A Day in the Life:

I’ve often wondered, why do people throw rubbish near a bin?

I mean it’s as though they’ve walked up to it and have then either failed miserably in their attempt to get whatever it is they’re throwing away into said receptacle or, worse still, they’ve simply run out of energy (or goodwill) and have dropped their rubbish on the floor within a foot or so of their goal .

Of course it’s different if the bin’s full – but they so often aren’t therefore surely, if you’ve made more than 90% of the effort it must be worth going the extra mile? Put your sandwich wrapper, cig packet or whatever where it belongs.

*REQUEST FOR FEEDBACK*

In order to ensure that we expend our energy most efficiently, we’d be grateful if readers could perhaps spend a moment telling us which (if any) parts of the email that they find most useful.

Section A should take half a minute or so (please just reply (A3, B2, C5 or whatever). Section B shouldn’t take much longer (just a few words will do)

Section A – rating 1 (not useful) to 5 (essential):

a. A Day in the Life

b. News – Pubs & Restaurants

c. News – Travel

d. News – Economics & Markets

e. News – Nick Bubb Retail Comment

f. Weekly Licensed Leisure Index

g. Weekly Food Retail Index

h. The Daily Wrap

Section B – just a few words will do:

a. Should the 4pm email be sent earlier?

b. The 4pm is included in the next day’s Morning Email; is this helpful?

c. At present, we mail only 2x per day; should we mail ad hoc, when news breaks – or would this be an irritant?

Anyway, answers by email please. On to the news:

The News:

Pub, Restaurant & Drinks Producer News:

• Shepherd Neame H1 results. Turnover +0.3% at £73.7m, underlying operating profit +2.9% at £7.2m. LfL sales +6.5%.

• Sheps H1: Group has seen ‘sustained and strong trading in the pub business’. Accommodation sales LfL +11.2%.

• Sheps H1: Says EPS +8.5% at 26.7p, H1 dividend 5.45p vs 5.30p last time. Jonathan Neame, CEO, comments ‘I am pleased to report that our half year results have been characterised by a sustained and strong trading in our pub business, positive operating cash flows and significant proceeds from property disposals. Our consistent investment in our brand and pub assets to align them to today’s consumer demand has resulted in the sustained quality and performance of the business in a highly competitive marketplace. We remain cautious about the outlook for consumer spending, however I am confident we have the right strategy to succeed and the skills to deliver it.’

• Nichols reports FY numbers. Revenues unchanged at £109m, PBT £28.0m vs £25.7m. EPS +9.6% at 60.33p. John Nichols, Non-Executive Chairman, reports ‘I am pleased to report another strong performance in 2015 reflecting the strength of our brands and diversified business model. Our financial performance remained strong with international sales up 3.9% on a constant currency basis and Group profit before tax up by 8.9%.’ He concludes ‘underpinned by the strengths of our brands, people and business model the Board looks forward with confidence to the year ahead.’

• Nichols re current year says ‘during 2016 we will continue to implement our growth strategy which includes further investment in our brands, across the still and carbonate product range, to support distribution growth both in the UK and our export markets. We will also complete the integration of Noisy (acquired in full in January 2016) and the Feel Good brand into the business both of which will have a positive impact on revenue during the year.’ The group concludes ‘in summary, the Board is pleased with the 2015 performance and is confident that the Group is well placed to continue the trend in to 2016.’

• City Pub Company will list on AIM and has set out its intentions to grow to 35 sites by late 2017 and to 50 independent pubs beyond that, writes M&C. Chairman Clive Watson added that the £10m raised through a convertible share preference meant the company now has little debt, which will allow it to borrow to fund its next ten acquisitions.

• Greene King head of investor relations Mark Blytham says there are still ‘huge opportunities’ for the business despite the current climate.

AB InBev has agreed to sell SABMiller’s 49% stake in China Resources Snow Breweries to 51%-owner China Resources Beer.

• Starbucks, Costa and Caffé Nero are all selling sandwiches and pastries containing more salt than a McDonald’s Big Mac, according to a new study.

• British food exports have declined for the first time in 11 years, with food and non-alcoholic drinks exports down 4% to £12.3bn in 2015. The fall was led by a 6% drop to the UK’s main trading partner, the EU.

• Kona Grill reports Q4 numbers, sales +20.6% at $38.1m. Same store sales +3.2% ‘lapping a 3.1% gain from the prior year’

• Kona Grill. Says openened 4 restaurants in period. Reports net loss of $2m. Loss of 18c per share vs loss of 8c last year. CEO Berke Bakay says ‘fourth quarter same-store sales growth of 3.2% is indicative of our concept strength, especially given recent industry trends, and enabled us to extend our track record of positive same-store sales growth to eleven consecutive quarters and in 21 of the last 22 quarters.’ He adds ‘we also exceeded our projection for Adjusted EBITDA, which grew 19.4% over the year-ago quarter.’

• Workers should double the amount they save for retirement concludes Labour Party sponsored Independent Review of Retirement Income. This would clearly take cash out of workers’ pockets but, over time, it should bolster the grey market. Workers currently save around 8% of their salary. The IRRI suggests that this should be nearer 15%.

• Caffè Nero LfL sales grew by 8.5% to £243.1m and adjusted EBITDA rose by 6.3% to £41.1m in the year to 31 May 2015, writes Propel. The group opened 36 stores and closed five, taking its total estate to 571, and management believes ‘there is potential in the UK market for at least 750 Caffè Nero stores.’

• Bella Italia is making its debut in India by opening a restaurant in New Delhi after signing a franchise agreement with Wave Hospitality. Parent company Casual Dining Group has appointed Mark Nelson to oversee its international expansion plans, which include markets in the Middle East and Asia.

• Papa John’s broke its own UK store openings record by opening 44 sites in 2015, making it one of the fastest growing brands in the sector.

• Crowdcube reports brewery & pub co Red Squirrel Group has raised some £595k (119% of target) from 504 investors

• Gruppo Campari, the producer behind Campari, Skyy Vodka and Wild Turkey whiskey, has posted a 36% rise in net profit for 2015. CEO Bob Kunce-Concewitz said of the group’s outlook: ‘with respect to the macroeconomic environment, we expect the volatility in some emerging markets and the recent devaluation of Group’s key foreign currencies to continue during 2016.’

• EU wine exports reached a record €9.8 billion in 2015 thanks to growing demand from the US and China.

• Nelson Packaging has blamed the 5p plastic bag charge and overseas competition for pushing the company into administration.

Leisure Travel:

• FT reports global hotel market cycle may be past its peak. It could be tested by its own success as it laps strong 2015 results

• Dalata Hotels reports FY numbers, says revenue +185% at €225.7m giving PBT of €28.5m. Says has been ‘transformational year’. CEO Pat McCann reports ‘2015 has been a remarkable year for Dalata. The results for 2015 highlight the momentous change that the Group has undergone as a result of the acquisition of 15 hotels. We now have a strong operating platform and management capacity from which we will continue to grow and create value for our stakeholders.’ He concludes ‘I believe 2016 will be another busy and exciting year for all at Dalata’ and says ‘we will continue to pursue potential opportunities to grow the Maldron and Clayton brand and develop the hotels we have already acquired.’

• Action Hotels reports opening of ibis Styles Brisbane. The 368 room hotel is the first newly built ibis Styles in Australia. Sheikh Mubarak A M Al-Sabah, Founder and Chairman of Action Hotels reports ‘we are very excited by the opening of our first hotel in Brisbane. It is a high quality three star hotel and is well located for both business and pleasure customers which will drive occupancy from day one.  The opening of this, our largest hotel, is a big step towards achieving our goal of 5,000 rooms by 2020.’

• Eurostar services may face disruption this month due to RMT strike action over lone working and the alleged victimisation of a staff member.

• The 2016 European Hotel Valuation Index (HVI) published by HVS shows that Madrid saw the biggest rise in value in Europe in 2015.

• UK business travel bookings to China fell 17% YoY in 2015, reflecting ‘international concerns’ about the nation’s economic situation.

• Research from ATPI Group shows buyers are forecasting a ‘confident outlook’ for business travel in 2016.

Other Leisure:

• Lego sales jumped 25% last year as Star Wars fever gripped toy buyers, with the Star Wars set proving one of Legos best-selling in 2015.

Finance & Markets:

• Rally in the gold price sends Gold/Oil ratio to an all-time high. Ratio has moved by around 50% over last 12mths. One ounce of gold will now cost around 36 barrels of oil. Historically, the ratio has been around half of that level.

• Eurozone unemployment has fallen for a 3rd straight month in Jan to stand at 10.3%, down from 10.4% in Dec. Unemployment hit a high of 12.1% in H1 2013.

• Eurozone manufacturing slower, PMI drops to 51.2 in Feb from 52.3 in Jan. Any number over 50.0 implies growth. Nonetheless, Markit reports ‘concerns are growing that the region is facing yet another year of sluggish growth in 2016, or even another downturn. Lacklustre domestic demand is being compounded by a worsening global picture.’

• UK manufacturing growth fell to a near 3yr low in Feb with a PMI of 50.8. Implies manufacturing is still growing. Markit reports ‘the near-stagnation of manufacturing highlights the ongoing fragility of the economic recovery at the start of the year and provides further cover for the Bank of England’s increasingly dovish stance.’

• Moody’s cuts outlook for China from “stable” to “negative”. It suggests Beijing’s fiscal strength will continue to decline. Moody’s says ‘without credible and efficient reforms, China’s GDP growth would slow more markedly as a high debt burden dampens business investment and demographics turn increasingly unfavourable.’ It adds ‘government debt would increase more sharply than we currently expect.’

• Australia’s economy has grown by 3% in the quarter to end-Dec. Q-o-Q growth came in at 0.6$ vs estimates of 0.4%

• World markets: UK & Europe up yesterday. US also higher & Far East up in Wednesday trading

• Oil price settling back a little but still trading up over last 24hrs at around $36.75 per barrel

• Gold price drifting a little. Trading at around $1228.50 per ounce.

Whitbread: UK hotels & coffee in 60 seconds…

Great brands but some grey clouds…

Premier Inn:

• Whitbread has the UK’s #1 budget hotel chain & main competitor Travelodge recently dropped the ball.

• However, Travelodge is recovering & is now adding capacity (see Daily).

• Though Premier is national, there are signs that London is slowing.

• Given the way cycles behave, we would expect to see rates (which lag occupancy) come under downward pressure 

Costa:

• Costa is also #1 in its market & major competitor, Starbucks, has had issues (no-tax brouhaha) – but this is abating

• Elsewhere, Pret & EAT are growing in the London market & Gregg’s continues to move into Costa’s space

• China, though growing rapidly, has lost a little of its sheen

Other considerations:

• Whitbread updates on Q4 on Thursday then reports FY numbers on 26 April.

• At that point it becomes ‘optically’ cheaper as investors will focus on Feb 17 numbers

• Furthermore, diverging fortunes at Premier & Costa may hasten a split. A Costa IPO or spin-off should enhance value

Conclusion:

• WTB’s shares are trading on ‘only’ 15x Feb 17 EPS.

• The group has excellent brands & there is upside demerger risk.

• However, evolving market conditions may mean WTB shares are less of a bargain at £39 than they were at £54

Retail Roundup from Nick Bubb:

Darty: Not content with barging into the Sainsbury/Argos deal, now Steinhoff are trying to break up the Darty/FNAC party, as Darty has confirmed this morning the FT story that it has received a bid from Conforama/Steinhoff of 125p per share in cash, a small premium to last night’s close of c115p (which valued Darty at £610m). Why they’ve decided at this late hour to intervene is unclear, but the Darty/FNAC merger agreed back in November is still bogged down in the process of EU regulatory clearance. Conforama is, of course, a combined electrical and furniture retail chain in France so it makes eminent sense to takeover Darty, given the synergies, although they too will have regulatory issues. FNAC is obviously a much smaller business than Steinhoff, so they will be hard pressed to beat away this rival bid…

Poundland: Now, there’s another interesting announcement: “Kevin O’Byrne to succeed Jim McCarthy as Chief Executive Officer of Poundland”. The veteran Jim McCarthy is, of course, no spring chicken and it is unclear whether health issues or the stress of dealing with the 99p Stores acquisition have made him decide to retire at the age of 60, but we wish the ebullient Jim well. Kevin O’Byrne, of course, is a former Dixons and Kingfisher stalwart and has always been ambitious for a CEO role and he would have known Darren Shapland, the Chairman of Poundland, in a former life Kevin O’Byrne says: “I am very excited about joining Poundland, a business with a strong brand and great potential.  Jim and his team have built a very good business”. Nick Bubb – nicholas_bubb@hotmail.com

Tuesday 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:

Gregg’s FY numbers:

• Numbers look good despite the fact that the co is now lapping tough comps.

• The group’s shares stumbled (after a tremendous run) at the end of Q4 when Gregg’s reported that LfL sales were +4.7% for the year.

• They had been up by 5.6% LfL at the end of Q3 (they were +4.9% in Q3 itself) suggesting that there had been a sharp slowdown in Q4.

• Today, the group is able to say that ‘this year has started well and like-for-like sales in the eight weeks to 27 February 2016 have grown by 4.2 per cent, with total sales up 6.8 per cent.’

• Gregg’s says ‘the consumer outlook remains positive with disposable incomes expected to grow further in 2016.’ It adds ‘overall 2016 will be another year of significant change as we advance with our strategic plan and propose major investment in our supply chain.’

• Gregg’s concludes ‘we are confident of delivering a further year of underlying growth. The Board’s expectations for the year ahead remain unchanged.’

• We would suggest that 1) there has been an improvement (at least in LfL sales) between Q4/15 and Q1/16, 2) this may be due to pricing (as there is no mention of margin) but, if we take it at face value, it is a very good performance

• And Gregg’s shares have responded positively. They are up 127p (+12.3%) at the time of writing.

• This puts them, at 1158p, on around 19.6x suggested earnings for the current year which, for a pie shop, looks a little stretched.

Input prices:

• Oil showing some signs of life, holding well above the $36 mark at $36.83 (at time of writing) and challenging recent high (intraday) of around $37.00 on 26 Feb.

• Oil continued. This is micro-analysis as far as timing is concerned. Chartists maintain that the longer term trend is still down but this is how rallies happen. Like bull markets, they ‘climb a wall of worry’ at the end of which, hey presto, prices may have partially recovered.

• Commodity of the Day – Copper: You don’t get much copper in a meat pie, not on purpose at least, but it’s often a good indicator as to how prices are faring up in the non-precious metals space.

• Copper continued. And here we have some evidence of stabilisation. Prices troughed at around 194c per pound back in January and they are now 213c per pound. Prices were over $4 per pound in early 2012 but, nonetheless, chartists will be suggesting that maintaining prices over say 215c look bullish for the future.

• Volatility levels in soft commodities may be diminishing. This would make some sense if the products’ initial drop were due to China fears. The markets may be waiting for further news to move prices firmly either one way or the other. Most observers may be betting on that being upwards – and hopefully not simply because they are being seduced by the fact that most charts are not logarithmic and therefore they suggest, wrongly, that prices cannot go down in percentage terms forever.

Random information, hopefully not all of it useless:

• Big companies reporting numbers this morning seem to have gone down (Barclays, Glencore) whilst smaller companies (Gregg’s, Just Eat) saw their share prices rise.

• Re the wider markets, the UK held above its 50dy moving average yesterday whilst US markets breached them on the downside. Today’s upward move (at the time of writing) in the UK looks like persuading some observers that we remain in recovery mode.

• Just Eat uses the word ‘excellent’ and shares go up by 5%.

• Travelodge numbers good, has plans to grow. Does this threaten to put more pressure on Whitbread’s Premier Inn chain? London market is slowing and extra capacity being put on by a competitor will not help matters.