Leisure Wrap & Other:

So the trading day is grinding to a close. We’re another day older but are we any wiser? After a day of intensive head-scratching, pen flipping and gossip, we have been considering the following. As always, contact us if you’d like further details:

Langton Licensed Retail Index – Major Movers

Last week was very much a week of two halves. The wider UK market fell on Monday and Tuesday before succumbing to panic selling on Wednesday when the FTSE100 lost over 200pts. A rally then set in with the markets rising sharply on both Thursday and Friday.

The FT All Share Index finished the week up 1.22% and leisure stocks were not immune from the moves with the weekly performances (with a couple of exceptions) being driven by wider market moves.

Pubs:

JDW had a poor week last week (down 8.4%) on the back of its lacklustre Q2 update and the comment that results would be ‘at the bottom of the range’ – see earlier emails for further comments. Greene King shares lost 2.6% as they failed to bounce as markedly as did the market but Marston’s, which updates tomorrow, lost only 0.5%. M&B shares, having been oversold for some weeks now, ended up by 2.6%.

The tenanted pub companies had a poor week with Enterprise’s shares down by 4.5% and Punch Taverns giving back 4.1%. London operators Fuller’s and Young & Co both lost ground with the former down by 2.4% and the latter a material 7.1%. Concerns that the London market may be becoming saturated may have weighed on the shares.

Other Leisure:

Amongst the other major operators, Restaurant Group steadied up after having lost ground during the previous week when it updated on full year trading. Its shares rose by 1.2% las week whilst bar operator Revolution Group lost 4.4% and Domino’s Pizza shares finished the week some 5.1% lower.

Whitbread, Cineworld and Merlin shares moved by less than one percentage point (the former down, the latter two up) whilst SSP shares fell by 1.9%. Will Brumby – will.brumby@langtoncapital.co.uk

The News:

Evolution, a continuing process:

• The news that contactless payment volumes have quadrupled in less than a year should not be a surprise.

• Similarly Uber Eats may now be looking to disrupt former-disrupters such as Just Eat and Deliveroo.

• Tesco, meanwhile, is going in the other direction & has closed its (admittedly only two) food to go outlets.

o One has to here question the future re Harris & Hoole and Giraffe within the Tesco fold

Oil. Iran eclipsed by snow in the US:

• It was always going to be winter at this time of year in North America but Storm Jonas, now dubbed Snowzilla, has reminded traders that Americans use oil in order to stay warm

• Hence the price, though giving a bit back at present, rose by 10% on Friday and a little more over the weekend to trade at over $32.50 earlier today

• Oil apparently has just had its best 2dy run in 7yrs.

• However, a too-short term chart, whilst it will give traders a bit of a buzz, can be a bit misleading because the oil price remains historically very low

• Because, though the price rose by almost 20% over the last three days, it is still down by around three quarters of its value on prices of only a little more than a year ago

• With billions being gambled on the oil price on a daily basis, there’s little that any single observer is likely to be able to add

• But surely snow melts but the re-emergence of Iran is (semi) permanent?

• Overall, however, the suggestion that oil could test new lows is not without merit and, when the snow lying in New York and Washington melts, the price could come under further downward pressure

• We note, however, that slashed capex budgets, over time, could lead to a squeeze on supply at some point in the future

Sterling bouncing:

• So should we scrub everything that we’ve said recently about the impact of a weak Pound?

• Well not really. Sterling had an OK day Thursday & a bit more of a bounce Friday but it’s still down by around 10% over the last 3mths

• As always, the impact on holidaymakers going abroad will be immediate whilst the costs for holiday companies should have been hedged – at least for the season that we are currently in

• Commodities (priced in US$s) and imports (priced, typically, in US$s, dollar-linked currencies, Euros and Yen) will rise in price on an overall lower level of Sterling but the impact should take some time to feed through

Random information, hopefully not all of it useless:

• The Daily Mail has opined that ‘Amazon wages war on grocers’. It points out that the online giant is to hire 2500 more staff in the UK and possibly takeover Ocado.

• Falling diesel prices, now at six year lows, should help to put a little more cash back into would-be pub-goers pockets

• Tunisia. Now shut till November in the eyes of TUI. The market will be fortunate if that is the worst of it. Capacity in Canaries & elsewhere seems to have picked up the slack.

• UK market: Tried to go better today but fell. On Friday, it was somewhat unusual to see the oil companies in the gainers & the miners in the fallers.

• Interestingly on Friday, only four FTSE100 stocks actually registered a decline.

• Commodities: The Gold Rally is now visible to the naked eye. Non-precious metals prices still weak, copper is off by 23% over the last year and soft commodity prices, with the recent exception of sugar, remain depressed

We’re so 21st Century, this morning’s Tweets (diff. font size denotes importance):

1. BBPA calls on publicans to email MPs asking them to back the body’s campaign to secure a fourth cut in beer duty

2. UK contactless payments hit £1bn in November, a four-fold increase since Jan 2015. The limit rose from £20 to £30 in Sept 15.

3. In a further sign of its retrenchment to its core business, Tesco is to shut its two “Food-to-Go” stores in London reports The Telegraph

4. Global sales of scotch are forecast to grow by 5% a year between 2015 and 2020

5. Uber is planning to expand its meal delivery service, UberEats, to ten cities across the US, including LA, Chicago and Austin.

6. Asda, Tesco and Morrisons are all cutting the price of their diesel by 2ppl to its lowest price in six years

7. The mild winter weather helped drive a 1% decline in the volume of goods sold in UK shops in December

8. Institute of Economic Affairs jumps on Langton bandwagon. Says 80% of traffic lights should be torn out.

9. PPHE Hotels updates on trading, says revenues +12% y-o-y. It says this ‘reflects continued strong demand’

10. Carlson Rezidor Hotel Group owner Carlson is contemplating ‘strategic alternatives’ that include a sale or merger per WSJ

11. Tui UK has cancelled its summer programme to Tunisia and will not restart flights until at least 1 November

12. Campaign to oblige government to ‘at least halve’ APD gains momentum, 20 MPs so far signed an Early Day Motion.

13. London international visitor numbers hit a record 5.2m in the quarter to end-Sept. per ONS. Figures +5.9% on 2014.

a. ONS reports overseas visitor numbers for whole of UK up 4.7% in Q3 to 10.5m visits. This despite relative strength of Sterling.

14. Oil prices sharply higher Friday on US snow & heating demand. Price through $30 and trading at $32.50 presently

15. UK Government borrowing fell by £4.3bn to £7.5bn for the month of December per official statistics

16. Number of profit warnings in the UK on the rise reports Ernst & Young. There were >100 warnings for London listed shares in Q4