Langton Capital – 2016-06-09 – Giraffe, Brown Forman, gaming, oil & milk price & other:
A Day in the Life:In our house we seem to be operating a breeding programme for toothbrushes. At least that suggestion would fit the facts as the number of toothbrushes, red, green, pink, Hull City flavoured and the rest lying around in the bathrooms, loos and bedrooms has been going up and the proliferation can’t been down to people leaving them lying around as everyone has denied that suggestion vociferously. And, as it seems to be in the DNA of most humans not to throw away what you believe to be somebody else’s toothbrush, the numbers only ever seem to go up. Now I would suggest that this is down to our various offspring coming and going from university and buying their own flats and using the main residence as something of a jumping off point between pubs and holidays and, as I seem to be unwrapping toothbrushes myself at a fair clip, I think that I might be contributing to the problem as well. So we might have to bite the bullet. We might have to adopt the attitude that we did to the more-than-a-dozen size 3, 4, 5, 6, 7 football boots that we found in the under-stairs cupboard the other day and simply throw the things out as I’d swear that they don’t move from one day to the next. Except to breed, that is. On to the news: The News:RECENT WEBSITE ARTICLES: • Euro 2016 & leisure; see here • Market getting tougher? See here • Main features London hotels, slowing markets, Restaurant Group etc. Link to index page – here • Ongoing tweets, older emails found – here PUB, RESTAURANT & DRINKS PRODUCER NEWS: • Tesco is reportedly close to confirming the sale of its restaurant chain, Giraffe, to a family office vehicle with existing restaurant assets. Chief executive Dave Lewis is also prepared to offload Tesco’s interests in Turkey, as he continues to cut out businesses acquired by his predecessors in their attempts to give the retailer global reach. • Sky News specifically reports that Harry Ramsden owner Boparan Ventures is to buy Giraffe from Tesco. It says the deal should be announced today. Sky says ‘Boparan Ventures, which also owns Fishworks, a London-based chain, is understood to be paying Tesco a modest sum for Giraffe, which was loss-making last year.’ • Enterprise Inns yesterday bought back 100.5k shares at c96p. • Lancashire-based pub operator, Thwaites, reported a fall in turnover for the year to 31 March following disposals and the partial sale of its brewing business to Marston’s. Turnover across its 285-strong pub estate grew by 3% despite a net reduction of 18 pubs, thanks to a 12% rise in average EBITDA per pub. • The price of wholesale milk has continued to slip. This will leave more money in consumers’ pockets. That is unless the supermarkets snaffle the margin. • Lower milk price helpful for companies such as Premier Foods as it is the group’s single largest input cost. • Brown Forman FY results. Group reported numbers ahead of market expectations & shares +3% Wednesday. EPS 260c, revenue $933m. CEO Paul Varga described the year as strong and said ‘fiscal 2016 was another successful year at Brown-Forman. We delivered solid underlying growth in sales and operating income, led by the Jack Daniel’s family of brands. We also made important changes to our portfolio of brands that we believe position us well for the long-term’. • BF sales +3% in US (43% of total sales) driven by Jack Daniel’s family of brands (which was up mid-single digits). Western Europe up by high single digits in sales terms. Australia, Japan & Spain in growth but sales in Japan fell. • iNTERTAIN has set up a new concept called Felson’s Sports Lounge and Stick Hall which ‘taps into the trend for secret speakeasy bars.’ • Chapel Down is moving into spirits with the release of a £150, 23-year old brandy made from grapes grown in Kent. • BBPA releases 2016 benchmarking data for tenants and lessees, says energy costs on the rise. BBPA CEO Brigid Simmonds reports ‘our updated 2016 report provides the latest figures to help anyone thinking of investing in a pub, or those who are already in the trade. Publicans in the leased and tenanted sectors, or anyone else, can download it free of charge.’ She continues ‘business plans, and the negotiations over leases and tenancies, need to be as well informed as possible, and so this should be a great help to all those running a Great British Pub.’ • Amazon is planning to launch a full online supermarket service in the UK, limited in the short term to central London. Amazon Fresh says ‘we are launching with a comprehensive offer in a limited area and will take our time to hone our service.’ • The UK’s illicit cigarette trade grew by over 6% to account for 16% of total consumption in 2015, according to findings from KPMG’s annual study. The increase makes the UK market for illicit cigarettes the third largest in the EU after Poland and France. The largest volumes of counterfeit and contraband cigarettes came from Poland and Pakistan, with an additional 0.4bn cigarettes from Romania in 2015. • Loungers has appointed co-founder and operations director Jake Bishop as managing director of the group’s Cosy Club brand, which has a busy rollout schedule over the next 18 months. • Consumers can now ask for a vegan-friendly cheese at any The Stable site for a completely animal-free pizza. • Tasty, owner of Wildwood (43 sites), has announced a five-year £12m financing deal with Barclays to aid the ‘continued expansion of the company’s restaurant estate’. LEISURE TRAVEL: • All Leisure AGM sees delisting resolution passed, shares will cease to trade from end of business 15 June • London’s hotel industry is projected to experience performance declines in 2016, but positive figures in 2017, according to a quarterly forecast from STR and Tourism Economics. The capital has reported year-over-year occupancy declines for each month since November 2015, with April’s occupancy rate falling 2.7% to 74.5%. New supply continues to enter the market, holding back the average daily rate and leading to negative occupancy figures. • London has posted year-over-year growth in revenue per available room (RevPAR) since 2010 but there are reports it might have peaked. RevPAR was down 3.2% in April to £95.60 and London hotels face tough upcoming comps from a busy summer 2015, which included the Rugby World Cup and The Ashes. • CEO of consultancy Control Risks, Richard Fenning, told listeners at a recent conference that ‘the world is not as dangerous a place as some would have you believe’. Fenning added: ‘We live in an age that is obsessed by risk. The world is not nearly as bad a shape as you would think if you looked at a newspaper.’ OTHER LEISURE: • Nielsen’s 360° Gaming Report suggests more than half of the population in the world’s industrialised countries now identifies as gamers. These gamers spend about 10% of their leisure time on games. • Gaming. The ability to integrate gaming into our daily routines via powerful mobile devices has helped to push games into the mainstream. In North American and Europe, console and mobile are tied as the most popular gaming platforms, whereas mobile dominates the Chinese market by a wide margin. • Gaming. Interestingly, gamers have quite different preferences about how they want to spend their money. Mobile gaming markets, like China and Latin America have the heaviest preference for freemium titles, while players in Germany have a strong preference for paid games. • Airbnb has introduced a new tool that gives people the power to book rooms for their travellers as well as controlling payment and itinerary details. • Hoseasons is calling 2016 the ‘year of the short break’ after a 16% jump in short break bookings year-on-year for the self-catering specialist. FINANCE & MARKETS: • UK manufacturing output grew at its fastest pace for nearly four years in April, up 2.3% and outperforming wider output growth of 2%. Pharmaceuticals helped drive the strong results, with output in the sector up 8.6% thanks to increased exports. • RICS says that house prices in the UK will fall over the next quarter. This will be the first drop in 6yrs. RICS economist Simon Rubinsohn reports ‘what we are looking at is a short term drop caused by the uncertainty resulting from the forthcoming EU referendum, coupled by a slow-down following the rush to get into the market ahead of the tax change on the purchase of investment properties.’ • World markets: UK mixed yesterday & Europe down. US markets higher but Asian markets down in Thursday trade • Oil price strong, Brent Crude trading at around $52.70 per barrel. Price almost doubled in 3mths. • Gold/oil price down from 36 barrels per ounce in March to less than 24 barrels today. • US dollar at 6wk lows on further reflection re dovish Fed comments • NIESR says that UK GDP should have grown by 0.5% over the March to May period. It estimates Feb-Apr GDP at +0.4%. Retail Roundup from Nick Bubb:WH Smith; We weren’t expecting the trading update from WH Smith yesterday, but it looks like “business as usual”, with sales in the High Street down 3% LFL and sales in Travel up by 3% LFL, in the 14 weeks to June 4th. Gross margins are up, as usual, and the outlook statement says: “Looking ahead we continue to focus on profitable growth, cash generation and investing in the business to position us well for the future. We remain confident in the outcome for the full year”. AO World: Yesterday’s finals from AO.com for y/e March are boldly headlined “CONTINUING TO GROW MARKET SHARE AND DELIVER OUR STRATEGY” and the outlook statement is upbeat, despite continuing heavy start-up losses in Europe: “Trading in the current financial year has started well…Whilst we are mindful of the recent softening of UK consumer confidence and the recent reduction in property transactions, and in Europe we are in still in a start-up phase, the Board remains confident in the long-term prospects of the Group”. Nevertheless, AO.com is hedging its bets by introducing computing into the range this year. Analyst’s meeting 9.30am. Shoe Zone: With yesterday’s interims, for the six months to 2 April, the discount retailer Shoe Zone has reassuring trading update: “Looking at performance over the nine weeks to June 4th, April was a challenging month with a cooler start to spring than anticipated. This has been offset with a strong May performance where temperatures were closer to seasonal averages. Overall the business continues to trade in line with management’s expectations”. Analyst’s meeting 9.30am.
Mike Ashley Watch: Wednesday’s Press and News: The big focus is on Mike Ashley’s appearance before MPs and there are lots of unhelpful front page headlines again, despite the positive City response, with the FT flagging that “Ashley admits retail empire is being probed by HMRC over low wages” and his main adversary, the Guardian, running with “Ashley admits “I broke law”: the scandal of Sports Direct”. The FT also has an amusing piece comparing Mike Ashley with “David Brent rather than Stalin”! The FT also reports that Amazon is about to launch the UK version of its grocery delivery service Amazon Fresh.
Amazon: Home Retail (Argos): Today’s Q1 from Argos (for the 13 weeks to May 28th) was expected to show sales down again, but, thanks to the strength of Electronics, LFL sales are up a tad overall (ie by 0.1%), albeit gross margins were 100bps down. CEO John Walden notes that Argos delivered “its strongest sales growth performance in eight quarters”, despite “the challenging backdrop of constrained seasonal product sales due to poor weather, on top of a deflationary pricing environment” and says that “we remain on track to complete the proposed transaction with Sainsbury’s in the third quarter of this calendar year”. Conf call 8.30am ScS Group: It has been a bit of a mystery why the quoted Furniture retailers have not been reporting stronger sales, given the apparent boom in the market (although the latest BRC-KPMG survey for May cast some doubt on trading last month), but sofa specialists SCS has come out today with a very upbeat report, flagging that LFL order intake growth has moved up from 12.0% for the first 37 weeks of the year to 14.6% for the 45 weeks ended 4 June (ie the last 8 weeks have seen strong double-digit growth). As a result “the Group expects to report profits ahead of current market expectations, which have already been significantly upgraded during the current year” and the CEO David Knight said “We are delighted that trading through the two key May Bank Holidays exceeded our initial expectation”.
Monomaniac Watch: Today’s Press and News: With Sainsbury, Boohoo, WH Smith, AO World and Shoe Zone in focus on the Retail beat yesterday, there is plenty for the papers to talk about, but the main focus is on the Parliamentary inquiry into the collapse of BHS and the appearance of both BHS’s management and the infamous Dominic Chappell before MPs…The front-page of CityAM sensationalises the battle between “The Shopkeepers” over the collapse of BHS and the FT also has a front-page story about the accusation that Philip Green let BHS collapse to thwart Mike Ashley! The Telegraph, however, highlights that “Amazon Fresh to take on UK food giants”. News Flow This Week: On Friday we get the Bonmarche finals, plus…the start of Euro 2016 in France. Nick Bubb – nicholas_bubb@hotmail.com Yester-tweet – Yesterday in a Nutshell: Live Tweets on Website:Some of the early tweets: • Domino’s Pizza Group has announced the acquisition of an interest in Domino’s Iceland, Norway and Sweden • Domino’s. It has invested £24m in order to ‘acquire significant minority interests’ in the Scandinavian businesses. • Domino’s current trading. Says this ‘remains in line with market expectations.’ H1 numbers are 28 July. • Newly published research from Mintel shows ‘one in seven’ global spirit launches are now for craft gins and whiskies • Monthly Barclaycard data shows a 3.6% rise in consumer spending in May, with pubs (15.2%) and restaurants (12.3%) • Mintel has reported that higher-earning Britons are spending more on holidays and dining as confidence grows’ • Millward Brown’s BrandZ rankings show tech stocks Amazon & Facebook on the up. Starbucks also up the rankings. Google pips Apple to no1 • At least 11 people are dead and 36 injured following an explosion in the popular Beyazit Square area of Istanbul • Ladbrokes reports H1 Coral numbers for 28wks to 9 April, says EBITDA was £124.6m, up 16%. • The World Bank has slashed its 2016 global growth forecast to 2.4% from its previous estimate of 2.9%, citing low commodity prices • Economic growth in Eurozone for Q1 2016 has been revised up to 0.6%, supported by stronger household spending • House price growth is likely to slow over the rest of 2016 per Halifax, while house price inflation in the year to May remained at 9.2% Other Tweets: • US dollar weakness partly responsible for increase in US$ price of commodities? Not least oil, now trading at nearly $52. • With oil at c$52, how long before the travel companies share prices start to wobble on ‘higher oil costs’? Should be in the price, surely… • Milk price continues 2014, 2015 decline. Now trading below 22p per litre. Bad for farmers but good for consumer wallets, Premier Foods etc. • Euro 2016 and the leisure industry. Good (some) pubs, bad for indoor attractions, holiday companies etc. See http://tinyurl.com/j9ekx4y • Gold Oil (the number of barrels to buy one ounce) falls further to 24 barrels. Was 34 barrels 3mths ago |
|