Langton Capital – 2015-08-27 – Daily Wrap: Evolution, blurring of the lines, markets & 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:
Evolution in trading patterns:
• Today we have VoucherCodesPro.co.uk saying that beer is going out of fashion, Starbucks saying it will sell more booze in the evening & Horizons telling us that exotic seeds are being stuck more frequently on burger buns.
• None of which trends are related though in a way all of them are.
• Because the only constant remains change & evolution is necessary to prosper and perhaps even to survive.
• Beer is still a big deal but it’s perhaps less big than it was (and the numbers quoted above may be influenced by relatively poor weather in July and the absence of a World Cup year-on-year). On trade retailers have both moved to other products (wines, spirits, soft drinks, food, accommodation etc.) and have looked to Craft beers to add a bit of zest to a 12,500yr old product [info there from Wiki, don’t shoot me if I’m 10,000yrs to the bad].
• If Starbucks is on to a winner with coffee then rivals should be able to find space & non-direct competitors (pubs) will also enter that market.
• Ditto breakfasts.
• And Starbucks (and Costa, Caffe Nero & others for that matter) pay rent 24-7 and, subject to planning issues, they could and perhaps should seek to do something with their units in the evening.
• And burgers have been a staple for a couple of generations so what’s the harm in spicing them up a bit, giving them a bit of life.
• They’ve come a long way since Wimpy in the 1950s and may have further yet to travel. Certainly this is the view of Meat Liquor, Shake Shack, Honest Burger, Byron, GBK and several other operators so what’s next?
• Well 1) I don’t know, that’s why operators are paid the big bucks, who’d have thought of peri peri chicken before the shop opened on your High Street and 2) if I did know, I’d be doing it.
Tangential issue is the blurring of the lines:
• Blurring between products, day-slots etc. is happening & will continue.
• We have fusion in the former and grazing, sharing platters & getting on for 24-7 service in the latter meaning that, when the cafés in Helmsley stop serving their all-day breakfasts at 11am, you now have a right to feel aggrieved
24hr financial news channels have to find financial news 24hrs:
• And sometimes there isn’t any. Or what there is, is pumped up in order to backward-justify something that’s already happened.
• Note Jim Cramer in his autobiography Street Addict confessed that sometimes he would tell journalists that the market was down because oil prices had strengthened and on other occasions he would tell them that the market was up for exactly the same reason [neither, probably, being correct]
• NY Fed President Mr Dudley said that a rate rise in September was now ‘less compelling’ – but is that really a shock?
• Well it shouldn’t have been but, in thin volumes, it was enough to send the Dow up to record its biggest points gain in 4yrs
Random information, hopefully not all of it useless (re most leisure operators etc.):
• Yo-yoing markets against backdrop of light volumes. It’s like watching a Mexican Wave work its way around the world, isn’t it? Question is, will things steady down in September? And then some bright spark will forecast an October crash…
• The baton has passed to Europe, we’re up c2% – but that will be subject to review as traders get their third or fourth cup of coffee late morning [ahead of Wall Street]
• Where too next, we’re baffled. Any suggestions gratefully received.
• Oil price up a little. To be expected but worth keeping an eye on. As US$ weakens, the Sterling impact will be mitigated, however. That is if Sterling doesn’t weaken by even more than the greenback.
• Zero hours contracts seem to be back in the news with McDonald’s sticking its head above the parapet & suggesting that workers (and customers) like them & that they help to keep employment levels high
We’re so 21st Century, this morning’s Tweets (diff. font size denotes importance):
1. NPD Group survey suggests Londoners more health-conscious when eating out. Or at least they say they are.
2. Starbucks is rolling out its Evenings model to 2,000 stores by 2019. The new format sees the group offering snacks + alcoholic drinks
3. Food purchasing expert Beacon has reported that the input prices of commodity foods will become more volatile due to geopolitical issues
4. Burgers still the most prevalent street food reports Horizons. But it says there are more ‘niche ingredients
5. VoucherCodesPro.co.uk has said that just 12% of men aged over 30 listed beer as their favourite beverage
a. Off trade sales grew in value by 0.7% over the summer says Nielsen. It reports sparkling wine + spirits did well with beer down 12%
6. McDonald’s UK boss Paul Pomroy has defended zero hour contracts to the BBC saying they allow staff to stay flexible.
7. Latest Deloitte Consumer Tracker shows fall in consumer confidence in Q2 2015, coinciding with election uncertainty
8. PPHE reports H1 numbers, says revenues +12.4% to €141m, EBITDA +21.9% at €48.4m. REVPAR +12.5%, EPS +98% at 37c
9. Playtech H1. Says group is ‘delivering on our strategy – strong underlying growth and strategic M+A’. Sales +33%, EBITDA +16%, EPS +19%.
a. Playtech says average daily revenue in Gaming division for first 55 days of Q3 is +15% on last year (which benefited from the World Cup).
10. World markets: UK + Europe down yesterday but US up. Asia up in Thurs trading + UK markets looking like +80
a. Oil price firmer at $44.15 per barrel. US crude stocks fell in week to 21 Aug but stocks built in gasoline + distillates
b. Fed official William Dudley says rate rise in Sept now “seems less compelling” than it did a few weeks ago. You can say that again
c. British Bankers Association says number of mortgage approvals rose in July. Some 46,000 loans were approved
d. ECB member Peter Praet has said that China’s slowdown was intensifying deflationary pressures across the Eurozone
e. WPP, which has an eye on most markets, yesterday commented ‘soft landing’ uncertainties in China were leading to some customer caution