nielsen grocery market share data and an AO.com analysts visit to Germany. The Dunelm interims are on Wednesday and the DFS pre-close update is on Thursday.   

• Quote of the Day: As a general comment on Trump/Brexit etc etc, here’s a question from the great American comedian Will Rogers: “If Stupidity got us into this mess, then why can’t it get us out?”.