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:

Restaurant Group shares weak:

• RTN shares were down by over 5% yesterday.

• The group updated on trading on 14 Jan at which time it said ‘it has become apparent from much of the recent data from the retail sector and the wider economy that the trading environment for many consumer facing businesses has been tougher in recent months than it was earlier in 2015.’

• It went on to say ‘this has caused like-for-like sales growth to trend lower and accordingly we are more cautious than previously on the outlook for 2016.’

• Since that time, both the EPS forecasts and the group’s rating have come under downward pressure

• Though yesterday’s move does not take the stock to new recent lows, it serves to remind would-be buyers that the jury may be out on the stock for a little while.

• At least until it can update more fully on current trading. The group reports full year numbers on 9 March.

Evolution of the leisure offer:

• This remains an ongoing theme. See today’s tweets highlighted below.

• Today we comment briefly on organic foods (Soil Association), own-label coffee (Mitchells & Butlers), burger deliveries (Burger King) and coffee-by-post (Pact & Crowdcube).

• It would appear that change is still the only constant and that, whilst not every innovation is guaranteed to succeed, in many cases offers must be evolved in order for them to remain relevant to operators’ customers

Sterling weakness:

• Sterling lost 3% vs US$ in 3dys

• Brexit being blamed but also Governor Carney’s dovish comments to the Treasury Select Committee didn’t do much to strengthen the currency

• Certainly Mr Carney doesn’t necessarily want to box himself into a corner by guaranteeing that the next rate move will be upwards – but could it really be down?

• And having said the ‘boxing into a corner’ bit above, isn’t that exactly what Mr Carney had said he was going to introduce, fresh and shiny new, from Canada when he became governor.

• It was known at the time as forward guidance

• Anyway, the pound is weak and, with the vote on EU membership not due to take place until the end of June, traders will be able to play with the uncertainty that that creates for many months to come

• As mentioned yesterday, this will impact import costs (brewers) and holiday companies (oil, insurance, bed costs etc.)

Random information, hopefully not all of it useless:

• Oil price still driving equities. Down yesterday so equities down. Travel stocks among the few winners with Intercontinental Hotels, IAG and Carnival all in the FTSE100’s top ten yesterday.

• Oil price production level cuts ruled out by Saudis and, apparently, by Iran.

• Oil price now getting back towards recent lows hit around a week ago. That is the rally that buoyed equity markets for most of last week has now been virtually undone

• Gold price still acting as the flip-side of oil. Traders saying it’s bumping against its recent resistane level of around $1232 per ounce. They threaten that, if it moves through that level, it could move markedly higher. Short term chart shows where it has been over last day or so.

• Longer term gold chart suggests that, though this is a lump of intrinsically worthless yellow metal that we are talking about, it could move quite a bit better if oil price worries persist

• Soft commodities still weak but some signs of life in Cocoa and, to a lesser extent, in sugar

We’re so 21st Century, this morning’s Tweets (diff. font size denotes importance):

1. Greene King’s Jan Tracker show ‘a strong start to 2016 for sector, with rises in spending in both Other Leisure and Drinking Out’.

a. Tracker: ‘Many British households are optimistic ahead of next month’s Budget as the UK economy continues to show signs of improvement.’

b. GNK Tracker: Suggests that Dry January did little to dampen spend on drinking out as it was +6% y-o-y

c. GNK Tracker: Says spend on eating out down 2% y-o-y in Jan. Total leisure spend was +1% at £182.34.

d. GNK Tracker: Eating out held up in London in Jan but was down 4% in the rest of the UK. New capacity must be hitting LfL sales

e. Tracker: Says ‘consumer confidence remains high as shown by GFK’s Consumer Confidence Index.’

2. Study by NPD Group suggests UK diners could spend an estimated £54.7bn on eating out by 2017, up from 2015 levels of £52.2bn

3. The 2016 Organic Market Report from the Soil Association says demand for organic products rose by 4.9% last year

a. M&B is to offer its own coffee, Brood, in a number of Ember Inn & Sizzling Pub sites over the next few months.

b. Burger King adds 34 locations across UK to its home delivery trial including Manchester, Liverpool, and Leicester.

c. Coffee-by-mail co Pact Coffee is looking to raise £1m via the sale of 3.85% of its business on the Crowdcube platform.

4. Cracker Barrel Q2 & H1 numbers, says has seen ‘positive comparable store restaurant sales and retail sales in the quarter’.

a. CBRL on outlook: Traffic down 2.6% in Jan but spend +2.9% to drive a positive 0.3% LfL spend

5. The average disposable income in the UK rose to £25,700 in 2014-15, up by £1,500 since its recent 2012-13 low, according to ONS.

6. No. of major global travel/terrorism incidents has tripled in last 2yrs reports security specialist Anvil

7. Profits at Norwegian Cruise Line Holdings rose by more than $180m to $662.7m in 2015 as revenues jumped by 39% to $4.3bn

8. Heathrow airport has seen its profits rise by 22% to £223m as passenger numbers rose by 2.2% to 75 million

9. Oxygen Freejumping has secured £10m of funding and is aiming to reach 30 locations across the UK by 2018

10. B of England’s Mark Carney has refused to confirm to Treasury Select Committee that next move in UK rates would necessarily be up

11. German business confidence fell from 107.3 to 105.7 in January, the third fall in a row and the steepest monthly drop since 2008

12. Greek Finance Minister insists IMF is making too many demands of Greece on pension reform & cutting spending