Langton Capital – 2015-03-24 – Daily Wrap: Tougher trading, crowd-funding, evolution & other:
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:
A TOUGHER 2016?
• Adnams earlier today said that, whilst 2015 had benefited from a somewhat better economic environment, it was expecting this to be less helpful in 2016.
• The group reported ‘the economic mood for much of 2015 was reasonably buoyant, though it is clear that consumer spending patterns continue to evolve quickly, and it has been very important for us to keep our finger on the pulse of the market and our eye on future trends.’
• It says, whilst 2015 was buoyant, ‘sentiment at the start of 2016 has been less so.’ It blames Brexit fears and a general economic slowdown’.
• Elsewhere today, retailer Next has reported ‘the year ahead may well be the toughest we have faced since 2008.”
• Re 2016, Next continues by saying ‘it may well feel like walking up the down escalator, with a great deal of effort required to stand still.’
• CEO Simon Wolfson says ‘it will not be the first time we have felt this way, and our experience is that the effort put into improving the business in tough times can pay handsome rewards when conditions improve’.
• Sounds like hard work but, if Mr Wolfson is correct, then good operators, those remaining relevant to their markets and serving product that appeals to customer at a price they are willing to pay, could yet succeed in what does look like being a tougher environment.
EVOLUTION. SERVICE, PRODUCTS, YOU NAME IT:
• Today we report that Google is bringing its Android Pay mobile payment service to the UK.
• In this it will be competing with Apple.
• Cash may, at some point go the same way as cheques.
• A number of operators, perhaps seeking publicity, have said that certain units will no longer accept cash.
• It may be some time before this spreads to the mainstream but, it we can learn anything from the recent past, it is that change can happen quickly and that operators that fail to stay in touch will find themselves soon at a competitive disadvantage.
• Elsewhere, the ALMR’s Future Shock report concludes that young people between the ages of 19 and 24 are increasingly choosing food over alcohol.
• Vertical drinking just isn’t what it was.
• Just ask Eclectic, Deltic or any other operator servicing the youth market.
• Though selling food remains an attractive option – though even here, sharing platters, other products in the ‘grazing’ market, soft drinks, coffee and ethically-sourced products may be in the process of squeezing out pie and mash.
• The ALMR reports ‘young people are increasingly planning their social lives around eating-out, turning away from drink and towards food. On average, under-25s are eating out between 5-6 times per month…The boom in eating-out, particularly in casual dining outlets, has seen a renaissance of our high streets driven by younger consumers. This is not only helping to drive growth in our local economies, but help contribute to healthier consumption and changing attitudes towards alcohol.’
COMMODITY & INPUT PRICES:
• Oil price down on glut fears. Only a dollar, though, which suggests that sometimes more credence than is justified is sometimes given to the ‘reason’ for the fall.
• Gold stable.
RANDOM INFORMATION, HOPEFULLY NOT ALL OF IT USELESS:
• Crowd-funding. Pact Coffee pulled its fund-raise & is now sacking staff. Smacks of ‘growth-via-retrenchment’. Often a somewhat confused strategy.
• Bull market taking a day off, prices currently lower.
• Currencies. Sterling down against both Euro and Dollar. Brexit fears doing the damage. Probably not too much of an impact at present but, it this persists, it will impact inflationary expectations.
• Sterling & Brexit. Cost of hedging against further Sterling weakness has apparently increased as odds on a Brexit have shortened.
• Bank of England suggesting that risks of exceeding 2% inflation target more than one year out have increased. Pointing currently to labour costs and a suggested further tightening of the labour market but weak Sterling will also ultimately have an impact.
THIS MORNING’S TWEETS:
1. Adnams reports FY numbers, sales down a shade at £65.7m (2014: £66.0m), PBT £4.7m (£4.4m), EPS per A share, 171.1p (158.1p).
a. Adnams FY: Chairman Jonathan Adnams reports slower sales ‘improved in H2, to leave us just 0.5% short of the prior year.’
b. Adnams FY: Says ‘the economic mood for much of 2015 was reasonably buoyant’. Says 2016 is ‘less so’.
2. Pact Coffee is reported to have cut 16 jobs around a week after abandoning a fund-raise on Crowdcube.
3. Yum Brands is in talks with KKR and another PE group to sell a minority stake in its Chinese business of as much as 19.9%
4. BHS is close to securing cash from a private equity investor and its creditors have pushed through a rescue package
5. Google is bringing its Android Pay mobile payment service to the UK as it continues to keep the pressure up on Apple’s rival system
6. Welsh brewer and pub operator SA Brain reports sales & EBITDA growth of 3% in the year to 26 Sept to £127m and £13.4m respectively
7. ALMR’s Future Shock report concludes that young people between the ages of 19 and 24 are increasingly choosing food over alcohol
8. Meantime CEO Nick Miller is to step down after five years at the company and will be replaced by Laura Edwards
9. Subway has opened its 5,000th European store with the launch of a new unit in Livingston, Scotland.
10. Retailer optimism up for 2nd Qtr in a row, according to Association of Convenience stores Voice of Local Shops survey of 1,210 retailers.
11. Abta is advising travellers to allow more time to clear security checks as >2m Brits look to head overseas for Easter.