Punch, business rates, costs, the economy & other:

A DAY IN THE LIFE:

So, do you ever get a warm, comforting kind of feeling when you look into your dog’s eyes and, apart from his reeking breath and fox-poo-smelling fur, he seems to overwhelm you with his love and devotion?

Because I do from time to time but, whenever I do, I ask myself what the beast would do if I permanently came between him and his food.

Or if I collapsed in a heap whilst carrying my dinner to the table?

Would he fuss about me attentively, try to ring an ambulance with his huge, filthy paws or would he wolf my meal down, congealing gravy, dust-covered potatoes, shards of dirty pottery and all?

Because, I have to admit, I think it would be the latter. Anyway, I’m not the first one to theorise on that, on to the news:

LANGTON RESEARCH:

• Langton has produced a piece of research on the outlook for 2017. It’s free & can be found here

• We look at the macro trends etc. out there & comment on current developments. If you would like to advertise in these documents going forward, please let us know.

• See latest 60 seconds piece here

PUB, RESTAURANT & DRINKS PRODUCERS:

• Punch Taverns’ shareholders vote overwhelmingly in favour of Patron/Heineken takeover bid for the company. Bidco, which has 28.5% of Punch’s shares, did not vote. Punch says the Scheme is expected to become effective in the first half of 2017.

• Bidco has responded to the vote saying ‘we are delighted that an overwhelming majority of shareholders are in support of the Acquisition and look forward to progressing towards completion of the Acquisition following the satisfaction or (if capable of being waived) waiver of the remaining Conditions.’

• Visa data shows spending grew at one of the slowest annual rates of the past three years as British households kept a tighter grip on their credit cards, backing up the view that consumer spending is starting to lose momentum. With inflation set to eat into disposable income this year, many are anticipating a slowdown in the consumer spending that helped the UK economy outpace its peers last year. Consumer spending, adjusted for inflation, rose just 0.4% on the year in January, down sharply from 2.5% in December.

• The Coca-Cola Company reported a 56% drop in fourth-quarter 2016 net income, due in large part to ongoing refranchising of its bottlers, while core earnings were strong. The company is shrinking its total size by shedding its bottling assets, but becoming more profitable as the capital-intensive businesses are divested. The soft drinks giant generated some c$9bn in operating cash flow in 2016.

• Pubs & restaurants’ complaints re business rates hikes have made it onto the BBC. The broadcaster quotes the ALMR as saying that the increase will ‘add a further £300m to £500m in additional cost in the hospitality sector.’ The ALMR goes on to ask for a period of transitional relief to be taken into account.

• The Telegraph reports that Clinton Cards is considering shutting a large number of its high street stores. It has recently said that 120 out of 393 shops are yet to be modernised. It says these shops are “subject to an ongoing strategic review”.

• The late night economy is increasingly responsible for keeping the High Street in a number of towns alive

• Azzuri, the owner of the ASK & Zizzi brands, is reported to have refinanced its debt and increased its facilities

• MCA reports Luke Johnson appoints advisors consider sale of Feng Sushi, his Japanese fast-casual restaurant concept. Johnson told the MCA: “I’m always looking at options for every business I’m involved in.”

• Richoux is to begin a trial of a new Italian restaurant format called Zintino, which will replace the group’s Villagio site in St. Peters Street, Canterbury, in the coming months. MCA writes that Jonathon Kaye, chief exec of Richoux, is assessing the group’s estate of six Richoux restaurants, five Dean’s Diners, and four Villagio units.

• Wal-Mart will use its purchasing strength to bring down prices and costs at Asda, which faces a battle to protect its UK market share.

• Dark Star Brewing Co is exploring the possibility of a rollout of its bottle shops in tandem with its pub expansion programme, per MCA.

• Bourbon distilleries added an additional $1bn to Kentucky’s economy over the last two years alone, according to figures from the Kentucky Distillers’ Association (KDA).

• The ALMR says Weymouth and Portland Borough Council’s decision to consider the introduction of a Cumulative Impact Policy is ‘not a welcome decision’. ALMR Chief Executive Kate Nicholls said: ‘We are not convinced that a CIP will have a positive effect on tackling perceived problems, but it will certainly create barriers for local businesses to grow and invest. Weymouth already has a highly regarded Best Bar None scheme in place to help promote healthier attitudes to alcohol and ensure that pubs and bars are engaged positively.’

INFLATIONWATCH:

• British Gas it to keep its gas and electricity prices on hold until August.

• Scottish Power is to raise prices by an average of 7.8%

• Npower is to raise electricity prices by 15% next month. It will also put gas prices up by 4.8%.

• EDF, which cut prices last month, is to put prices up by 8.4% on 1 March

LEISURE TRAVEL & HOTELS:

• The A Fair Tax on Flying campaign will be calling for a 50% reduction in Air Passenger Duty ahead of next month’s Budget to ensure that Britain is ‘Brexit ready’.

• The Caribbean is more popular than ever with tourists after more than 29 million visited in 2016, spending some $35.5bn (+3.5%). The US remains the Caribbean’s primary market with an estimated 14.6 million stay-over arrivals, up 3.5% on 2015, although it was Europe that recorded the highest rate of growth, led by strong increases from Germany at 8.2% and the UK at 4.1%.

• Manchester airport has broken into the top 20 of Europe’s busiest airports for the first time, with a total of 25.9 million passengers using the airport for the 12 months running up to the end of January.

• Heathrow has recorded a 4.2% rise in passengers in January to a record 5.74 million over the same month last year.

• BA crew members are to hold 4 more days of strikes beginning on 17 February

OTHER LEISURE:

• Times reports Disney has purchased Prince Alwaleed’s 9% stake in Disneyland Paris & is to take full control of the resort

• Spotify reported to be considering an IPO. The group, which is 10yrs old, is yet to make a profit

FINANCE & MARKETS:

• NIESR reports UK economy grew by 0.7% in the three months to end January. It grew by 0.6% in the quarter to December. NIESR says ‘our estimates suggest economic output in the three months ending in January 2017 was 0.7 per cent higher than in the previous three months. Growth was driven by robust consumer spending combined with a pickup in output in production industries. This represents the first expansion of production, on a three month on three month rolling basis, since September 2016. Despite our estimates indicating a strong start of 2017.’

• NIESR says ‘we expect economic growth to soften to 1.7 per cent this year as rising consumer price inflation weighs on consumer spending.’

• Bundesbank executive board member Dr Andreas Dombret has said that London is likely to lose its position as ‘gateway to Europe’ for financial services. He says that it would be dangerous if there was a ‘race for the bottom’ in terms of pricing & lax legislation.

• UK manufacturing grew faster than expected at 2.1% in Q4 per the ONS.

• UK’s trade in goods & services deficit fell to £3.3bn in December from £3.6bn in the previous month. The ONS reports ‘while both exports and imports grew over 2016, there remains little evidence that the weaker pound has had an effect on the trade balance.’

• Jean-Claude Juncker suggests that IMF has not yet made its mind up as to whether to support the refinancing of Greek debt

• Juncker has said that the EU’s remaining 27 members may struggle to retain a united face in the upcoming UK exit negotiations

• The IMF’s Christine Lagarde has said that she is concerned about the elections coming up in several EU countries. Right winger Marine Le Pen has said that she will take France out of the Euro if she wins the upcoming election in France

• She reports, however, that the Eurozone is making progress in solving its various economic problems

• German consultancy firm Roland Berger has concluded that companies should not invest in the UK due to a lack of certainty regarding Brexit

• Brent up at around $56.65 per barrel.

• Sterling flat against US$ at $1.251. Stronger over last few days vs Euro at around 117.6c per pound

• UK long rates (10yr gilt) up a little at 1.26%. Was 1.25% on Friday

• World markets: UK & Europe up on Friday with US also higher. Far East markets mostly up in Monday trade

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

• Punch Taverns’ shareholders vote overwhelmingly in favour of Patron/Heineken takeover bid for the company.

• Pubs & restaurants’ complaints re rates hikes make it to BBC. Quotes ALMR saying ‘add a further £300m to £500m in additional cost’

• Visa data shows spending grew at one of the slowest annual rates of the past three years. Up 0.4% in year to Jan.

• Coca-Cola reported 56% drop in Q4 net income, due partly to ongoing refranchising of its bottlers, while core earnings were strong

• The Telegraph reports that Clinton Cards is considering shutting a large number of its high street stores.

• The late night economy is increasingly responsible for keeping the High Street in a number of towns alive

• Azzuri, the owner of the ASK & Zizzi brands, is reported to have refinanced its debt and increased its facilities

• A Fair Tax on Flying campaign calls for 50% cut in APD ahead of next month’s Budget to ensure that Britain is ‘Brexit ready’.

• Times reports Disney has purchased Prince Alwaleed’s 9% stake in Disneyland Paris & is to take full control of the resort

• NIESR reports UK economy grew by 0.7% in the three months to end January. It grew by 0.6% in the quarter to December.

• UK manufacturing grew faster than expected at 2.1% in Q4 per the ONS. Trade deficit dropped in December

• Later tweets: Reflation plays vs bond proxies. Will ebb & flow but we’re moving to higher interest rates, more inflation. Hence reflation plays should win

• Greene King. Ex-Xmas, ex-London, these are slower numbers. Trading has encountered sharper headwinds?

• Greene King. Looks like Fayre & Square not performing well. Group insists still making progress on Spirit acquisition, however

RETAIL NEWS WITH NICK BUBB:

The Grocer Power List Watch: The main feature in The Grocer magazine on Saturday was its annual “Power List” of “the 100 leaders, thinkers and agitators shaping the Food industry”. A year ago, The Grocer controversially picked as its No 1, Chris North, the then Amazon UK MD, even though “he doesn’t run any supermarkets and his market share in groceries is minuscule”. This year, The Grocer has played safe by going for Dave Lewis of Tesco as its top pick. Chris North’s replacement, Douglas Gurr, comes in at 11th and Charles Wilson of Booker rises from 10th to 6th. Matthew Barnes of Aldi UK stays at No 2 and Mike Coupe of Sainsbury edges up from 6th to 4th. 

Saturday Press: There were some interesting feature articles in the Saturday papers: the Times interviewed the head of Ikea UK, Gillian Drakeford, highlighting that it is trying to end the queues in its stores and adopt “a more flexible approach to allen keys” (by offering product delivery and assembly services). The FT analysed the decline of The Body Shop, noting that it had lost its lead in ethical credentials and been slow to embrace the social media channels that L’Oreal had successfully exploited. And the Guardian focused on the continuing boom in PCP new car finance schemes and the worrying rise in consumer indebtedness that they represent (“Sub-prime cars: are car loans driving us towards the next financial crash?”). In other news, the Times flagged that Dobbies Garden Centres has reported good Christmas and January trading under its new private equity owners and a couple of
the stockmarket reports highlighted the rally in Dunelm on Friday, on the back of share buying by the Chairman and a Buy tip from Numis. 

Sunday Press: The main story in the Sunday papers was probably the Sunday Times picking up the Sky News scoop that Marks & Spencer is talking to the former Next veteran, Christos Angelides, about becoming its new Head of Clothing and Homewares. The Sunday Times also flagged another interesting executive move: the former Tesco director Jill Easterbrook is to become the new boss of the mail order Fashion brand Boden. And the Sunday Times also highlighted that Apax is leading the pack of private equity buyout firms looking at The Body Shop. On that front, the Mail on Sunday had an “exclusive” interview with the boss of French cosmetics giant L’Oreal, noting that he was “sorry” that they couldn’t make The Body Shop work and that he thought it would make more sense for the business to be owned by a private equity firm. The main Business story in the Mail on Sunday was that, after the
collapse of BHS, MP’s led by Frank Field are targeting the embattled Philip Green and his struggling Arcadia fashion empire in “a major crackdown on secretive private businesses”. The Sunday Telegraph noted the speculation that US card firm American Greetings is thinking of closing the 120 unmodernised Clinton Cards stores, coming up for 5 years since its rescue deal. Finally, the Sunday Telegraph interviewed the boss of the Italian Online fashion business Yoox, Federico Marchetti, focusing on how he is integrating the bold acquisition of Net-A-Porter.

News Flow This Week: Things are quiet this week (which is skool half-term week), but tomorrow (aka Valentine’s Day) brings us the Pendragon finals and on Wednesday it will be interesting to hear what Wesfarmers say “down under” about Bunnings/Homebase in their interim results statement. Then on Friday we learn what last month was like on the High Street on the Planet ONS, via the ONS Retail Sales figures for January.

Trade Press Revisited: Leafing through Retail Week and Drapers magazines at our leisure at the weekend we spotted a few interesting things that we’d missed in our quick Summary on Friday: in Retail Week a column by the veteran consultant Michael Poynor praised 2 stores that “surprise and delight their customers” (Missguided in Westfield and the Dutch discounter Action) and there was also an overview of the new-look Halfords store in Derby, that praised the new “Park up and relax” waiting area for customers. Drapers had an overview of the new Gizia Gate designer womenswear store in Istanbul and also had a feature on the new own-label womenswear brands launched by Debenhams, John Lewis and Shop Direct (“Nine by Savannah Miller”, “Modern Rarity” and “V by Very” respectively).