A Day in the Life:

There’s a lot to be said for accidents of birth.

They’re normally spoken of in terms of the wealth (or health) of your parents or the country in which you were born but I think it’s true across species as well because, if you’re born a human – or even a proud and magnificent eagle – you’re going to live one sort of life but if you’re born a slug or a woodlouse, you’ll live another.

All of which was brought to mind because we noticed a little brown bird was building a nest in one of our nest boxes over the weekend, one that the dog can’t reach and, after consulting with my 40yr old Observer Book of British Birds, we concluded that it’s a wren.

But there’s no guarantee that the little thing will actually live there because, in the case of that species, the male builds seven or eight nests after which a female chooses one in which to lay her eggs.

I mean, I’ve heard of chasing the girl but what an idiot.

He then woos and dotes on said female, feeds her for a month or so and fights off the local cats after which she pecks him to death and eats him.

Okay, so that last bit isn’t true but come on Mother Nature, I mean eight nests? On to the news:

The News:

PUB, RESTAURANT & DRINKS PRODUCER NEWS:

• Eclectic Bars CEO Reuben Harley to leave the company. 1.8m of his shares to be sold.

• Eclectic Bars to change its name to The Brighton Pier Group following purchase of the same for £18m.

• Eclectic Bars to buy The Brighton Marine Palace & Pier Company. Will issue £8.5m of new shares. Group says it ‘has today entered into a conditional agreement to acquire The Brighton Marine Palace and Pier Company, which owns and operates Brighton Pier, a profitable and cash-generative landmark seafront visitor attraction and entertainment venue on the South East coast of the UK, for a total cash consideration of £18 million on a cash-free, debt-free basis.’

• Eclectic to fund Pier purchase via £8.5m placing and provision of £13m debt facility from Barclays. Chairman Luke Johnson is to invest a further £2.5m.

• Eclectic says Pier purchase will be a ‘transformational acquisition’. It says it’s paying 5.1x EBITDA to Oct-15. Group says ‘the Board believes that the Acquisition represents a significant opportunity for the Group to acquire an iconic British asset whilst also broadening its business base and diversifying its existing portfolio of venues by expanding into a differentiated offering within the leisure sector.’ It adds ‘in particular, the Board believes that the Enlarged Group will benefit from the high-quality experience of operations, leadership and performance enhancement of PierCo’s existing, standalone, senior management team, led by Anne Martin, whom it is proposed will join the Board on Completion.’

• Eclectic purchase of Pier Co will be immediately earnings enhancing from completion. Chairman Luke Johnson says ‘we are very pleased to announce the acquisition of Brighton Pier, one of the most iconic and instantly recognisable attractions in the UK. The pier is hugely popular with the British public and it occupies a special place as a landmark at the heart of Brighton.’ He adds ‘Brighton is one of the UK’s most popular visitor destinations with over 10 million visitors per year, making it the most visited place in the South East. The pier itself is Britain’s most popular attraction outside London. The pier has been well run and well maintained by the previous owners and we welcome Anne Martin and her first class management team to the newly enlarged Eclectic group.’ He concludes ‘this acquisition represents the next stage in the group’s development,
expanding the Company’s existing portfolio and using the enhanced Board’s diverse skillset to become a differentiated operator of leisure and entertainment assets.’ Re management changes, the chairman says ‘I’d like to thank Reuben Harley for his contribution to the success of the Group.  He leaves with our warm wishes.’

• Enterprise Inns reports it bought back another 168,222 of its shares yesterday for cancellation at prices between 97.5p and 99.25p

• Ruby Tuesday reports Q3 numbers, says LfL sales down 3.1% incl. 140bps due to winter weather closures

• Ruby Tuesday: Q3 total sales down 5.1% to $271.5m (part due to disposal of 20 corporate-owned restaurants. Margin down 10bps to 17.1%. Group chairman, president and CEO JJ Buettgen reports ‘our third quarter was a volatile period affected by weather, softness in the casual dining industry, and increased promotional activity by our peers. Despite this challenging environment, we continue to believe that our key brand initiatives will drive an improvement in guest counts.’ He continues ‘we remain focused on better in-restaurant execution, refining our media and targeting plans, and incorporating what we’ve learned from our Garden Bar and remodel tests into our go forward strategy.’ He says ‘this gives us confidence that we can return to same-restaurant sales growth and higher operating profitability. While not yet visible in our results, we believe that we
have the right framework in place to attract more women and families and increase visits from our current Ruby Tuesday guest.’

• Soho House’s Roll Out Restaurants receives £15m in funding from RBS. Soho House says ‘this funding will support Pizza East, Dirty Burger and in particular Chicken Shop which serves rotisserie chickens that are marinated overnight, steamed and then spit-roasted over charcoal.’ Phil Brown, UK Corporate Coverage, Leisure & Travel at RBS says ‘we are keen to support innovative operators in this exciting market and are delighted to announce this support for Roll-out Restaurants to fund their next phase of expansion’ whilst Soho House comments ‘we are hoping to add 10 – 15 new sites a year to our portfolio so approached several banks to secure the finance we need for this expansion.’

• Drake & Morgan is to open its first airport site this summer called The Commission, an all-day joint venture with Delaware North at Heathrow’s Terminal 4. The 4,800 sq ft site will have 170 covers and will feature a grab-and-go ‘picnic’ format alongside its breakfast, brunch, and dinner offering. CEO Jillian MacLean said of the new bar and restaurant: ‘Our all-day bar and dining format is ideal for transport hubs and we are working closely with Delaware North to deliver a fresh new concept designed specifically to appeal to travellers, from business passengers through to families.’

• Duloe-based cider producer, Cornish Orchards, has signed an exclusive deal with Boardmasters for sole cider pouring rights at the five-day surf and music festival. Over 160,000 people are expected to attend the event, which takes place between 10 and 14 August in Cornwall.

• Sainsbury’s is to stop running its Brand Match scheme, which it has been maintaining since 2011, and will use the money to cut prices on basics. Morrisons stopped the price-matching element of its loyalty card scheme last year, while Asda has  also made changes to its scheme in the wake of Aldi and Lidl’s continued success.

• Record car data (also Topps Tiles) shows that big-ticket spending is still alive & well. Move to ‘affordable treats’ therefore delayed?

• Premier Foods. No comment from McCormick yet (at least at time of writing) post Premier ‘we-can-go-it-alone’ presentation.

• Early Easter. Frost on the car this morning & Easter is behind us. Comes some 3wks later next year. Comps (for beer gardens) therefore soft. This kind of thing shouldn’t really matter – but it does.

OTHER LEISURE:

• Verizon Communications and Google intend to make a first round bid for Yahoo’s web business next week, according to sources familiar with the matter per Bloomberg. Verizon is considering a bid for Yahoo Japan Corp to sweeten the offer, although no official statement has been made.

LEISURE TRAVEL:

• The US hotel industry saw positive results across its three key performance indicators during the week of 27 March to 2 April 2016. Occupancy was up 6.6% to 66.9%, while average daily rate rose by 5% to $121.96 and revenue per available room grew by 11.9% to $81.61.

• Security emerged as the big issue yesterday at the opening of the World Travel and Tourism Council’s summit in Dallas. Marriott International president and chief executive Arne Sorenson spoke of ‘perhaps the greatest threat to international travel. Paris and Brussels have given rise to an emotion to lock doors’ before adding, pointedly: ‘We have a candidate for president in the US who wants to build a wall.’ Hilton CEO Chris Nasetta concurred, saying: ‘Fear mongering is being used during the political season to tap into political anger.’

• Global demand for air travel in 2016 is off to its best start in eight years, although the load factor fell and terrorist attacks are a ‘grim reminder’ of safety concerns. Total revenue passenger kilometres grew by 8.6% in February year-on-year and monthly capacity increased by 9.6%, but the load factor decreased 0.7% to 77.8%. Iata chief executive, Tony Tyler, cautioned that February was ‘the first month since the middle of 2015 in which capacity growth exceeded demand, which caused the global load factor to decline. It is unclear whether this signals the start of a generalised downtrend in load factor, but it bears watching.’

• Passengers headed to Greece yesterday had to deal with severe disruption as a result of a 24-hour, countrywide air traffic controller strikes. The union action is in response to pension reforms and has caused airlines including Easyjet and Ryanair to cancel strikes.

• Sterling lower still. Could bounce post Brexit vote (if it’s a ‘stay’) but, in the meantime, slightly negative for tour operators, positive for Merlin

FINANCE & MARKETS:

• Surge in Yen putting downward pressure on Japanese exports.

• World markets: UK & Europe down. Wall Street also lower and Far East down in Friday trading

• Oil little changed at around $40 per barrel.

• ECB annual report shows bank ready to make further moves in order to stimulate growth. Minutes hint further rate cuts possible

• ONS figures show UK productivity among UK workers in Q4 2015 fell at its fastest pace since 2008, with worker output per hour falling 1.2% during the last three months. The service sector continued to prove more resilient than manufacturing, falling 0.7% compared to 2% for the latter. Last month’s Budget saw growth forecasts revised down as a result of reduced productivity predictions.

• UK house prices grew by 10.1% in the year to March compared to a year earlier, although Brexit fears could slow the market, warns Halifax. The lender says the increase made an average home worth £214,811.

Retail Roundup from Nick Bubb:

Marks & Spencer:
We noted yesterday that the early Easter should have helped Marks & Spencer’s Q4 sales and that we expected M&S to clarify the impact, but it was only in the very small print that M&S admitted that on an Easter-adjusted basis Food sales in the 13 weeks to 26 March were down 1.0% LFL and that Non-Food sales (or “Clothing and Home”, as new CEO Steve Rowe likes to put it) were down by 3.1% LFL. The headline of the press release, however, was “Another good quarter in Food”, helped by a strong 4.0% contribution from new space, and, while M&S admitted that there is “more to do” in Non-Food, the City focused on the “significant increase in Clothing and Home gross margin” of 240/250bps, despite the sharpening of prices on a number of lines. At another time, the City would have given M&S a hard time for achieving
Online sales growth of only 8% and the weak International sales, but we live in an era of rose-tinted glasses…Full-year profit forecasts didn’t change, so it can only be a sense of relief or false optimism about the future that led to the 3% rally in the share price yesterday…

Dunelm: We flagged yesterday that the Dunelm Q3 trading update would be held back by the timing of the Winter Sale, with stated LFL sales in the 13 weeks to April 2nd likely to be broadly flat, but in the event they were up by 1.1%, although Dunelm said that that nearly all reflected the benefit from the early Easter, with the underlying sales trend a solid +5% LFL. John Browett, the CEO, said “We have enjoyed a good Easter, are looking forward to a successful final quarter and are confident of achieving our expectations for the full year”.

ASOS: Ahead of its interims next Tuesday, ASOS announced yesterday, out of the blue, that it is the latest UK retailer to withdraw with China with burnt fingers. To be fair, it will continue to sell from its ASOS.com website, but it is closing its own local operations in China (launched with much fanfare in November 2013) at a cost of £10m, saving annual trading losses of £4m. Judging by the positive share price reaction, the City evidently thought that this a sensible decision…

Sainsbury: The healthy 2.7% jump in the Sainsbury share price yesterday may be seen as a reaction to its controversial decision (which was announced mid-morning) to drop its “Brand Match” policy versus Asda, but in reality it stemmed from an upgrade by the influential analysts at the broker Exane, on the back of the “inspired” acquisition of Argos…

Today’s Press and News:
The main focus is obviously on the M&S trading update, with new CEO Steve Rowe’s comment that “our Clothing and Home sales performance remains unsatisfactory” is widely quoted in the papers, but there is also a fair amount of coverage of the news that ASOS is to pull out of China and that Sainsbury is to dump its “Brand Match” promise (see above), whilst the news that the CEO of the Co-Op, Richard Pennycook, is to take a pay-cut also gets a lot of attention (with Lex column in the FT drawing a favourable comparison with the egregious pay rise for the CEO of the struggling estate agent Foxtons). As for M&S, the FT has an article headlined “M&S’s new chief hopes to fashion a recovery”, flagging that as sales dip again new CEO Steve Rowe says that self-help is needed to improve chain’s performance. And Lombard
column in the FT thunders that Steve Rowe is already proving to be politically adept: “He has already demonstrated a mastery of four tactics all successful politicians employ: a) Agreeing there is a problem…Subtly distancing oneself from one’s predecessor…Dodging tough questions…Managing expectations”, although the Guardian Business editorial is headlined “Rowe will need more than honesty about M&S’s underperformance”.

News Flow Next Week: The pace of news picks up next week, with Thursday promising to be another “Super Thursday”, even though WH Smith have moved their interims forward a day. Tuesday brings the BRC-KPMG Retail Sales for March first thing, plus the ASOS interims and the ScS interims. Wednesday then brings us the Tesco finals, the Halfords Q3 and the WH Smith interims. Then on Thursday we get the Debenhams interims, the JD Sports finals, the Burberry Q4, the Poundland Q4 and the Mothercare Q4…

Trade Press: The editor of Drapers magazine looks at the current problems of the industry in her column and thunders that “Menswear rides to the rescue of fashion retail”. In terms of news stories, Drapers flags that Boohoo has launched a dedicated menswear site (Boohooman.com), the fashion chain Jacques Vert has appointed FD Shaun Wills as its new CEO and the Fat Face CEO Anthony Thompson says the fashion market is the “toughest it has ever been”. Drapers also have a feature article on how Bonmarché’s new CEO faces opportunities as well as challenges. Nick Bubb – nicholas_bubb@hotmail.com