A Day in the Life:

If you require any further evidence to illustrate that time passes more quickly as you get older, then I’d suggest having a ten-year-old.

Because, when you ask them if they want to do such-and-such as they had always liked doing it, they’re likely to answer ‘duh, yeah, like when I was eight!’ before rolling their eyes and, if they can summon up the energy, flouncing off with a the kind of backward glance normally used only by those leaving behind a very bad smell.

And that puts you in your place. It might only be 15mths since you visited a zoo or built a jigsaw but, like, that’s for children, isn’t it?

Anyway, if you would like to come off this email list please simply hit the unsubscribe button above (or below). Similarly, if you are getting it forwarded and would like to go on directly or if you would like to recommend it to one of your colleagues, please just hit the subscribe button and/or suggest that your colleague does so. On to the news:

The News:

Pub, Restaurant & Drinks Producer News:

• Greene King Feb Spend Tracker suggests confidence fragile, more consumers feeling worse (34%) about their position than better (29%)

• GNK Tracker: Cold weather also held back leisure spending in Feb. Both London & provinces saw lower spend

• GNK Tracker: Says spend down most noticeably in London & South East, down 9% year on year. Rest of UK down 6%.

• GNK Tracker: Spend on eating out down 4% in Feb, drinking out spend down 7% y-o-y. Drinking down 7% in London, up 3% elsewhere

• Horizons’ annual briefing hears food service spend rose by 2.8% last year or by around 2.0% in real terms

• Horizons’. Briefing hears new openings been a feature of last few years with a number of commentators mentioning S-word (saturation)

• Horizons’ briefing hears from property investor that scheme planners getting greedy, and ‘putting in too much A3’.

• Horizons’ briefing hears ‘many’ restaurants in new-build developments disappointing on numbers as capacity risen sharply

• Horizons’ briefing hears overall outlook for 2016 likely to see expansion but at a slower rate. Says market is ‘drifting down’

• Young & Co announces managed house boss Patrick Dardis is to succeed Stephen Goodyear as CEO of group on 5 July

• Young & Co. Says ‘over next few months [Dardis & Goodyear]…will work closely together to ensure an orderly handover of responsibilities.’ Young points out that under Patrick Dardis’s supervision ‘the core Young’s managed estate has delivered strong outperformance, with reported same outlet like-for-like revenue increasing by over 5% in each of its last four years.’ Chairman Nicholas Bryan reports ‘this change represents a smooth and effective succession plan. In Patrick, we have a very well qualified successor to Steve as Chief Executive. Having undertaken a thorough review of potential candidates, including externally, it was very clear that Patrick, having been intrinsically involved in our success over the last 10 years, was the right person. He knows our business inside out, is already responsible for the managed estates of both
Young’s and Geronimo and is very well respected in the industry. The company will continue to benefit from his passion, drive and commitment as we grow and develop further.’

• Eclectic has released results for its ‘in line’ H1, with sales down from £12.12m to £10.72m and diluted EPS swinging from a 4p loss to 1.8p a share. Operating profit after highlighted items rose from a loss of £0.43m to £0.34m and net debt was reduced from £2.8m to £0.2m. Commenting on the results, Luke Johnson, Executive Chairman said: ‘Eclectic has some of the best locations and premium brands in the UK. Positive progress is being made across all areas of the business and I am particularly pleased to see the Group returning to profit for the half year.  Broadening the business into more activity-based leisure concepts such as we are trialling in Reading will continue to build value for our shareholders over the medium to long term.’

• Jason Myers of Thai chain Busaba Eathai has told Hotelier Middle East.com that it is much harder for a mid-casual brand to launch in overseas markets. Speaking at the Global Restaurant Investment Forum 2016, Myers said: ‘Mid-casual brands are launching badly all around the world. Don’t expect you can sign a deal with someone a seven-hour flight away and expect that they can launch your concept with a manual. It’s so much more than that. The reason Dubai is working for us is that I moved 12 people here.’

• Moorhouse’s Brewery managing director remains on extended leave after the group’s first sales dip in several years in December 2015. A spokesperson told MCA: ‘we don’t know when he is returning to work.’

• StayinaPub continues to raise the profile of accommodation in the pub industry and has recently organised and supported two events. Paul Nunny of Stayinapub said at one such event: ‘The pub offer of Eat, Drink and Sleep is highly attractive proposition when compared with a B&B which has little sociability and perhaps a drive to a pub for dinner or a hotel that lacks atmosphere in the bar and is not renowned for their food.  It seems a no brainer to me,’ while Alastair McKenzie, the Chairman of the Trade Writers, added: ‘The standard of pub accommodation has been rising in recent years – a trend that has been overlooked by many travellers. So the ‘Stay in a Pub’ initiative is a timely one. I stayed in a number of excellent pubs around the country in 2015. I’m keen to find more this year and pleased that many Guild members seem eager to do the same.’

• A poll of 1,500 internet users by Mintel suggests the ‘feelgood factor’ of eating chocolate outweighs any health risks for Britons. ‘Even at a time when the importance of healthy snacking is being emphasised, the importance of chocolate confectionery as a psychological wellness tool cannot be ignored,’ said Marcia Mogelonsky, director of insight at Mintel. ‘While confectionery may be considered to be a ‘guilty pleasure’, it is also a food that is strongly tied to emotional needs. This is likely the reason that consumers allow themselves to indulge in chocolate and other less healthy snacks.’

NASA research in collaboration with Harvard University has found that climate change has led to ‘dramatically earlier’ harvests in places like France and Switzerland. Harvest dates from 1600 to 2007 in Western Europe were examined in the study, with researchers finding that they began shifting dramatically earlier during the latter half of the 20th century.

Leisure Travel:

• Bookings to Turkey have slumped some 58% year-on-year, according to Barrhead Travel, which has seen Spain bookings rise by a similar amount. The trends led CEO Sharon Munro to conclude that ‘the growth in popularity of the western Mediterranean is being driven partly by a drop in demand to traditionally popular destinations like Tunisia and Red Sea destinations.’

• Boris Johnson is bringing back plans for ‘Boris Island’ — a four runway hub airport at the Thames Estuary which was last year rejected by the Airports Commission.

• Shares in European airline groups slid on Tuesday as bombings in Brussels brought back terrorism concerns across Europe. Ryanair and easyJet fell about 4%, while Tui, Thomas Cook, and InterContinental Hotels.

Other Leisure:

• William Hill warns on trading saying ‘in y-t-d two main factors have combined to deliver a weaker than expected Online performance.’

• William Hill says ‘we have seen an acceleration in the number of time-outs and automatic self-exclusions over recent weeks’

• William Hill: Says time-outs could hit online profits ‘by £20-25m in 2016’

• Second William Hill says ‘gross win margins for Online are 1.9pps below expectations in the period at 6.2%’. Hit by football & Cheltenham.

• William Hill says adversely impacted ‘by the worst Cheltenham results in recent history.’

• Ex-online, WMH reports ‘the broader William Hill Group continues to trade well and is overall in line with our internal expectations’

• William Hill concludes ‘we now expect the Group’s operating profit for 2016 to be in the range of £260-280m.’ James Henderson, CEO of William Hill, comments ‘today’s statement reflects the combined effect of our assessment of the impact of recent regulatory changes and unfavourable sporting results including the worst results at Cheltenham in our recent history. We are also experiencing softer UK growth as a consequence of acquiring lower value customers. While the rest of the Group is performing in line with our expectations, we continue to focus on improving Online’s performance so that we can, once again, outperform the market.’

• Paddy Power Betfair has announced that COO Andy McCue (former CEO of Paddy Power) is to leave the business

• PP Betfair: CEO Breon Corcoran says ‘Andy has played a pivotal and hugely constructive role in the successful merger, for which I am very grateful. As CEO of Paddy Power, he led the business strongly, embedding a new growth strategy which delivered record revenues and profits. His contribution to Paddy Power in a variety of roles, but particularly as CEO, was immense. I wish him every success in his future career.’ Mr McCue himself comments ‘I leave Paddy Power Betfair following the completion of the merger and in the knowledge that this combination will be greater than the sum of its parts. I have thoroughly enjoyed leading and working closely with a great team of people who have created a dynamic and successful business. I feel now is the right time to pursue new opportunities and, in doing so, wish everyone in Paddy Power Betfair the very best for the
future.’

Finance & Markets:

• UK CPI inflation was unchanged at 0.3% in February, with food prices, and particularly vegetables, seeing the biggest rise according to the ONS.

• A top official at the Fed has said raising short-term interest rates will not necessarily lead to higher interest rates in the long term. ‘I’m not in charge of the yield curve,’ Chicago Fed President Charles Evans, one of the U.S. central bank’s most dovish policymakers, told the City Club of Chicago, adding that rates must rise ‘organically’ as a result of a stronger economy.

• House prices have risen significantly in England in the past year, outperforming the rest of the UK by some margin. Figures from the Office for National Statistics show prices in England went up by 8.6% in the year to the end of January, compared to 0.1% and 0.8% growth in Scotland and Northern Ireland respectively, while prices in Wales fell by 0.3%. The rise in England driven by an annual increase in the South East of England (+ 11.7%), London (+ 10.8%) and the East of England (+ 9.8%). Excluding London and the South East, UK house prices increased by 5.1% in the 12 months to the end of January.

• World markets: UK & Europe up yesterday. US down and Far East mostly lower in Wednesday trade

• Oil price a little higher once again, trading at around $41.40 per barrel

Retail Roundup from Nick Bubb:

Kingfisher: Ahead of today’s finals, the last news from Kingfisher was at the Capital Markets Day on Jan 25th when the company announced a “5 Year Transformation” programme, targeting £500m sustainable annual profit uplift by the end of Year 5, in return for total expected cash costs of £800m. Underlying PBT of £686m for y/e Jan was only flat, but Véronique Laury, the CEO, trumpets that: “This has been a very productive and important year…Based on the solid progress so far, and the competence and enthusiasm of our colleagues, we feel very confident in our ability to deliver”.

Game Digital: We last heard from Game Digital back on Jan 13th, when it reported “improved” Christmas trading and reconfirmed its guidance that adjusted EBITDA for the 26 week period ended 23 January would be around £30m (vs £43m), but today’s interims reveal that EBITDA was ahead of expectations at £33m, down 23% on the back of sales down 6%. Game says that “Trading in the second half of the year has been in line with our expectations and the group expects to deliver a small, positive EBITDA for the 27 weeks ending July 30th”. The analysts meeting is at 9.30am

Sports Direct:
We noted yesterday that, after Mike Ashley’s startling admission to the Times that profits will be down this year, we expected an announcement from Sports Direct revising down their profit guidance, but it took until 7am today for their hapless new PR company Keith Bishop to put out a perfunctory announcement to clarify that underlying EBITDA for y/e April is expected to be ”at or around the bottom of the range announced on 8 January “, ie £380m-420m (vs £383m in the year before).  That is depressing, but what we found even more extraordinary than his admission that the business is “in trouble” was “Mad Mike’s” apparent belief that all the problems are caused by MP’s and the press…rather than poor M&A moves, the strength of JD Sports and consumer fatigue with the “pile it high and sell it cheap in stores
that look like bazaars” approach to retailing! In this sense, it was also amazing to hear from Mike that the real power behind the business is Karen Byers, Head of Retail: “Karen Byers runs Sports Direct…She is the person who sets the rules. Not me. She is not on the Board because we won’t waste her time. We always say, whatever happens, keep KB going and we will all be all right”!

BHS CVA Watch: The vital BHS CVA (Company Voluntary Arrangement) vote today is in fact two votes – one for BHS Limited and one for BHS Properties Limited. BHS Limited is the important one, as that is where the bulk of the creditors lie and we hear that the result of this vote should be known by early afternoon, with the result of the BHS Properties Limited vote probably out at around 4pm. BHS is still confident of getting to the 75% approval threshold that they need from all the unsecured creditors, defined by the value of those attending the meeting or voting by proxy. “Voting value” is a complex matter, but it is broadly the equivalent of what they would claim if BHS falls into insolvency, so the biggest suppliers and landlords etc get the most votes…Nick Bubb – nicholas_bubb@hotmail.com

Tuesday Wrap:

This was produced for distribution yesterday afternoon: 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:

THOMAS COOK UPDATES ON Q2 TRADING:

• Thomas Cook’s Q2 update was arguably realistic rather than cautionary as such but, with terrorism and demand shifts a feature of the market at the moment, the one may be very similar to the other

• And TCG did use the word ‘challenging’ twice.

• This is perhaps to be expected but the group also used ‘broadly’ (a.k.a. ‘a bit below’) twice in the context that 1) lower booking levels were ‘broadly reflecting capacity reductions’ and 2) pricing is ‘broadly firm against last year’.

• Add in the fact that Brussels’ airport and metro system have been the targets of more terrorist attacks (also Istanbul and a crashed FlyDubai plane) and the group’s shares were arguably always likely to have a tough morning.

• But we would suggest that, horrible though such atrocities are, their impact should be transitory whereas other factors, such as the growth in Chinese visitor numbers, should continue for many years, if not decades.

OUTBOUND CHINESE HOLIDAYMAKERS:

• The FT reports that the World Travel & Tourism Council has suggested that outbound Chinese tourists spent some 53% more abroad in 2015 than they did the year before

• Spend rose from $140bn to $215bn. The WTTC, rather scientifically, reports that spend is ‘growing like crazy’.

• Spend has risen most rapidly in long-haul destinations. Indeed the WTTC reports ‘“severe declines” in tourism revenues in 2015 in Macau (down 32 per cent), South Korea (down 10.2 per cent) and Hong Kong (off by 8.4 per cent), each of which are highly reliant on visitors from mainland China.’

• The WTTC’s David Scowsgill reports ‘Europe has noticeably benefited from strong numbers of Chinese visitors, with major destinations like the UK and Germany, alongside emerging destinations like Iceland, profiting from strong Chinese outbound trends.’

• Here TCG has a JV in place with Chinese investor Fosun (49:51) ‘to develop domestic, inbound and outbound tourism activities for the Chinese market under Thomas Cook brands.’

• Back in June last year, the group said ‘the JV will combine Thomas Cook’s brand heritage, know-how and expertise in international travel with Fosun’s in-depth local market knowledge and operational resources, enabling Thomas Cook to benefit from direct exposure to China’s growing demand for leisure travel.’

• Hopefully the matter is progressing – though it is notable that the word ‘Fosun’ was missing both from the group’s Q2 and earlier Q1 trading update.

• Fosun bought 5% of Thomas Cook (via the issuance of new shares) last June with the promise that it would take its holding up to 10% via open market purchases. As at 25 November (TCG’s FY numbers), it had 5.8%.

• As at 25 Nov, TCG commented ‘we continue to make good progress in respect of our China joint venture. We have established the joint venture company, based in Shanghai, and have put in place the core management team, comprising both existing Thomas Cook staff and new external hires. Our business plan focuses on the fast-growing Chinese leisure travel market, and we expect to obtain the relevant regulatory licences to begin trading in the New Year.’

• An update would be nice.

JD WETHERSPOON’S SHARE BUY BACK:

• JDW putting its foot down as far as buying back its shares is concerned.

• Group announced this morning that yesterday it spent another £1.4m of some shareholders’ money buying back shares (from other shareholders)

• The group has this calendar year spent some £13.1m in buying back 1.96m shares at an average price of 667p.

• The group now has 117.3m shares in issue – meaning that some 1.64% of the group’s shares in issue have been bought back and cancelled since the group update on trading for its Q2 on 20 January

• It won’t be long at this rate before the group hits the 50% (of shares bought back) mark since it began purchases in earnest some 12 years ago

CURRENCIES:

• Sterling up a little vs Euro, down vs US$.

• Means that dollar weakness is taking a day off.

• Impact, for the moment, marginal

COMMODITY & INPUT PRICES:

• Oil price up a little overnight. Now trading at $41.48 per barrel.

• Gold also up a little overnight – but not as much as oil. Yellow metal now trading at $1,251.16 per ounce meaning that the gold / oil ratio fell to 30.2 (30.2 barrels of oil to buy an ounce of gold) from 30.4 on Monday and 31.9 a week ago.

• Gold oil ratio falling could/should be a sign that markets are prepared to take a little more risk.