Langton Capital – 2015-11-20 – Daily Wrap: London trading, rugby, Thomas Cook, commodities & 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:
London, rugby etc.:
• No surprise that the Fuller’s numbers were good.
• And no surprise that the w33 numbers showed an acceleration on w26 as the latter include the Rugby World Cup.
• LfLs at the group’s managed pubs edged forward from an excellent +5.6% (w26) to an even-more excellent +5.8% (w33) suggesting that the last 7wks have been extremely strong.
• As the improvement is only of the order of 20bps, rounding differences make analysis difficult but a figure of around +6.5% is implied arithmetically by the numbers given above
• And it would appear as though London is showing few if any signs of slowing down
• This is in accord with the numbers we get from CGA Peach re the wider leisure retailing industry but it does serve to highlight the difference between pubs and casual diners in the Capital
• Pub capacity is not rising at anywhere near the rate of that for casual dining offers and, indeed, it may be falling
• For the branded casual diners, on the other hand, capacity is an issue
• New entrants and fast-growing minnows are putting on sites and this, whilst it does their own numbers a power of good, is negative for the industry as a whole – at least at the LfL level.
• Back to Fuller’s and, it has to be said, the group is going to face some very tough comps next year.
• It’s a great company & has a footprint to die for but the shares have doubled over the last 5yrs and they were hardly cheap to start with
• Shares trading on c21x this year’s earnings & c20x next
• Deltic (was Luminar) has reported that sales at its £3m site on the Festival Leisure Park in Basildon took over £100k in its first week of trading
• The unit was ‘sold out prior to opening, on both Friday and Saturday night.’
• CEO Peter Marks reports ‘our annual investment programme has delivered some great results.’
• It’s good to hear how the company is doing and long may it continue – but we can’t help wondering whether an IPO might not be on the cards in due course?
Travel agents, route to market:
• With the world going digital, it’s interesting to see Thomas Cook opening a new store and apparently looking to acquire further new sites
• TCG’s Kathryn Darbandi, director of retail & customer experience, said the tour operator has “just started to look at” locations in towns where it does not have a presence reports Travel Weekly
• She adds ‘this is really exciting as we haven’t opened new stores for a long time. We will be looking at brand new sites. There are some towns where we don’t have a Thomas Cook or a Co-operative Travel.’
• This seems sensible as some customers will still wish to meet face to face and, without recycling the babble-speak that crept in under former CEO Harriet Green, an omni-channel approach re the route to market seems like a good idea
• Thomas Cook has jettisoned around 2,500 people from retail over the last two years but it has also ‘refreshed’ some 450 stores
Random information, hopefully not all of it useless:
• Sugar & cocoa prices getting a little carried away on the upside. Bad news for chocolate lovers everywhere. Cocoa prices (el Nino) now up nearly 20% y-o-y. Sugar prices still down 1% y-o-t but price sharply off the bottom. Grain prices showing signs of life.
• Poundland shares up 2% after yesterday’s 20% fall. The group saying that more than ever it was dependent on 6wks trading over Xmas didn’t help. If anything, it focused investor eyes on the risks at this end of the market. Group also says “the shape” of Xmas trading will be skewed by “Black Friday” (next week) even more than it was last year.
• Repeat, get out your shin-pads, it’s Black Friday a week today.
• Markets now seem relatively sanguine re US rate rise in December. Could we be getting a little too complacent? Final decision still 4wks away.
• Chancellor’s Autumn Statement next week & the begging bowls are out. Nobody is ever satisfied but no surprises there.
• Interesting to see that food-retailing is still bearing the brunt of deflationary pressures. ONS has said predominantly food retailers were down by 1.6% in Oct whilst predominantly non-food retailers were up by 1.4%. Online sales, meanwhile, were up by 10.6%.
We’re so 21st Century, this morning’s Tweets (diff. font size denotes importance):
1. Fuller’s H1 numbers. Revenues +10% at £177.7m, LfL sales +5.6% in managed houses, EBITDA +8% at £33.3m.
a. FSTA H1: Says has seen ‘a strong first half from a great team of people’. EPS +11% at 30.74p, DPS +8% at 6.9p.
b. FSTA H1: LfL growth is ‘against strong comparatives from last year’. Has seen a ‘good performance from Tenanted Inns’ LfL profits +3%.
c. FSTA H1: Has seen ‘a solid start for The Fuller’s Beer Company with total beer and cider volumes up by 1%’.
d. FSTA H1: Group bought 2 new freeholds + bought in 3 leases. Re beer, it will ‘maintain clear differentiation over the competition
e. FSTA H1: Current trading. Managed LfLs +5.8% in first 33wks (therefore strong Rugby World Cup) + tenanted +4% at w33.
2. Various beer + pub industry bodies incl. BBPA, ALMR, SIBA, join forces in order to call for fairer deal for pubs in Autumn Statement
3. Deltic has seen ‘unprecedented sales for its latest venture, Unit 7 in Basildon, which opened last weekend’ post a £7.5m refurb
4. Rugby World Cup thought to be partly responsible for 21% increase in spending on takeaway meals in October
5. Food deflation far from over, it would appear. Retail sales figures show drop in food sales, largest since May 2014.
6. JLL reports F+B operators have doubled the amount of space they have in shopping centres from 7% to 15% over last 10yrs
7. Thomas Cook is reported to be looking to acquire new sites for retail stores in admission that the medium is not dead.
8. GBTA reports that generational change + mobile technology are changing consumer travel habits, likely permanently
9. Paris visitor numbers said to be down. Survey by Synhorcat, the hotel + restaurant operators’ union, suggested sales down 44% at cafes