A Day in the Life:

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Find previous emails at https://www.langtoncapital.co.uk/daily-notes/ 

So how are we coming on with our corporate bull-droppings (profanity-checker alert) Bingo out there?

Because we keep adding to our list such that we’ll have to update the board pretty soon and in addition we think we’re going to have to introduce a points system as, whilst some words are truly irritating, others have become just like white noise.

I mean ‘challenging’ is like the word ‘the’. It ends up everywhere and may only be worth a single point whilst nouns used as verbs (to spreadsheet, to brainstorm etc.) are clearly more valuable.

And then come the really annoying buzzwords. Presented like tablets from the Mount they include granularity, engagement-culture, disruptive (technology rather than children), provenance, artisanal, an essence of theatre etc. which add a whole new level of, well, shall we say ‘droppings’ to any particular conversation or speech.

But I think the highest number of points should be awarded to those new words, perhaps those unnecessary adverbs (those usually ending in the letters ‘–ly’, you know, the ones that your old English teacher used to scribble out with such enthusiasm when adding ‘show, don’t tell’ in your literature essays) such as ‘impactfully’. On to the news:

The News:

Pub, Restaurant & Drinks Producer News:

• Enterprise Inns’ chairman Robert Walker bought 67k shares in the company at 75p on Friday.

• Punch’s shares fell in late trading yesterday to finish Monday down 8p at 98p. Until recently, they had strongly outperformed Enterprise

• A new ‘study of studies’, led by Dr Jeremy Spencer of the University of Reading, suggests that moderate wine consumption can delay dementia. The review draws a link between chemicals known as phenols found in red and sparkling wine, which can help protect brain cells from damage, and its effects on Alzheimer’s.

• The number of micropubs in the UK has doubled in the last year to over 200 and is expected to reach 800 by 2018, according to the Micropub Association. Co-founder of the organisation, Martyn Hillier, commented: ‘This is a model that has real momentum at the moment. I have always said that there is room in the market for ten micropubs for every microbrewery and there are currently 1,500 microbreweries.’

• Research conducted for treated.com has found that PizzaExpress has the saltiest dish in the eating out sector, with its Napoletana containing 9.6g per serving. The chain is followed by Barburrito’s beef burrito wrap (9g salt per serving) and JD Wetherspoon’s gammon and eggs (8.8g). By comparison, McDonald’s Big Mac and regular fries contains just 2.9g.

• Aldi will hire another 5,000 staff in the UK this year alongside 80 new stores, taking the chain’s total to 700 shops and more than 32,000 employees in the UK. The German-owned company was the UK’s sixth-biggest supermarket with a 5.6% market share in the 12 months to 31 January.

• Propel reports American diner chain, Ed’s Easy Diner, is no longer available for sale after it failed to attract offers in line with its £90m valuation. Ed’s currently has 50-60 sites across the UK.

Leisure Travel:

• All Leisure Group shares fell by 5.5p to 1.75p yesterday as it reported full year numbers & said that it may de-list from the AIM market

• The British Hospitality Association has voiced its concern over the lack of transparency from home sharing websites such as Airbnb, which can lead to ‘illegal hotels’. Single owners in London let multiple properties and are able to operate with minimal overheads by avoiding health and safety, food safety and planning regulations.  There is little data available from online platforms. In London it is estimated that last year up to 39.8% of Airbnb hosts were letting more than one property, with some letting as many as a hundred but figures are not available from the home sharing websites themselves.

• New supply: There are 1,152 hotels totalling 167,251 rooms Under Contract in Europe, according to the January 2016 STR Global Pipeline Report. This represents a 15.8% increase in rooms Under Contract compared with January 2015. Greater London reported the most rooms under construction with 4,792 rooms in 33 hotels. Three other markets reported more than 2,000 rooms under construction: Istanbul, Turkey (4,679 rooms in 24 hotels); Moscow, Russia (3,830 rooms in 16 hotels); and Greater Berlin, Germany (2,330 rooms in six hotels).

• New supply: There are 496,184 rooms Under Contract in the US, up 13% year-on-year with January 2015.

• Former Tui CEO Peter Long and EasyJet boss Carolyn McCall have both warned in the Sunday Times that leaving the EU would affect both security and the cost of holidays. Long added that Tui’s merger with First Choice in 2007 was only made possible by Britain’s presence in the European Union.

• The head of Iata has said that drones operated by members of the public are ‘a real and growing threat’ to civilian aircraft. Tony Tyler called for regulations to be put in place before a serious incident occurs.

Other Leisure:

• Merlin announces appointment of Anne-Françoise Nesmes to the Board as CFO with effect from 1 August 2016. The group points out ‘Ms. Nesmes will succeed Andrew Carr, whose intention to retire was announced in January. Mr. Carr will remain in post until her arrival and continue to be employed for a period after Ms Nesmes’ appointment as part of a handover process.’ Chairman of Merlin Sir John Sunderland comments ‘we look forward to welcoming Anne-Françoise to the Board later in the year. Her extensive finance and international experience will enable her to make a significant contribution to our business as we continue to grow. On behalf of the Board I would like to again thank Andrew for his dedication to Merlin during the past 16 years and building it into the successful company it is today. We wish him all the best in the future.’

• Shares in Hornby have jumped by more than a third on the news that Richard Ames will depart as chief executive after a ‘disappointing’ start to the year. Hornby shares have recently plummeted and currently trade on 33p.

Finance & Markets:

• World markets: UK & Europe sharply higher yesterday as recovery continued. US closed but Asia mostly up in Tues trade

• Oil up overnight. Trading at around $34.70 per barrel.

• Bank of England policymaker, Ian McCafferty, has said British wage growth is now a more distant prospect and added the BoE is ‘out of ammunition’.

• December Eurozone trade surplus down a little but still an impressive €21bn. Was €22.6bn in prior month

Retail Roundup from Nick Bubb:

Pendragon: Despite its recent weak share price, Pendragon has reported finals today (for y/e Dec 31st) which are a bit ahead of expectations, with underlying PBT up 16% to £70m on the back of an 11% increase in sales to a modest £4.45bn. The statement is long and self-congratulatory, as usual, beginning with the headline “The UK’s largest automotive online retailer increases earnings by 19% and continues to deliver against its strategy” and ending with the comment from veteran CEO Trevor Finn that “Our prospects for 2016 are in line with current expectations”.

John Lewis Partnership Sales Watch: This morning’s official John Lewis Partnership sales figures for last week (w/e Feb 13th) will probably show that trading was again solid for John Lewis (+1%/2% LFL?) and weak for Waitrose (-1%/2% LFL?), albeit the fact that Valentine’s Day fell on the Sunday this year may skew things. A year ago the comp was w/e Feb 14th and, despite continuing weak Electricals sales, John Lewis was up c2.5% LFL that week, whilst Waitrose was over 4% down LFL.

Thirlwell Watch: It has been pointed out that, inadvertently, we said yesterday that the Times on Saturday had a feature interview with Hotel Chocolat boss Edwin Thirlwell, when we should have said Angus Thirlwell. Edwin Thirwell is Angus Thirlwell’s father and we knew him well back in the 1980’s, when he ran the Prontaprint franchised printing operation and it was a quoted company. Interestingly enough, he also founded the Mr Whippy ice cream business and, after he sold Mr Whippy, he then became chairman of the Barbados Ice Cream Company and has more recently helped his son establish his chocolate business in St Lucia. Nick Bubb – nicholas_bubb@hotmail.com

Monday 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:

The AIM market:

• All Leisure has today said that it is considering delisting from the AIM market.

• It’s probably safe to say that it has considered its statement long and hard before making it to the LSE.

• Chairman Roger Allard owns c60% of the group’s shares.

• The above would seem to be a comment on the costs versus the assumed benefits of the company having its shares publicly listed

Global worries swept aside by market’s desire to bounce:

• Markets very strong Friday & following through today. This despite poor Japanese GDP numbers (but stock market +7%), sluggish export numbers out of China and the fact that the US is closed today for Presidents’ Day

• Brexit fears swept aside.

• Oil price rise now seen as a good thing.

• Greek problem ignored – but it hasn’t gone away, it’s just been sleeping. PM Tsipras blames lack of progress on disagreements between his creditors on what the country should be doing about its bloated pension payments

To tax or not to tax?

• Sugar flip flopping goes on.

• Government last week ‘not discounted’ a tax but, by Monday, it apparently has.

• However, the FT suggests ‘ministers will use the threat of a levy to force the drinks industry to make healthier products.’

• There, they are probably pushing on an open door as manufacturers wish to (and wish to seen to) provide healthier products – particularly if these are being demanded by consumers

• There is a micro-macro problem here, however.

• Because if the threat of a tax is hanging over the whole industry, it may still be in the interests of any one operator to break ranks (or to hold out) and produce sweeter products than its competitors

• In a report to government, Public Health England suggested that ‘a price increase of a minimum of 10-20 per cent on high sugar products’ should be engineered in order to cut consumption

• There would be a major issue here in execution as the sugar cost of a slice of cake may be only 10% to 20% of the total cost to the consumer meaning that, in order to put up the price of the final product by 20%, a tax of 100% on the sugar content may be necessary

• Anything less may be lost in the mix

• Obesity is thought to cost the NHS £5.1bn

Business confidence:

• Still positive per Grant Thornton, but running at its lowest level for three years.

• Grant Thornton says ‘this quarter’s reduction in business confidence continues a well-established downward trend, which developed against a difficult economic and political backdrop, particularly in the second half of 2015.’

• It adds ‘the Office for National Statistics (ONS) reported repeated declines in manufacturing output, while growth in retail sales slowed in the second half of the year.’

• It says ‘2015 also ended with a slight pick-up in inflation and reports of a large deterioration in the UK’s trade balance, which widened from £4.7bn in Q3 2015 to £8.7bn in Q4 2015. Globally, as we move into 2016, concerns persist about China’s slowing economy, and there are challenging political developments, including war in the Middle East and the consequent refugee crisis.’

• Quite sobering stuff but not perhaps a shock to the Stock Market, which at its low-point was some 22% off its mid-2015 peakl

Random information, hopefully not all of it useless:

• Perhaps more cash headed for consumers’ pockets as Aldi looks set to announce a new round of price cuts, in response to the recent moves by Morrison’s.

• Incoming Greene King chairman commits a meaningful £257k to shares in the company

• Oil price deemed to be ‘stronger’. It’s all a matter of definition. Looks good on a 3dy view. Considerably less so over a few months.

• Gold bugs getting themselves worked up. Gold up to $1220 per ounce. Hard to believe but it’s still down c2% over the last year.

• Soft commodity prices weak. With the exception of lean hogs. Though it operates throughout most of the supply chain, this may put a little pressure on Cranswick margins over the medium term. Pig prices had a big dip but they are up strongly over last quarter & are now up 4% over the last 12mths.