Langton Capital – 2016-01-04 – Daily Wrap: Evolution in the marketplace, share prices diverge & 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 – drinking:
• Today’s tweets include stories on 1) the dry-January brigade gaining momentum, 2) drinking limits being tweaked (on would imagine downwards) and 3) older drinkers imbibing more than their younger peers.
• All of which suggests to us that evolution is alive and well and that the only constant remains change.
• That said, so what?
• Well quite a lot, actually, because it’s not an option for operators to stand still.
• Of course there will probably be some demand for vertical drinking retro-outlets in 50yrs’ time – but just not that many of them.
• So better operators continue to evolve and, and get this, new entrants don’t have to lug around the baggage being carried by their more-established rivals.
Evolution – spending habits:
• We also comment on reduced High Street footfall.
• This (down 3%) may be down to more retail parks (up 3.6%) or more online shopping (or both) but it is what it is.
• It suggests that resting on one’s former laurels is not a sustainable option – and this will apply both to the general retailers and to the F&B operators that hope to benefit from their footfall.
• It’s better news for retail-park operators.
• And it also plays into the hands of some operators who make the valid point that it is sometimes only the late night economy that is keeping some High Streets alive.
Evolution – other:
• Amazon said to be set to make loans to customers. Who said the catalogue or HP model is dead? They’ll be opening a bookshop next. Ah, they already have – what goes around comes around.
• What next, pub companies opening breweries?
• Aldi is reported to be set to accelerate its store opening programme in the UK 2016.
Recent history, the markets in 2015:
• Interestingly the FTSE100 fell by 4.9% last year whilst the mid-250 rose by 9.2% and the small cap index was some 9.9% to the good
• Just shows that disaster-avoidance (no miners, no oils) can be every bit as important as picking winners when it comes to securing performance
Random information, hopefully not all of it useless:
• Lower petrol & diesel prices and modest increases in train fares this year will help to keep money in consumers’ pockets.
• Telegraph speculates that Morrison’s could be bid for by private equity.
• M&S Xmas numbers on Thursday. Observers speculating that it will not have performed very well. The Sunday Telegraph suggests ‘M&S to reveal suffering from retail’s toughest year.’
• China suspended limit down, having the expected impact upon mining and resource stocks. Hurtful also for exporters, etc.
• Sterling somewhat weaker vs US$. Anticipation that US interest rates may rise 2, 3 or 4x before they rise in the UK. Will put a little upward pressure on prices but, in the current environment, inflation is perhaps more of a wish than a fear.
• Oil still very weak. Saudi vs Iran spat may add a little upward pressure into the mix.
• Cattle prices a little firmer, some upward pressure on red meats. Otherwise most commodities, softs and metals, still weak.
• El Niño-impacted commodity prices the exception to the weak trend.
• With the warmest December in many a year just behind us, it’s worth looking at a couple of recent headlines. Check – Express forecasts mega-snow, gets it wrong.
• Joking apart, mean reversion is a major concern. Averages are only averages because temperatures equalise either side of the mean. Colder weather is arguably more rather than less likely.
We’re so 21st Century, this morning’s Tweets (diff. font size denotes importance):
1. Recommended drinking limits set to change, people should abstain from alcohol for at least two days a week
2. Alcohol Concern supports Dry January by saying that drinking less will help you lose weight, improve your sleep
3. Drinking – older consumers. A leading doctor has warned Britain faces a ‘timebomb’ of serious illnesses due to over-drinking
4. CEO of YO! Sushi Robin Rowland + former Ed’s Easy Diner CEO Andrew Guy included in the New Year’s Honours list.
5. Morrison’s has lowered the price of diesel to below £1 a litre, with Asda and Tesco set to follow suit today
6. The cost of train tickets in England, Wales and Scotland has gone up by just 1.1%, marking the smallest rise in six years.
7. Rics data shows that the proportion of young people in the UK who own their own home is at its joint lowest level since 1996
8. UK High Streets weaker over Xmas per retail data firm Springboard. High Street down 3% in footfall, retail parks +3.6%.
9. VisitBritain predicts overseas tourists will spend up to £23bn in the UK in 2016 (up 4.2%) on the back of 36.7m visitors (+3.8%)
10. Thomas Cook is relaunching its Airtours programme as a value sun and beach holiday brand targeting young families and couples
11. US jobs growth data points to second rate riser perhaps sooner than later. US added 200k jobs in Dec per official data
12. London share prices lost 5% of their value over 2015. Given a yield of perhaps 3%, the net loss was somewhat smaller
13. China’s factories are experiencing their longest period of contraction in at least 6yrs per official data
14. China stock trading halted as shares him down-limits. CSI 300 Index down by 7% at one point per Bloomberg
15. Oil price little-changed over festive period, up a little for choice. Trading at around $38.15 per barrel