Coca Cola HBC, Pepsi, Marriott, pub closures & other:

A DAY IN THE LIFE

I got an alert yesterday asking me if my phone was getting too ‘laggy’.

Of course I tried to text them back to say that no, on the contrary, it wasn’t laggy enough but I’ve yet to get a response because, do you know what, I don’t think it was a human being that was trying to communicate with me in the first place.

And that brought to mind the book Chaos Monkeys, which I read last week. The style was a bit grating but the history as to how Facebook (and others) have expended hundreds of millions of dollars in trying to get inside our skin, to chase us around the internet and offer us hotels, razor blades or nappies depending on our browser history, made occasionally interesting reading.

Because Big Brother really is out there. The Stasi had nothing on modern search engines, social media sites and the rest so mind your Ps and Qs, you’re always being watched. On to the news:

JANUARY TRADE TRACKER:

Coffer Peach Tracker reports Jan LfL sales +1.9% nationally. Shows restaurants +3.3% with pubs +1.0%.

Total sales were +4.4%, which continues to show the impact of new openings.

Coffer Peach Tracker shows London casual diners turned in the best LfL performance. Peter Martin reports ‘after a busy Christmas and New Year period, when sector like-for-likes were up a healthy 2.2% on 2015, many expected January to be more muted – but consumers seem to have continued to go out to eat and drink, and in particular eat.’

London LfL sales +2.2% vs +1.6% in rest of the country. Restaurants in London +3.8%. Tracker’s Peter Martin cautions ‘it also has to be remembered that January is always a weak trading month, so swings at this time of the year will not overly affect business fortunes, but with latest figures showing inflation running at 1.8%, this is a level of the growth the market will need to maintain.’

Tracker suggests annual January detox is now a Big Thing. Food will have to take up the slack.

Coffer Peach says ‘consumer confidence is proving to be resilient in spite of a background of accelerating inflation.’

However, it adds ‘the next few months will see significant cost pressures for operators in both the pub and restaurant sectors, not least of which is the new rates assessments.’

PUB, RESTAURANT & DRINK PRODUCERS:

Coca Cola HBC reports ‘continued good progress in margin recovery’ in FY to end-December.

CC HBC FY: Reports ‘another year of good progress, with the business developing in line with our 2020 strategic plan’

CC HBC FY: Sales +3% on a same-currency basis. Net reported revenue down 2%

CC HBC FY: Volume +0.1% in year ‘with good growth led by Nigeria and Romania, offset by continuing decline in Russia and weaker volume performance in Italy and Austria’

CC HBC FY: EBIT margin +90bps. Comparable EPS +12.5% at 97.2c (Euros). Dividend of 44c (+10%). CEO Dimitris Lois reports ‘I am delighted with our 2016 performance and the momentum in the business. We have delivered solid currency-neutral revenue growth and another year of significant growth in margins and profits, representing a sustainable and well established recovery. Cost and efficiency actions continue to improve profitability and enable the business to maximise the gains from top line growth.’

Coca Cola HBC says ‘in 2017, we expect slightly better economic conditions to support volume growth.’ It concludes ‘we are confident that 2017 will be a year of currency-neutral revenue growth and margin expansion as we continue to make progress towards our 2020 targets.’

Rising business rates are forcing thousands of pubs to close their doors across England and Wales and more could follow when rate levels increase in April, per CVS. Research from the rates and rental specialists suggests that a fifth of pubs closed between April 2010 and the end of 2016 (some 11,443 units), meaning there is now the lowest ever recorded number of pubs in England and Wales (43,231). It is estimated that local pubs face a £421m hike in overall business rates over the next five years.

US restaurant industry same-store sales dropped by 1.5% in January, marking the industry’s seventh decrease in the past eight months. The findings come from the latest MillerPulse restaurant index and were attributed primarily to weak traffic and same-store traffic has now fallen for 15 of the past 16 months. ‘Restaurants have their own set of problems,’ Miller said. ‘It’s not necessarily the indicator it once was of the general economy.’

Pepsi reports Q4 & FY numbers, says revenue +5.0% in Q4 against down 0.4% for the year as a whole.

Pepsi reports FY EPS 436c (+19%). Co reports ‘we concluded 2016 with another strong quarter of operating performance, capping off a successful year. We met or exceeded every financial goal we set for 2016, while delivering a good balance between revenue performance and productivity.’

Pepsi adds ‘looking ahead to 2017, we expect solid financial performance despite anticipated continued macroeconomic challenges. Further, reflecting our commitment to providing attractive cash returns to shareholders, we are increasing our dividend per share for the 45th consecutive year, beginning with our June 2017 payment.’

Global drinks giant Pernod Ricard has teamed up with American retailers to lobby the Trump White House not to impose tariffs of up to 20% on non-US produced spirits. Speaking in London earlier this week, chairman and chief executive Alexander Ricard warned: ‘You cannot produce Scotch in the US like you cannot produce Bourbon in Scotland. Cognac is French and Irish whiskey is Irish. Spirits is a very specific industry based on appellations. We cannot move production [from many locations]. So [if it comes in] this will be a tax we will pass on to consumers. The retailers say it will be a new consumer tax and we agree with them. I don’t think it is fair to the American consumer, so…go figure… but we will see what happens.’

MCA data suggests outlet growth across the eating out sector is likely to slow over the next 12 months to 3.7% from 3.9% in 2016. Last year itself was a marked slowdown from a 6.5% spike in 2015 and, although net growth remains robust with 521 net new outlets coming this year (some 120 of which will be opened by Subway), MCA’s Outlet Growth Analysis discusses why operators ‘caught in the middle’ are likely to find growth hard to come by.

More than 50 breweries have now signed up to a campaign to improve the discount on beer duty for small brewers, which has seen rapid growth in support since its launch on 18 January. SIBA and CAMRA are now also being consulted as part of the process. The PMA writes that Brewhouse Bar & Kitchen, Brakspear, West Berkshire, St Peters, Everards, Castle Rock, Thwaites, Siren Craft, and Magic Rock have all joined the campaign spearheaded by The Small Brewer Duty Reform Coalition (SBDRC).

CEO of CGA Strategy, Phil Tate, says that pubs are likely to see a plateau this year as operators shift to providing an attractive range of drinks, with a particular emphasis on soft drinks.

Potbelly Corp in the US has reported that LfL sales edged ahead only by 0.1% in Q4 but volume of customers fell due to ‘industry headwinds’.

Sir Cliff Richard has reduced the asking price of his Portuguese vineyard from ‎€9.5m to €6.5m. 

Some 400 craft brewers have entered into a competition hosted by the Society of Independent Brewers (SIBA) – a 700% increase on 2011. The contestants will be whittled down to 72 national finalists, before the overall champion is named.

Restaurant Brands, owners of Burger King and Tim Hortons, has reported a 5% rise in revenue to $1.1bn in Q4. Profits more than doubled year-on-year, with LfL sales of Burger King increasing 2.8%.

Papa Murphy’s Holdings Inc. is removing certain management and corporate positions, as the group conducts a ‘strategic realignment of resources’. The cutbacks are expected to save the group $1.5m a year.

LEISURE TRAVEL & HOTELS:

Marriott reports FY numbers & Q4, says headline EPS came in at 62c in Q4. Underlying EPS was +20% at 85c.

Marriott reports N American comparable systemwide constant dollar RevPAR rose 1.1 percent in the 2016 fourth quarter

Marriott reports EBITDA of $756m in Q4 saying in the full year Marriott & Starwood together added more than 68,000 rooms

Marriott;s y/e pipeline of new rooms increased to 420k. CEO Arne Sorenson reports ‘the company delivered record high fee revenues in 2016, boosted by significant unit growth, RevPAR improvement, outstanding property-level margin gains and the acquisition of Starwood Hotels & Resorts.’

Marriott CEO Sorenson reports ‘looking ahead, we’ve never been more optimistic about our long-term prospects.’

Marriott reports ‘in 2017, we anticipate growing our rooms distribution by 6 percent, net, and expect that our worldwide systemwide comparable constant dollar RevPAR for the combined portfolio will increase 1/2 to 2 1/2 percent.’

FINANCE & MARKETS:

Wages grew by 2.6% in the quarter to end-Dec per the ONS, comfortably ahead of CPI, which is now 1.8%.

UK jobless rate holds steady at 11yr low of 4.8%. Number unemployed now 1.6m.

ONS says ‘the unemployment rate is now at its lowest in over a decade, but wage growth remains subdued by historical standards’.

Tata Steel’s UK metal workers have voted to accept pension cuts in order to secure their jobs

Eurozone trade surplus rose to Euro 28.1bn in December

U.S. retail sales increased by 0.4% (5.6% y-o-y) in January, lifted by purchases of appliances and electronics, increasing the chances of a rates hike. Federal Reserve Chair Janet Yellen has hinted at a interest rate rise in March.

Brent little changed at $55.77 (was $55.67)

Sterling little changed at $1.2467 (was $1.2470) and down a shade vs Euro at 117.4c (was 117.8c)

World markets: UK & Europe higher yesterday with US also hitting new records. Far East mostly down in Thursday trade

TODAY IN A NUTSHELL:

Coffer Peach Tracker reports Jan LfL sales +1.9% nationally. Shows restaurants +3.3% with pubs +1.0%.

Coffer Peach Tracker shows London casual diners turned in the best LfL performance. London LfL sales +2.2% vs +1.6% elsewhere

Tracker suggests annual January detox is now a Big Thing. Food will have to take up the slack.

Coffer Peach says ‘consumer confidence is proving to be resilient in spite of a background of accelerating inflation.’ But it expects further cost pressures

Coca Cola HBC reports ‘continued good progress in margin recovery’ in FY to end-December.

Rising business rates are forcing thousands of pubs to close their doors

US restaurant industry same-store sales dropped by 1.5% in January, marking the industry’s 7th down month in last 8mths

Pepsi reports Q4 & FY numbers, says revenue +5.0% in Q4 against down 0.4% for the year as a whole.

MCA data suggests outlet growth across the eating out sector is likely to slow over the next 12 months to 3.7% from 3.9%

Marriott reports FY numbers & Q4, says headline EPS came in at 62c in Q4. Underlying EPS was +20% at 85c.

Wages grew by 2.6% in the quarter to end-Dec per the ONS, comfortably ahead of CPI, which is now 1.8%.

UK jobless rate holds steady at 11yr low of 4.8%. Number unemployed now 1.6m. Later tweets yesterday: Input price inflation 20%, output prices rising at 3.5%, RPI of 2.6% and CPI of 1.8%. Implies a certain amount of pressure in the system

What must Ms Yellen be thinking? Signs up under Obama, looking forward to Clinton & gets, guess who, Trump.

Some say ‘Trump policies may make interest rate rises unnecessary’. Who is that idiot? I’ve got some lead here, needs turning into gold…

RETAIL NEWS WITH NICK BUBB:

Laura Ashley: Unexpectedly, today has brought a profit warning from Laura Ashley, on the back of their interim results, with Tan Sri Dr Khoo Kay Peng, the Chairman, flagging that “Trading conditions have been demanding during the first six months of the year. The Board have reviewed the first half results and forecasts for the remainder of the year to 30th June 2017 and, given the continued market challenges, feels that net pre-tax profit for the year will fall below market expectations”. LFL sales for the six weeks to 11th February were 0.6% down on last year.

Kantar Clothing Market Share Watch: Kantar is best known for its UK grocery market share data, but the Kantar WorldPanel also produces survey data on the UK clothing market and Tuesday’s figures showed that the market remained in decline in the 12 weeks to 15 January, falling by 1.2%, despite an improvement in Menswear. Of the major players, only Primark gained share over the period, with implied sales up by 2.4%, with M&S Clothing down by 2.8%, Next down by 1.5% and Debenhams down by 4.2%.

Exponent Watch: We are indebted to our friends at Drapers for pointing out to the tipster “Honest Nick” that the private equity fund, Exponent, which has just bought the “Flash Sale” site Secretsales, is also the owner of “the bible of the horseracing industry”, the Racing Post! Exponent, which specialises in UK small businesses, bought the Racing Post last September and said at the time “We were attracted to the business by its unique position as the only scaled media brand dedicated to horseracing, as well as the opportunity to continue the digital transformation of the business”. As for SecretSales, the idea seems to be to integrate the business with its existing investment in the Wowcher discount deals website (which it bought from the Daily Mail in November 2015).

News Flow This Week: Tomorrow morning we will learn what last month was like for Small Retailers on the High Street on the Planet ONS, via the ONS Retail Sales figures for January.