Langton Capital – 2016-06-14 – Coffee Shops, MOD Pizza, Elegant Hotels & other:
A Day in the Life:
So we had only one duck hatch out of a batch of a dozen.
They had been under the same heat lamp at the same temperature for the same length of time so we’re not sure how that happened but the one that did pop out of his little cocoon seems disgustingly healthy and, if first impressions are anything to go by, is eating for twelve.
And a similar volume of waste material is coming out of the other end proving once again that there is something behind the ‘as quickly as xyz through a goose’ comment beloved by our American cousins.
Anyway the little beast, known as Lucky Goldstar or something equally soppy to the ten-year-old girl that it thinks is its mother (but Crispy to me), is running around the house and tripping over its clown feet whilst cheeping endearingly in the hope that I haven’t already pencilled in ‘fat enough to eat’ on the calendar for some time in late October.
Indeed, I can feel a Halloween BBQ coming on but, as our house now appears to be under the impression that it’s a democracy, I could well be outvoted at the time. on to the news:
RECENT WEBSITE ARTICLES:
• London pubs – here
• Ongoing tweets, older emails found – here
PUB, RESTAURANT & DRINKS PRODUCER NEWS:
• Pragma consulting says independent coffee shops are fighting back after the massive Starbucks/Costa expansion of the last c15yrs. It says ‘we have seen the hunted become hunters with the emergence of a new stronger independent sector, now challenging the bigger brands for market share.’ Pragma says ‘the number of coffee outlets in the UK has almost trebled in the last six years growing from just under 7,000 in 2010, to nearly 19,000 in 2016, and forecast to grow to over 27,000 by 2020.’ It adds ‘with over 2 billion cups of coffee a year now being bought from UK coffee shops, the consumer has become increasingly knowledgeable and discerning about product quality and the in-store experience. This has been encouraged by independents who prioritise quality from sourcing through to roasting, and focus on training baristas to a high standard. Consumers are
• Pragma: The end of the beginning for the major chains? Growth to slow? Pragma says ‘although chain outlets still dominate, independents are forcing established brands to keep up with new trends and consumer demands. The now ubiquitous flat white was introduced into the UK by independents and many chains are now selling specialist products. Starbucks, for example, is offering cold brew coffee, which only a few years ago would have been unheard of by the majority of consumers.’
• Pragma re the future. It says ‘the challenge for independents is how to scale their business while maintaining product quality and without losing their distinctive character.’ Pragma concludes ‘while the independents might not be a threat individually to the likes of Costa and Starbucks, as a group they play an important role in the UK coffee market. In catering to an increasingly sophisticated customer they drive innovation, forcing the chains to up their game, particularly regarding store refurbishment and product development. And that can only be a good thing for the consumer.’
• MOD Pizza tells MCA it is looking forward to bringing to the UK ‘the people-led culture we have, the way we are making a difference in people’s lives and the purpose behind the brand. It will be really fun to see this come to life in provincial towns in places like Leeds, Manchester, Bristol and Glasgow.’ Scott Svenson says MOD plans to have a national presence. He suggests that the brand could grow to “hundreds of stores” in this country alone.
• Enterprise Inns yesterday bought back 106,500 of its own shares for cancellation at around 93p per share
• JDW Fri & Mon bought back c132k shares at c713p. It has bought back c3.86m since January at a cost of c£26.5m or 685p each.
• Visa UK’s Consumer Spending Index rose by just 0.8% in May, although the strongest spending growth was observed in hotels, restaurants, and bars (+6.7%). The consumer spending figure is the weakest increase since February 2014 and is a far cry from the 2.6% annual increase reported in April. Visa cited the slowing global economy and uncertainty of the EU referendum as reasons for the weak performance.
• Heineken says its new c£150m seven-year sponsorship deal with Formula One will revolutionise the sport and make it as big as the Champions League. The Dutch company has been set the task of transforming F1’s social media presence and making the sport more accessible to hundreds of millions of potential new fans.
• A recent study suggests older teens who try electronic cigarettes have six times the odds of trying tobacco cigarettes within two years than those who never vape. The researchers from the University of Southern California based their findings on surveys of about 300 high school students in southern California.
• Greggs is planning to increase the number of healthy options on its menus with a gluten-free range and more vegetarian products. Chief executive Roger Whiteside added: ‘We’re also looking seriously at Mexican food, and it’s not impossible that we’ll see sushi on the menu one day.’
• iNTERTAIN has entered into a license agreement with Chicago Rib Shack to open up a restaurant at the nightclub operator’s Camden Lock venue. The site is also undergoing a £300,000 refurbishment programme that will see a return to the site’s original name, the T. E. Dingwall building.
• Poppleston Allen has confirmed that Cheltenham Borough Council is looking to consult again on the Late Night Levy in the coming months. Local businesses have voted in favour of a Business Improvement District, which will come into effect in August of September. The Levy could cease to be effective from 31 March 2017 if the Full Council decides it should no longer be payable.
• Retailers’ in-store sales benefitted over the weekend as the home nations involved in Euro 2016 kicked off their campaigns. Speaking to Convenience Store magazine, Singh’s Premier in Sheffield saw a week-on-week sales uplift of 31% across its three stores as customers took advantage of deals on packs of beer.
• The French government has asked cities hosting Euro 2016 matches to ban alcohol near venues and fan zones in the wake of last weekend’s violence in Marseille. Pubs, bars, and cafés might also be banned from selling drinks in containers that could be used as missiles, while France’s interior minister, Bernard Cazeneuve said he has ‘asked for all necessary measures to be taken to prohibit the sale, consumption and transport of alcoholic drinks in sensitive areas on match days and the day before, and on days when fan zones are open.’
• Smirnoff vodka has announced itself in the fruit cider category with the launch of its Passionfruit & Lime and Raspberry & Pomegranate drinks. The 4% ABV ciders have a recommended retail price of £4.50 for the on-trade as Smirnoff looks to tap into the £2.7bn cider market.
• Countrywide figures show Londoners are spending almost 60% of their income in rent and prices in the capital have risen by 48% since 2007. That is four times faster than growth in income. London Assembly Sian berry commented: ‘London’s 2.3 million private renters, like myself, need protection from greedy landlords and letting agents. We also need a London Renters Union funded by but independent of City Hall that would enforce existing rules for landlords and lettings agents and help support renters with information and campaign for things like rent controls.’
• BHS shenanigans ongoing. See Nick Bubb.
LEISURE TRAVEL & HOTELS:
• Preliminary data from STR indicates a 2.8% drop in occupancy in London during May as a 2.5% increase in supply handily outstripped a 0.4% fall in demand. Average daily rate was pushed up 0.4% to £143.92 but could not prevent a 2.4% decrease in revenue per available room to £117.62.
• Elegant Hotels reports H1 numbers. Says it has turned in ‘a solid performance in a challenging trading environment.’
• Elegant says revenues were +0.1% in H1 to $36.5m with REVPAR +0.3%. ADR was +3.1% and occupancy was lower.
• Elegant reports adjusted EBITDA +2.5% at $16.7m, adjusted EPS or 12.9c and a H1 dividend of 3.5p vs 1.75p last year. CEO Sunil Chatrani reports ‘this has been a period of solid progress for Elegant Hotels and we were particularly pleased to complete our first acquisition since becoming a public company, in the form of Waves Hotel & Spa. The Group now owns around 29% of the quality leisure tourist room stock in Barbados and our objective remains to continue extending this position while also expanding further into the Caribbean region. Whilst there are currently a number of challenges that are impacting the trading performance of both Elegant Hotels and the wider luxury hotel market in Barbados, we continue to be confident in the Group’s long-term growth prospects.’
• Wyndham Hotel Group has revealed a new strategic vision that aims to enhance the travel experience for millennials and the global middle class. WHG’s chief executive officer Geoff Ballotti said of the group: ‘We’re transforming at a time when the $7.2 trillion global travel and tourism industry is growing faster than the global economy, fuelled largely by millennials and an increasingly travel-curious middle class. With Wyndham Hotel Group’s unmatched scale and the breadth of our portfolio, no one is better positioned to meet this demand and champion the everyday traveler.’
• The FCO has warned Brits to avoid the area around the Pulse Nightclub in Orlando City following the shooting at the club in the early hours of Sunday morning. A US-born man left 50 people dead and another 53 injured.
• Microsoft is set to by LinkedIn for $26.2bn in its biggest ever deal, giving it access to the latter’s online network of 433 million professionals
FINANCE & MARKETS:
• ECB policies are ‘appropriate’ says Jens Weidmann, boss of the German Bundesbank. He cautioned against further easing. He told a conference in Frankfurt ‘one thing I want to stress: our definition of price stability requires that the targeted inflation rate is achieved in the medium term. This gives us enough time to wait for the effect of the adopted monetary policy measures on prices.’ He said ‘the current monetary environment requires no further easing.’
• Fed concludes its 2dy meeting tomorrow. Chance of a rate rise slim to non-existent. Chance of a July rise said to be c20%.
• World markets: UK and Europe down yesterday for 3rd day. US also lower and Far East down in Tuesday trade.
• Oil price cuts $50 on way down. Brent Crude currently trading at around $49.80 per barrel
Retail Roundup from Nick Bubb:
Ted Baker: Ahead of its AGM (which is being held at the ubiquitous The Ugly Brown Building HQ at 11am this morning), Ted Baker has issued an update on trading for the 19 week period to 11 June and….despite the very soggy share price of late, it is reassuring, with slightly better than expected Retail LFL sales growth of 3%, strong North American wholesale sales growth and robust gross margins, so “the Group remains on track to meet the Board’s expectations for the full year”. The great Ray Kelvin, Founder and CEO, says “These results demonstrate the strengths of the brand…We are very pleased with the response from our customers over this period…”
Today’s Press and News: The news that Asda has decided to replace CEO Andy Clarke with another Clarke, Sean Clarke, gets plenty of coverage: “Bungling Asda boss gets the boot” shouts the Daily Mail. But BHS is still in the news, with former City minister Lord Myners asking the Government if the Serious Fraud Office will investigate the sale and purchase of BHS, while, according to the Telegraph, Matalan founder John Hargreaves has insisted that he dropped his interest in rescuing the bankrupt BHS of his “own accord” and not because he was “blocked by Philip Green”. And the Times highlights that shares in Ocado have fallen a further 8%, amidst investor concern over the impact of Amazon Fresh.
News Flow This Week: The continuing Parliamentary inquiry into BHS will get a lot of attention tomorrow morning, when the beleaguered Philip Green is due to appear before MPs…but there is plenty of other stuff going on this week (as Euro 2016 continues in France). The estimable Simon Wolfson of Next appears tomorrow evening in the City to give the prestigious BRC Annual Lecture. Thursday then brings the ONS Retail Sales figures for May, the Poundland finals, the Darty finals and the N Brown Q1 update. And on Friday B&M are taking analysts to Germany to visit their business there, whilst JD Sports will give a trading update ahead of its AGM.
Royal Ascot Watch: the “toffs” in their silly hats will be out in force as usual at Royal Ascot, which starts today, and our alter ego, the intrepid tipster “Honest Nick”, recommends the Irish superstar Awtaad in the 4.20pm, the high-class St James’s Palace Stakes, as the day’s banker (although Ervedya in the 2.30pm and Psychedelic Funk in the 3.05pm look well worth e/w wagers). But, by tradition, his “Bet of the Day” on the opening day of Royal Ascot is always deliberately at the humble jumps course of Stratford and he goes with Red Hammer in the 4.05pm.
Yester-tweet – Yesterday in a Nutshell: Live Tweets on Website:
Some of the early tweets:
• Shepherd Neame reports managed house sales +4.6% in year to date wityh LfL EBITDA at tenanted houses +2.4% at week 48
• The Wilson Drinks Report has suggested that drinks retailers should generate £200m in extra sales if England reach the finals
• American-style casual dining chain TGI Fridays has fallen to a £12.45m pre-tax loss after a number of one-off bills
• Levant Restaurants preparing for a £40m flotation so that the Lebanese chain can expand across Britain & move into Middle East
• Indian authorities are reported to have seized properties worth about $210m belonging to tycoon Vijay Mallya
• Sports Direct boss Mike Ashley has written to BHS administrators saying that he has an interest in taking over some of the stores
• JD Wetherspoon is set to open eight pubs and a hotel in the next six weeks as part of its goal to open 15 sites this year.
• Campaigners are urging the government to make an urgent statement on when the pubs code will be enacted after its delay last month
• Oil price spikes under $50 three times in last few hours but, thus far, seems reluctant to spend much time below that level
• Grocer Watch has ASDA pricing very keenly. Closing the gap with Lidl (still the cheapest) but opening a gap with MRW, TSCO, SBRY
• Poundland numbers later this week expected to show 90% reduction in profits. Not flagged up at the IPO, to say the least
• Amazon Fresh. Said to have been a bit of a damp squib in US. But could it actually be more suited to Europe?