A Day in the Life:

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Why is it funny when a wasp lands in your colleague’s beer but, where it to land in your own, it would not be a cause for amusement at all?

Is it because people are 1) quirky + inconsistent, 2) are hung up on the ‘devil take the hindmost’ principle that if it’s happened to somebody else, then it’s less likely to happen to you or 3) are people basically nasty?

Well I think (or certainly hope) that it’s not the third and it would be nice if it’s the first.

But there’s no evidence to suggest that that’s the case meaning that, in the absence of any other potential reasons, we’ve got a little mental computer telling us that, of the billion or so wasps that will be buzzing around the UK between now and the end of September, there’s at least one that won’t be bothering us. On to the news:

The News:

Restaurant Group H1 numbers:

• RTN H1 numbers show ‘strong trading performance across all brands with good growth in turnover, profit and margins’

• RTN reports sales +8% at £334m with LfL sales +2.5% and operating margins some 10bps higher.

• RTN H1. PBT +10% at £36.9m, EPS+12% at 14.3p and H1 dividend +11.5% at 6.8p per share. 12 sites opened H1, 43-48 expected for FY

• RTN CEO Danny Briethaupt reports co ‘ has delivered another strong set of results, with good growth across all key performance measures and excellent progress on our strategy of increasing the pace of roll out in a more balanced way between our brands.’ He says ‘these results reflect the hard work that has gone in to driving the continued evolution of the Group and I would like to record my thanks to our teams across the country for delivering another excellent performance’ and concludes ‘the strengthening UK economy, increasing wages and disposable incomes, combined with the secular trends driving ongoing expansion of the eating out market, give me great confidence that TRG is well set for continued strong growth this year and beyond.’

• RTN chairman Alan Jackson reports the group could double in size over the next 8 to 10 years. He says ‘the Group benefits from operating in market segments with barriers to entry and excellent growth prospects which have proved to be resilient over many years.’ he says it has a ‘strong portfolio of complementary brands and an impressive pipeline of new sites in terms of both quality and quantity’ and says ‘the Group is now well positioned to deliver on the strategy of doubling in size with a more balanced portfolio over the next 8 to 10 years.’ Mr Jackson concludes ‘with continuing improvements in the UK economy, a strong pipeline of new sites and an exciting cinema release schedule, I am confident that the Group will continue to make excellent and profitable progress both in this year and future years.’

Pub, Restaurant & Drinks Producer News:

• Mintel reports that burger sales are growing in UK, powered by the growth of ‘better burgers’. Suggests growth of 4.5% in sales this year

• Mintel reports 12% of those surveyed aged 16-34 had switched from ‘normal’ to a ‘better burger’ restaurant in last 3mths

• Drinks Business ranks UK burgers, no1 is Patty + Bun, no2 is Bleeker St Burger + no3 is Meat Liquor’s Dead Hippy Burger

• Pernod Ricard yesterday reported FY sales +8% (+2% organic) in year to June. Net profits down 15% at €880m.

• Pernod reports lower profits on €404m write-down of Absolut vodka brand value. Says sales improving in China. It reports ‘growth was driven by whiskies…and also of Champagnes Mumm and Perrier-Jouët, both in high single digit growth. Martell returned to growth, despite negative mix (China). Absolut was impacted by a challenging USA market but grew outside the USA’. The group concludes ‘for FY15/16, despite a challenging and volatile macroeconomic environment, we aim to continue gradually improving our business performance. We will continue to support priority brands and innovations while focusing on operational excellence.’

• BBPA reports dip in beer sales Q2 on back of ‘an early Easter + the impact of the World Cup 2014.’ Says sales ‘disappointing’. The BBPA says ‘total sales were 5.6 per cent lower in Q2 compared with the same quarter in 2014. When it comes to the latest annual trend, the decline was lower, with off-trade sales down 1.9 per cent over the 12 months to June 2015, and on trade down 2.9 per cent. Total sales were down 2.4 per cent on the previous 12 months.’ CEO Brigid Simmonds comments ‘while we may see a bounce back in Q3, these latest figures give no room for complacency, and show that more action is needed on beer duty. The Chancellor has made a great start, with his three, one penny cuts, but with inflation very low, and an industry still experiencing the impact of the 42 per cent rise under the previous Government’s escalator policy
there is no doubt that more action is need to create a more sustainable future for Britain’s national drink.’

• Truman’s, which now has the brand, reports 6 of 21 inter-war pubs singled out for mention by Historic England are historic Truman sites. CEO James Morgan says ‘we are delighted that Historic England have recognised the value of these amazing pubs. Truman’s built palaces for the people, a home away from home, for all to enjoy. They are pinnacles of an era, which inspire us as a business to this day, and will now never be forgotten thanks to their hard work.’ Heritage Minister Tracey Crouch said ‘these inter-war pubs are more than a slice of living history, they play an intrinsic role in English culture and our local communities.’

• Barclaycard reports contactless spending has trebled in the last year

• Greene King has said that it will convert the Spirit HQ in Burton into a research + innovation centre

• Sainsbury is to increase wages for its staff by 4% from this weekend

• Burger King has approached McDonald’s suggesting that the two run a McWhopper burger in one site for one day (for charity)

• Jason Thomas has stepped down as CEO of ASK Italian per M+C

• CAMRA has called upon New River Retail to keep most if not all of the 158 pubs that it has just bought from Punch Taverns as pubs. CAMRA said ‘New River Retail has also not confirmed its plans for the purchased pubs – but appears to be making positive statements about its intentions to run them as going concerns.’

Holidays & Leisure Travel:

• Turkey specialist Exclusive Escapes and flight only specialist Fone N Fly are reported to have ceased trading per trade press

• ABTA has suggested that 1.9m Brits will travel overseas this weekend. Visit England suggests that 4.5m will holiday in the UK. Visit England CEO James Berresford reports ‘with 4.5m Brits planning a holiday trip in England this bank holiday weekend, it signifies a real statement of confidence in the breadth of product on offer across the country; from world class indoor and outdoor attractions, a host of events and festivals or coastal and rural destinations to explore; there is still time to plan a last minute short break or day trip in England , whatever the weather.’

Other Leisure:

• Bwin H1 numbers. CEO Norbert Teufelberger reports ‘clean EBITDA increased by 2% year-on-year’ but was +24% ex tax changes.

• Bwin says disposals + cost savings are ahead of plan and says ‘we remain confident about the full year outlook.’ Re current trading, the group says the ‘absence of a major football tournament and EU VAT meant that in the 8 weeks to 25 August 2015 average daily net revenue was down 9% versus the same period in 2014’. It adds, however, that the board remains confident about full year outlook.’

• 888 H1 numbers, says has been ‘another very encouraging performance driven by our core expertise’

• 888 CEO Brian Mattingley says ‘I am delighted to report that 888 has again delivered a very encouraging performance in the first half of 2015 driven by our quality brands, best-in-class technology and CRM expertise.’ He says ‘operational progress has continued with strong increases in active players and first time depositors despite the external headwinds of a new point of consumption tax in the UK, VAT in certain European markets and adverse currency movements.’

• 888 reports LfL revenues +9% in H1 ‘driven primarily by sustained strong growth in Casino and exceptional momentum in Sport’. Says ‘we are well positioned to deliver long term sustainable growth and look forward with confidence as we continue to develop the business.’

• Bwin yesterday confirmed that ‘key aspects of GVC’s proposal have now been addressed to bwin.party’s satisfaction.’ It says ‘whilst there can be no certainty that an offer will be made by GVC for bwin.party, 888 Holdings plc (‘888′) has been informed of this development and, if appropriate, will be given due notice in the event that bwin.party proposes to recommend an offer from GVC.’ It says ‘bwin.party’s directors’ unanimous recommendation of 888’s offer, that was announced on 17 July 2015, is unchanged by this announcement’ and adds ‘the Board expects to give a further update concerning these matters on Tuesday, 1st September 2015.’

• 888 has responded to bwin’s comments saying it ‘continues to believe that the combination of the 888 and bwin.party businesses announced on 17 July 2015 (the “Proposed Transaction”) under the 888 management team would generate significant value for both sets of shareholders.’

• Cinema operator Odeon has reported PBT of £14.5m for H1 2015.

Finance & Markets:

• World markets: UK + Europe higher. US up in later trading + Far East mostly higher in Fri trade

• Oil price bounces sharply on short-covering. Brent trading around $47.75 per barrel in Friday trading

• US economic growth has been revised up for Q2 to annualised 3.7% v a first estimate of 2.3%

• Eurozone commercial lending is reported to have risen at its fastest since early 2012 in July

• Nationwide reports house prices up by an annualised 3.2% in August, the slowest pace since mid-2013

Retail Roundup from Nick Bubb:

Consumer Confidence Watch: The widely-followed GFK Consumer Confidence survey for August came out overnight and shows that the overall index has recovered from the dip to +4 in July after the austerity Summer Budget and has moved back up to the June level of +7. GFK trumpet that “Rising house price inflation and improving employment growth prospects, combined with falling petrol prices and day-to-day living costs, as well as low interest rates, are translating into high levels of confidence across all major measures”, but given the evidence that August has been a tough month so far on the High Street (as per the John Lewis and BDO weekly sales figures) it is unclear why consumers don’t seem to be spending. And it goes without saying that polling for the survey will have been completed a couple of weeks ago, well before the big wobble in the stockmarket…

BDO High Street Sales Tracker: the weekly High Street sales index assembled by BDO is not representative of the mass-market, but, nevertheless, it is clearly interesting that BDO Fashion store sales have been pretty poor in recent weeks and BDO flag today that w/e Aug 23rd was very disappointing yet again, with overall Fashion store LFL sales down by 7.9%. Overall LFL Store sales (including c20 Homewares and “Lifestyle” retailers) were down by 6.9%, against a tough comp, with BDO blaming the weakness on holidays abroad and eating out, whilst total Non-Store sales (Including some Online-only retailers) were only up by 10.1%…

Trade Press:
Neither “Retail Week” magazine, nor “Drapers” magazine has been published today (cost-cutting? thin news?), although in this day and age their websites have had plenty of breaking news stories this week, including the turmoil at fashion chain Jack Wills, with the founder Peter Williams coming back to resume his role as CEO, after Wendy Becker quit the business and a mooted IPO was called off. Last week we didn’t have time/space to record these stories: House of Fraser has appointed the Ministry of Justice’s former head of digital Mark Madden to bolster its multi-channel proposition as Director of Digital Products, reporting to the Chief Customer Officer Andy Harding. Hamleys is the subject of bid interest from Middle Eastern company Gulf Greetings, the owner of rival toy specialist The Toy Store (which is opening an Oxford Street flagship
store at Bond Street Tube). JD Sports is among the latest batch of retailers to sign up to the Friars Walk shopping centre opening in Newport in November. And New Look has chosen the Intu Trafford Centre in Manchester for its first standalone menswear store, which will open in October. 

News Flow Next Week: Things are quiet after the Bank Holiday weekend, but McColl’s have trading statement on Tuesday (which is also the 1st anniversary of Dave Lewis becoming CEO of Tesco) and the deadline for the Conviviality Retail bid for Matthew Clark is Friday. The latest FTSE Index quarterly review is on Wednesday evening and John Lewis unveil their exciting new Home department in Oxford Street on Thursday.

Nick Bubb – nicholas_bubb@hotmail.com

Thursday 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:

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