Langton Capital – 2016-04-05 – Stock Spirits, Hostelworld, UK holidays, economy & other:
A Day in the Life:
So what did we used to do on the tube before we all had smartphones?
I really can’t remember and, looking around the carriage the other day, I could see that nine of the 12 people that I could see were doing something on their phone – and that included me.
Of the nine, eight were tapping away and one was talking. Nobody appeared to be reading anything on their mobile device and, of the three people who were not on their phones, two were gazing into space and one was reading a book.
Nobody was reading a newspaper, nobody was talking to the person next to them, nobody was marking up papers with a highlighter, nothing.
All of which leaves open the question as to whether we’re more ‘in touch’ than ever before or if we’re simply better at the games 2048 and Temple Run II than we used to be.
Anyway, as a result of comments we solicited re the structure of the email a few weeks ago, we’ve made the active decision not to change a great deal. We’ll keep the first email as it is but evolve the second daily effort into a longer, ad-hoc (probably weekly) note and put it onto the website with links & reminders from time to time. On to the news:
PUB, RESTAURANT & DRINKS PRODUCER NEWS:
• Pret puts prices up, supermarkets still putting prices down. Gap, at some point, may become unsustainable. Arguably group is illustrating to customers just what they pay to have somebody else boil a kettle.
• Western Gate Private Investments has requisitioned proposals to remove Chris Heath, CEO of Stock Spirits Group
• Western Gate, the largest individual shareholder in Stock Spirits, has put forward the names of two NE Directors. It holds 9.7% stake. WG says ‘before launching this requisition, Western Gate held a series of meetings and exchanges with the Company’s executive and non-executive directors, including ahead of the outcome of the “detailed ‘root and branch’ review” of its Polish operations which was initiated following the Company’s latest profit warning in November 2015. The findings of this review were announced on 10th March 2016 but we believe they contain nothing new to adequately address the most serious problem in its business – the dramatic loss of market share in the core Polish market and resulting decline in revenue. Our engagement with the Board, together with the outcome of the Company’s wider strategic review, have left our very real
• Western Gate outlines concerns regarding loss of market share in Poland, high costs and disproportionately high executive pay. It says ‘we believe the executive management team have run out of ideas about how to stem the ongoing market share losses affecting the Polish business and the Board would benefit from added relevant experience, a fresh perspective and renewed energy.’ WG says ‘financial performance has been poor, market share has been lost in its core Polish market, salaries and costs are too high and remote control management of the business from the UK, where the Company has no major revenue generating operations, is clearly not working. The executive team consistently blames others instead of being on the ground in Poland addressing the local market dynamics and managing the business. A fresh perspective on the Board will benefit all
• Enterprise Inns announces that it has bought back another 110.451 shares for cancellation at between 95.5p and 98p per share
• Share buybacks. Enterprise now joined JDW in retiring equity. Good news provided balance sheets do not come under pressure
• Kent-based wine, beer, and cider producer Chapel Down has raised £1.7m with Seedrs to boost its Curious Drinks beer and cider business. ‘The success of our Curious Drinks crowdfunding campaign is further testament to the revolution taking place in the British beer business’, said Frazer Thompson, CEO of Curious Drinks. ‘Customers want great beer and we’re delighted that they love Curious as much as we do. We are pleased to welcome nearly 900 new shareholders who we know will become fantastic brand ambassadors.’
• The current £1 coin will be replaced by a 12-sided coin from March next year to protect against sophisticated counterfeiters. The new model is being labelled the most secure coin in circulation around the world by the Royal Mint and will be a welcome upgrade on today’s coin which has seen as much as 3% of its number counterfeited in recent times.
• Len Shackleton of the Institute of Economic Affairs argues that the National Living Wage was sprung on the Low Pay Commission and will result in job losses.
• Hostelworld FY numbers, reports sales +5% at €83.5m, average value +5% at €12.10 per booking
• Hostelworld FY: Says is making ‘good progress in emerging markets – Asia is the fastest growing destination region (+10%).’
• Hostelworld FY: Reports adjusted EBITDA of €23.6m (2014: €27.0m) ‘reflecting marketing investment’. Pro forma EPS 22c vs 27c last year
• Hostelworld FY: CEO Feargal Mooney reports ‘we offer hostels worldwide the market leading proposition, providing them with a low cost distribution channel, access to a global customer base, access to our online property management system and to our leading booking engine technology.’ He says ‘consumers trust strong brands. The Hostelworld brand is characterised by a sense of adventure, community and social interaction, which appeals to our core target millennial demographic.’
• Hostelworld FY: Current trading. CEO Mooney reports ‘the new financial year has started well and in line with our expectations. The strength of our brand and technology together with healthy booking numbers and continued pricing improvements, underpinned by a growing marketplace, gives the Board confidence in the Group’s future prospects.’ Chairman Richard Segal adds ‘in recent years, the business has invested in its people, technology and brand. It has also modified its operating model to proactively anticipate and respond to changes in the market place. This investment and an absolute focus on serving the hostel sector and the millennial consumer in particular means the Group is well-positioned for future growth and development.’
• Hostel market set to grow at 7-8% per annum in revenue terms through to 2018 reports Phocuswright
• Carnival Corporation has finalised contracts with Italian shipbuilder Fincantieri to build five new ships. Two of the new vessels will be for Costa Asia, two for Princess Cruises, and one for P&O Cruises Australia, with deliveries scheduled for 2019-2020.
• LateRooms, the online hotel booking website, has changed hands for the second time in six months after a private-equity backed deal headed by Malvern Enterprises UK for £20m. Indian travel operator Cox & Kings is 49% owner of the newly incorporated Malvern, however, so will retain a degree of ownership in the website.
• British campsite and leisure park owner Verdant has been bought by Palatine Private Equity for c£40m.
• New research from Butlin’s suggests almost half of Britons (42%) believe the UK is undervalued as a holiday destination. Some 60% say their choice of holiday is based on affordability and a further 46% wants access to a beach.
• Hoseasons says seven of its best 10 booking days ever fell in what has proven to be a record-breaking first quarter. The self-catering specialist’s sales through third parties were up by 10% and overall bookings rose by 8% during the peak turn of year selling period year-on-year. Three and four-night short break bookings are proving popular, as are bookings for boating, lodges, and log cabins.
• Managing director, Simon Altham, described the figures as being particularly pleasing considering that 2015 was a very strong year. ‘These figures clearly demonstrate the continuing appeal of the UK luxury short break market for both families and couples looking for a safe, secure and convenient getaway only a short drive from home,’ he said.
• The number of UK visitors to Germany grew by 7.4% year-on-year to more than 5.5 million in 2015, thanks in part to a greater range of holidays offered by tour operators. Overnight stays from the UK rose by 10.2% in January to close to 300,000, according to data from the German National Tourist Office.
• Domestic holidays, Merlin etc. Weaker pound should boost London visitors. UK numbers at record for Jan this year
• QHotels saying an extra 1m people will holiday in the UK due to travel fears this year. Should boost domestic market
• CJ CGV, the South Korean cinema operator, is to purchase a 38.12% stake in Istanbul-based Mars Entertainment Group. The deal is set to close in May and would be the third-largest sale by private equity in Turkey’s history.
• William Hill PLC has entered into a long-term commercial agreement with NYX Gaming Group Limited. William Hill is investing £80m in a note redeemable in cash or shares in NYX with an interest coupon of 6% payable in kind. James Henderson, CEO of William Hill, commented: ‘Our new commercial agreement is a key step in delivering our technology strategy by enhancing our current platforms and, in parallel, developing a new back-end platform for William Hill to complement and support our Trafalgar platform which is focused on our front-end user experience. This route draws on the OpenBet team’s proven sports betting technology expertise and NYX’s gaming platform to give us a bespoke technology solution to support and deliver our UK and international growth strategies.’
FINANCE & MARKETS:
• World markets: UK & Europe higher yesterday but US down. Far East lower in Tuesday trading
• Oil price down overnight. Now trading at a little over $37.50 per barrel
• Eurozone PPO fell 0.7% in February
• Eurozone confidence rises to 5.7 in April vs 5.5 in March. Eurozone unemployment rate down to 10.3% in Feb v 10.4% in Jan
Retail Roundup from Nick Bubb:
Today’s Press and News:
Next Share Buyback Watch: The estimable “Mr Share Buyback Man” was in action again yesterday, picking up another c£5m worth of Next stock (c94,000 shares at an average price of 5292p), to take his post results activity to £20m in total, and, shrewdly, he managed to wait until towards the end of the day, to take advantage of the late slump below the 5300p level…
This Week’s News: As we move into early April, the highlight of this week is the much-awaited Marks & Spencer Q4 trading update on Thursday, but before that this morning brings the Card Factory and Moss Bros finals, together with the latest monthly Kantar and Nielsen grocery market share data. Tomorrow we get the Topps Tiles pre-close update and Thursday also brings the Dunelm Q3 trading update. Nick Bubb – firstname.lastname@example.org