Langton Capital – 2016-01-27 – Daily Wrap: Leisure spend, London, Merlin, holidays & 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:
Greene King Tracker, leisure spend etc.:
• The Tracker’s headline is perhaps a little misleading.
• The idea that leisure had a good December is somewhat belied by the fact that spending on both eating and drinking out of home was unchanged on Dec 2014.
• Other Leisure had a blinder with spending up by 13% y-o-y.
• In fact, if we drill down within Other Leisure (which we are not able to do given the information reported) it’s likely that Cinemas performed extremely strongly and that other Other Leisure was so-so.
• And drilling a little further is likely to identify a particular film release as driving spend meaning that the headline could have been somewhat different
• How about ‘Star Wars Drives Spend; All Else Unchanged’?
Leisure spend in context:
• That’s not to say that spend was poor.
• However, an unchanged spend on food & drink – even with virtually zero CPI – is a shade disappointing given that real wages are moving up, unemployment is at an 11yr low and the supermarkets have been gifting cash to their regular customers
• Add in the fact that petrol is below £1 per litre and that the pound is (or rather has been) strong and the consumer should perhaps have been able to spend a little more than he/she in fact did
• Still, there are winners and losers. Marston’s yesterday reported that it had had a good Christmas whereas the mood music coming out of Restaurant Group and JDW (though the latter is still buying its own shares back) was somewhat different
• We hear from M&B tomorrow.
• As always, stock selection is pretty important.
London, is the shine coming off?
• We perceive that there is a capacity issue developing in London, particularly in casual dining.
• New entrants may perform well but they are thinning the cake-slices available for the incumbents.
• GNK’s Tracker has it that London performed broadly in line with the provinces in December.
• This is OK but not brilliant. M&B has a sizable London estate and it may feel able to comment on trading in the Capital tomorrow.
• Shares down yesterday in a perceived ‘risk-on’ move that favoured the miners etc.
• Attempting a bounce today but, for investors with other than a very short view, we would suggest that the shares offer good value.
• Quality at a reasonable price.
• It’s the kind of stock that should, perhaps, be salted away when price movements present something of an opportunity.
Holidays – Spain & Greece making out like bandits:
• Terrorism has shut North Africa & Egypt’s Red Sea resorts are also semi-closed.
• This has massively benefitted resorts in Spain (the Canaries are all-year), Portugal and Greece.
• Travelzoo is now warning that Spain & Greece could sell out ‘within weeks’ in the case of Spain and by March for Greece
• Turkey bookings are reported to be down by as much as 50%
• Travelzoo’s Stephen Dunk reports ‘with airlines unable to fly to Sharm or Tunisia, they are re-routing to destinations such as the Canaries’.
• This has led to a glut of planes (‘we are seeing return flights priced from £69 return’) but there are not enough hotel rooms
• Travelzoo says ‘the issue is there simply aren’t enough hotel rooms in the Canaries, so we are hearing reports of half-empty planes flying in and out of the destination – a remarkable and unprecedented situation has emerged for the travel industry.’
Random information, hopefully not all of it useless:
• JDW is buying back more shares.
• Currency & oil markets volatile. Perhaps that’s nothing new but some seasoned observers may suggest that it’s indicative of a turning point. That is, until it isn’t.
• For the record, Sterling down after a bounce after a sharp downward move.
• Oil now weaker after a bounce after a retracement below $30 after an attempted bounce etc.
• Dow yesterday had its best day since 4 Dec
More from Nick Bubb:
• Seb Watch: We eagerly sat through the Dixons Carphone meeting yesterday waiting for some “bon mots” to drop from the lips of the extremely erudite and estimable CEO Seb James, but a watched pot never boils…and it was only towards the end that, after flagging that Carphone is helping Sprint revive its mobile phone business in the US, he said: “Sprint is the dolphin we’ve now chosen to ride and we want it to go fast”. Of course, Seb James has also famously compared the new Black Friday and Christmas trading peaks to the humps of a bactrian camel, so it will be interesting to see what new animal metaphors he comes up with in the future! Perhaps if the “English lion” does well in the European Football Championships this summer he will sell enough shiny new TV’s to reduce the groups’ dependence on the continued success of Carphone
• News Flow This Week: As the end of the month is approaching very rapidly now, we get the CBI Distributive Trades survey for “January” later this morning, whilst the monthly GFK Consumer Confidence Index is out first thing on Friday.
We’re so 21st Century, this morning’s Tweets (diff. font size denotes importance):
1. Greene King Tracker says in Dec, av. Brit household spent £220 on out of home leisure, up 5% on last year.
a. Tracker says ‘growing spend year on year reflects largely upbeat consumer sentiment’. Says London rise in line with provinces
b. GfK consumer confidence tracker recorded 12mths of positive scores in 2015 for the first time since it began in 1974.
c. Tracker: Eating out unchanged y-o-y in Dec (at £84.80), drinking out also unchanged (£48.14) with Other Leisure +13% (£87.22).
d. January Greene King Leisure Spend Tracker confirms acceptable Xmas but food & drink spend unchanged, Other Leisure the star
e. Tracker says ‘particularly encouraging is that the overall leisure pound appears to be growing’. Says cheaper food is helping spend.
f. Tracker: Other Leisure was the star (+13%) with cinemas doing well & the mild weather encouraging people to spend outdoors.
2. JDW announces that it yesterday bought back 25k of its own shares for cancellation at 649.6p.
3. Britvic has reported a 4.8% rise in revenue to £311.6m for the Q2 to 20 December, although organic revenue was down 2.4% to £290.1m
a. Britvic: Says ‘as anticipated, market conditions in Brazil remained very tough.’ Meanwhile revenue in France was down 5.5%
b. Britvic: Simon Litherland, Chief Executive, commented that Christmas trading showed signs of improvement.
c. Britvic: Says ‘trading over the entire Christmas period in our core markets was encouraging, with revenue ahead of last year’.
4. Camden has done ahead with the introduction of a Late Night Levy. ALMR says will add cost for operators
5. LDC-backed premium mixer brand Fever-Tree has seen sales jump by 71% in the full year after 77% growth in its second half.
6. Holidays to Spain and Greece could be sold out ‘within weeks’, according to Travelzoo
7. Norwegian Cruise Line will have a ship leaving from Southampton next year for the first time in seven years.
8. Hilton Worldwide is launching a new midscale brand called Tru by Hilton, which the group describes as ‘forward-thinking and innovative’
9. Marriott opened 300 hotels with nearly 52,000 rooms (incl. 9,600 rooms via purchase of Delta Hotels) in 2015
10. US consumer confidence said by CB index to have slipped in January to 98.1 from 98.3 in December