A Day in the Life:

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So anyway, our nine-year-old insists that jelly isn’t food whilst the dog insists that bin juice is.

And that perhaps goes to show that, whilst when the human youngster was one or two years old, they had a similar view as to what should be put in their mouths (i.e. everything), their opinions have diverged and are likely to continue to diverge over the coming years.

Because the dog’s definition of what goes into his mouth is pretty much ‘everything that fits’. Or indeed everything that can be made to fit after a period of crunching and munching whilst our daughter is, well, rather choosier.

In fact the list of things she’ll eat is getting shorter and shorter and that will have to stop otherwise we’ll end up having to point her at the fridge and tell her to suit herself – but we have no such worries with the dog because, if the feathers, rabbit bones and bits of old tyre that we find in his droppings are any indication as to his tastes, these can be said to be catholic in the extreme.

Anyway, it’s time for the news but if you would like to come off this email list please simply hit the unsubscribe button above.   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 too.

The News:

Pub, Restaurant & Drinks Producer News:

• Shareholder Piedmont has notified M+B that it wishes to nominate Josh Levy as a representative director on the company main board. M+B says ‘Josh Levy [is] to be appointed to the Board as its non-independent representative Director in place of Douglas McMahon, who will step down from the Board…Mr Levy will stand for reappointment at the forthcoming Annual General Meeting of the Company, to be held on 28 January 2016.’ It adds ‘Mr Levy works in the Investment Banking Division of Investec Bank.’

• Marston’s is to speed up the rollout of its Generous George concept reports M+C. it aims to take the fledgling brand to 10 sites

• KFC to offer delivery service on trial basis in Los Angeles + San Francisco. If successful, the offer will be extended to other territories. The group is partnering up with delivery service DoorDash.

• YUM Brands has reported better than anticipated LfL sales growth of 5% in china for October. It expects zero to 4% for Q4 as a whole. It says it remains ‘difficult to forecast in China’. Nonetheless, analysts have taken the numbers as indicative of a stabilisation in trading.

• Giggling Squid has confirmed that it has raised additional funds amounting to c£6.4m from the British Growth Fund

• Amazon announces launch of Pantry service in the UK from last Friday. Amazon offers some 4,000 lines of grocery + other products. Deliveries of up to 20kg of goods will cost Amazon Prime members some £2.99.

• Majestic Wines’ H1 adjusted PBT (ex-charges relating to the Naked Wines acquisition) for the 26 weeks to 28 September fell by 1% to £8.4m. The group’s profit before tax has halved to £4.3m ‘as a result of non-cash charges relating to the Naked Wines acquisition, interest costs and exceptional items’, while basic EPS plummeted by 72% to 2.7p a share due to its reported tax rate impacted by a high number of disallowable non-cash expenses. The group’s net debt now stands at £25m (from £11m) as a result of acquisitions ‘and the cashflow performance in the period’.

• MJW. Underlying group revenue grew 6% with like-for-likes up 2.3%, however a miss at L&W on management targets has meant Majestic is reviewing the associated goodwill and recognising a £2.6m impairment charge.

• MJW. The group is scaling back its store opening programme by almost a third, from 330 stores to 230, and is instead going to focus its efforts on increasing sales at its existing stores. Meanwhile costs have increased and capex guidance has been brought down as Majestic implements a new three-year strategy in response to changing industry and consumer trends.

• MJW. Following a ‘root and branch’ review, Majestic CEO Rowan Gormley acknowledged: ‘profit for the current year is expected to be impacted by the increased investment derived from our successful test period after which we expect to see sustainable growth as the anticipated returns from our initiatives are realised.’

Travel & Hotels:

• Foreign + Commonwealth Office has said that UK tourists should “exercise caution in public places” in Paris following attacks.

• Travelodge looks set to change hands for up to £1.5bn as owners Avenue Capital + Golden Tree are soliciting bids. Starwood Capital and Apollo Global Management are reported to be the front-runners to acquire the 500-strong operation.

• EasyJet reports full year numbers tomorrow. The group will update on Sharm costs with implications for tour operators TUI and Thomas Cook

• Monarch has cancelled its programme to Sharm El Sheikh until 19 December. Repatriation flights should end by Wednesday

• Iberostar Hotels is to offer free Wi-Fi to guests across resorts including those in Mexico, Brazil, Jamaica, Spain + Morocco

Finance & Markets:

• Economic growth slowed to 0.3% (Q-o-Q) across the Eurozone in Q3. Compares with 0.4% in Q2 + suggests rates won’t rise in short term

• Euro likely to suffer because of the above + uncertainty surrounding economic response (travel etc.) to terrorism in France

• Japan has fallen into recession again after its economy shrank 0.8% on an annualised basis in Q3.

• World markets: UK + Europe down on Friday, US markets down later in the day + Far East markets lower in Mon trade

• Oil price up a little this morning but lower over the weekend at a little under $45 per barrel. Price hit $43.60 late Friday

• Rightmove has said that UK house prices fell by 1.30% in Nov vs Oct. The index had risen by 0.60% in the previous month.

• US retail sales rose by less than expected in Oct on slower car sales. Total growth only 0.1% last month vs estimates of 0.3% increase. Online sales were up by some 7.1%.

• Oil glut still overhanging price. International Energy Agency says stockpiles stand at 3bn barrels.

• Bloomberg Commodity Index, set up 15yrs ago, is now at all-time lows. Was 100 at initiation + now stands c82.

• Ex-MP Sir John (Vince) Cable has said that the UK faces further ‘severe economic storms’. Cheerful stuff.

• FTSE100 had its worst week since August last week.

• UK service exports are hitting all-time highs. Country is second only to US in move that will help balance of payments overall

Langton has a burger…Patty & Bun:

Like many London restaurants generating buzz these days, Patty & Bun was born as a pop-up before making the transition to a more permanent establishment.

At the forefront of what seems like a bit of a better-burger revolution, the group’s recently-opened second site just off Liverpool Street stands opposite what is apparently the UK’s busiest McDonalds. That doesn’t seem to have put the crowds off, however. The unit is compact and bustling – the kind of site that fills up easily with chatter and energy – with exposed brick walls and a takeaway hatch to tap into the busy office lunch time trade.

Langton tried one Ari Gold burger (£7.50) and one Lambshank Redemption (£8) – ‘tried’ as the patty was bursting out of its brioche bun creating all manner of mess. Most of the food ended up on the plate, but an attempt was made.

Puns aside, the Lambshank is flavoured with coriander, chilli and cumin aioli and well worth a try both for its taste and to check out how the new guys continue to freshen up burger menus.

Patty & Bun jostles with the likes of MeatLiquor, Honest Burger, Five Guys, Dirty Burger and more established players like Gourmet Burger Kitchen – and that’s just in London. McDonald’s has seen the need to respond to the heightened competition and creativity in its sector, recently trialling a range of premium burgers.

It seems like life has never been better for foodies. The burgers hit the spot and, whilst Langton gets a nosebleed paying anywhere near a tenner for a burger, the crowds suggested that the product was seen as decent VFM elsewhere. Jack Brumby – jack.brumby@langtoncapital.co.uk

Langton Licensed Retail Index – Major Movers

The LRI slightly underperformed last week down 3.98% versus 3.4% in the wider market. Whitbread was down 6.61%, likely dragging the LRI into underperformance this week as brokers downgraded the stock. 

Pubs were varying degrees of down last week with Greene King the best performer, down only 1.08% while JD Wetherspoon and Marston’s were down 2.24% and 3.52% apiece. M&B was perhaps the worst performer of the pubs, down 5.48% the share price having performed well in recent weeks.

In tenanted pubs, it was a case of better to journey than arrive for Punch, whose shares were down 4.38% last week, with Enterprise down 2.85%.

Young’s and Fuller’s were relatively unchanged, down 0.4% and 0.67% following Young’s first half results on Thursday, which saw strong sales growth in the Capital.

The Restaurant Group was down 6.24% as the Coffer Peach Tracker saw pub sales markedly outstrip restaurant sales in the capital as a result of the rugby world cup. Will Brumby – will.brumby@langtoncapital.co.uk

Langton Food Retail Index – The Grocer’s Dozen

Disappointing H1 figures and a subdued outlook on the food retail industry’s fortunes from Sainsbury’s dragged Langton’s FRI down 6.53% in the week to Friday 13 November, almost double the FTSE 100’s 3.7% drop.

Grocers

The big news of the week was Sainsbury’s 18% y-o-y drop in profit to £308m for the 28 week period to 26 September, having slipped 6% at the same point in 2014. Shares in the retailer rose c1% on the results on Wednesday before finishing the day down more than 7% and the week down c12% at 242.14p.

Underlying sales at Sainsbury’s stores fell 2% to £13.64bn, while like-for-likes slipped 1.6% as management implied the environment of food deflation is here to stay for the foreseeable future and that H2 figures would be no better. Consumers increasingly shopping across multiple channels has also had an impact on business.

The results come after Tesco CEO Dave Lewis warned the industry faces a ‘lethal cocktail’ of high business rate tax, increasing labour costs and declining profits. The ominous outlook for the sector dragged Sainsbury’s peers sharply lower, with Tesco down 8.74% to 167p and Morrison’s falling 9.67% to 152.3p.

Ocado capped off a poor weak for the grocers, down 10.51% to 358.1p.

Specialty/Wholesale

Conviviality Retail held onto recent strong gains driven by acquisitions of a drinks company and an events business that have been hailed as ‘transformational’ by its CEO. Its shares are trading at 200p and it may be worth looking closer at what is an evolving company.

Meanwhile, Majestic Wine gave back 5.56% ahead of its interim results update, covered today. Shares in the group have tumbled by some 52% since early August, all but erasing gains made on acquisition of Naked Wines and consequent management changes. Shares in Majestic, valued at just over £200m, are now near 52-week lows at 310p and the group looks increasingly vulnerable to the actions of the beleaguered food retailers, who are slashing prices across a range of products (including wines) in an attempt to win back customers and combat the discounters. Jack Brumby – jack.brumby@langtoncapital.co.uk

Leisure – The Week Ahead

Full year numbers from Enterprise Inns will be reported tomorrow, Tuesday. Punch had its full year results last week and saw core net income up 0.3% like for like. The MRO remains a problem for the tenanted pub operators, however there are indications that the political attitude towards the pubcos is softening.

Jet2 owner Dart Group has its interims on Thursday. Budget travel looks to have been performing well in recent months, with Ryanair seeing its customer numbers rise 13% and profit after tax up 37% earlier this month. The oil price retreat will have helped lift costs at airlines, though the weekend’s terrorism will likely have a negative effect on travel in the coming weeks.

Fullers has its half year numbers on Friday. Last week saw Young’s produce its first half numbers which saw revenues up 8.3% and PBT rise 10.3% for the 26 weeks to 28 September, with recent trading having been boosted by the Rugby World Cup.   The market will likely be looking for Fuller’s to pull off some similar results.

The Consumer Price Index comes out on Tuesday. Last month saw the CPI down 0.1% for the year to September. Will Brumby – will.brumby@langtoncapital.co.uk

Retail Roundup from Nick Bubb:

Grocer Watch:
There was a surprise in the widely followed Grocer “33” weekly supermarket pricing survey in Saturday’s “Grocer” magazine, as Tesco was a rare winner, beating Asda easily and without having to rely on a cash-back via their “Brand Guarantee Scheme”. The Tesco basket of £55.59 was over £2 cheaper outright than the Asda basket of £57.66, which was only 25p cheaper than Morrisons. The Sainsbury basket cost £60.79 and Waitrose was a distant 5th as usual this week, on £64.22. The separate Grocer “Mystery Shopper” survey on Store Service and Availability was won this week again by Sainsbury, as their 65,000 sq ft store at Hessle in Hull topped the rankings, with a score of 71 out of 100 (just one point ahead of Asda in Huddersfield). Interestingly, Waitrose (via their Wells store in Somerset) came bottom of the ranking for the 3rd week in a row, because
of poor stock availability.

Saturday Press:
The big Retailing story in the Saturday papers was the news that Amazon has increased the pressure on the supermarkets by launching a next-day UK delivery service for bulky groceries and household goods called Amazon Pantry, as per the articles in the Telegraph, the FT and the Guardian. The Guardian also had a separate article about the new-look Lidl store in Rushden, interviewing the locals about the “Lidl of the future that looks rather like the Waitrose of the present”. The Times flagged that Marks & Spencer has agreed to be the subject of a “fly on the wall” TV documentary to be aired on Channel 4 in late spring next year and the Independent highlighted that Tesco has decided to stop production of its own-label tablet PC, the Hudl. The big feature in the FT was headlined “Death by 1,000 clicks on the High Street”, noting that
mid-market department stores are being brought low by the rise in Online shopping, although it is not clear why it dragged BHS into the debate. The FT stockmarket report highlighted the vague rumours about private equity interest in the Qatari stake in Sainsbury without explaining why the share price keeps falling. The winner of this week’s “Dogberry Award” by the Daily Mail for the worst crimes against the English language was Jill McDonald, the new CEO of Halfords, for saying that she promised to offer “a fulfilment infrastructure for modern times”, as well as initiatives to “maximise the lifetime customer value”. Finally, the traditional front-page headline about the weather in the Daily Express was “Britain faces flood chaos”, flagging that two month’s worth of rain was set to fall this weekend.

Sunday Press (1):
The front pages of the Sunday papers were, inevitably, taken up with the coverage of the horrific terrorist shootings in Paris on Friday night and the front page lead Business story in the Sunday Times was that stockmarkets around Europe would be rattled tomorrow by the news and that French consumer confidence would take a knock. In terms of Retailing stories, another “Black Friday” was a feature, with the Mail on Sunday flagging that Online spending has slowed as consumers wait for November 27th deals and the Sunday Express noting that Andy Street of John Lewis thinks Black Friday spending will be even higher than last year and will strain the capacity of parcel delivery networks. The supermarket industry was also in focus, with the Sunday Telegraph highlighting that Aldi and Lidl are roaring past their main rivals in terms of store opening plans and the Mail on
Sunday flagging that supermarkets are being “taxed to oblivion” by high business rates, whilst the Sunday Telegraph also noted that profits at the privately owned Booths chain (“the Waitrose of the North”) halved last year and the Business editorial in the Observer commented that Lidl will need to ensure it doesn’t lose its point of difference by opening upmarket new stores.

Sunday Press (2):
The Sunday Telegraph reported that Sports Direct has held talks with House of Fraser about introducing Lillywhites concessions into some of the Chinese-owned group’s department stores. The Sunday Times reported that BHS is close to agreeing a deal to raise money by selling off its flagship store on Oxford Street, concerns over Matalan’s poor trading and high borrowings have seen a slump in the value of its bonds and sales and profits soared last year at The Range discount chain owned by Chris “Del Boy” Dawson. The Sunday Times also had a feature interview with Paula Schneider, the controversial CEO of the embattled American Apparel fashion chain. In terms of previews of this week’s events, the Sunday Express noted consumer resistance to the high unit price of wine bottles at Majestic Wine and the Observer highlighted concern about the quality of
99p Stores sites ahead of Poundland’s results update on Thursday, whilst the Sunday Telegraph flagged that the good profits growth to be announced by fellow discounter B&M will contrast with the profit decline at Poundland. The Sunday Telegraph also had a snippet about the upbeat trading to be announced by Ted Baker, accompanied by a large fashion model photo.

Majestic Wine:
Today’s interims from Majestic are overshadowed by the much-awaited strategy update from the new management team under CEO Rowan Gormley, which takes a familiar shape: things will get worse before they get better…Having said that, the adjusted PBT for the 26 weeks is broadly unchanged at £8.5m, with underlying Retail trading at “old” Majestic “encouraging” (LFL sales +2.3%), albeit stated profits are heavily impacted by exceptional charges, after the Naked Wines takeover. The key headline from the strategic review is that a “challenging” target of achieving over £500m sales by 2019 has been set (vs £182m in H1) and, although it is unclear what profits will follow from that, the estimable Rowan Gormley says: “Six months in to my new job it is clear to me that we have a solid core business at Majestic, and two great growth engines in
Naked and our Commercial business. We have a clear plan, which will require investment and take 3 years to complete, but will also deliver a better business that can create sustained growth in shareholder value”. There’s quite a bit here for the market to absorb, so the analysts meeting at 10am in the City should be interesting. 

News Flow This Week: Another busy week continues tomorrow with the B&M interims and the British Land interims, together with the latest monthly Kantar and Nielsen Grocery market share data and the Asda Q3 update. Thursday brings the Mothercare interims and the Poundland interims and a Ted Baker IMS update, together with the ONS Retail Sales figures for October. Friday is FNAC’s much-postponed “put up or shut up” bid deadline for Darty (although the Paris attacks may give them pause for thought about the price they are paying for Darty…).Nick Bubb – nicholas_bubb@hotmail.com

Friday Wrap:

This was produced for distribution Friday 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:

Pubs code etc.:

• Whilst reading nuances has perhaps never been Langton’s strongest suit, the body language of various concerned parties re the Statutory Pubs Code and the associated Market Rent Only option does seem to suggest that there may be some softening in the proposed impact

• Brigid Simmonds at the BBPA has suggested that some MPs may be regretting voting in favour of the legislation. She has said that recent discussions have been ‘productive’.

• Dr Cable has gone & the House of Commons is a much different place post compared with pre-election

• Punch seems willing to work with the legislation

• Others have pointed out that the need for parallel rent assessments may be quietly dropped

• Some hope that MRO options will only be available when it is proposed that rents rise – and at a time of no-flation, this may be never

• It’s also clear that both Punch & Enterprise will manage units and hence they will have the right to take units back at the end of their leases (the average 15yr lease should have 7.5yrs to run, in fact less as no new ones are being granted as others continue to mature) meaning that the MRO would exist only for a short period of time

• And on the other side of the debate, Mr Greg Mulholland seems to be getting his knickers in a twist whilst the Pubs Advisory Service has said that it will resist attempts to ‘rail road tenants into consulting on a deeply flawed document’

• Fair Pint has said that it is concerned that the current consultation fails to honour the letter and spirit of the Small Business, Enterprise and Employment Act.

• As Punch pointed out yesterday, the rules will not be finalised for some time and the financial impact will not be clear until a while after that.

• It mentioned end-2016 ‘at the earliest’ but, whilst this is realistic and we accept that the market does not relish uncertainty, we think that the business impact of the proposals may be less far-reaching than had hitherto been imagined

Just Eat shares fall on placing:

• Just Eat shares fell yesterday on stock placing.

• Always hard to price such ‘disruptive technology’ stocks meaning that, when directors or founding shareholders sell, others may be inclined to take their lead.

• However, Just Eat does seem to have captured a large part of a large market. The latter should grow & JE could and indeed should grow with it.

• Whilst valuation may remain more of an art than a science, we could see ourselves becoming interested if the shares fell much further.

Random information, hopefully not all of it useless (re most leisure operators etc.):

• Markets had their worst day since September on Thursday. Interesting to see that the top-10 FTSE100 ‘risers’ included 5 shares who’s prices actually fell yesterday

• Sterling up vs US$ and Euro despite Haldane comments to the effect that UK rates could go either up or down at the next move

• Copper & gold prices now at 6yr lows. No wonder the miners had a bad day Thursday.

• Oil price testing new recent lows.

• Other commodities in a rut. Precious metals, non-ferrous metals & soft commodities all weak with the exception of El Nino-impacted products such as sugar, cocoa and Orange Juice. Hence your Terry’s Chocolate Oranges may be costing you more in future. However, if you want to drink your unsweetened coffee from a gold beaker, you’re laughing.

• John Lewis has reported that, following the launch of its Christmas TV advert, it has seen an “unprecedented demand for telescopes”.