Langton Capital – 2016-06-16 – May trading, leisure IPOs, Restaurant Group & other:
A Day in the Life:
So why, with England kicking off vs Wales at 2pm, did Langton schedule a meeting with one of the shining lights within the UK leisure industry at 3pm?
Bad planning you may say.
But no, I would respond. It demonstrates absolutely no planning at all in that we’re now going to have to watch the first half in the office with a six-pack and then scoot half way across the City whilst sucking mints in order to get to our meeting before the second half kicks off.
And we have the trickiest of pre-meeting negotiations yet to come as we have to move the venue from an office to a pub.
That should be possible as we’re talking about the leisure industry after all. But the outlet will need to have a TV. And a bit of atmosphere and we will have to position ourselves such that we can see and hear the telly whilst remembering to nod and smile and say ‘yes’ and ‘of course’ and ‘absolutely’ while the other guys mouth is moving.
And then we have to remember not to cheer or groan or spit our beer onto the carpet at inopportune moments and that’s stressful, isn’t it? Anyway football, who would have it – on to the news:
RECENT WEBSITE ARTICLES:
• Evolution in the coffee market – here
• London pubs – here
• Other recent notes – here
• Ongoing tweets, older emails found – here
PUB, RESTAURANT & DRINKS PRODUCER NEWS:
• Coffer Peach Tracker has May LfL sales down 1.4% on May last year. Says ‘London sales hold up better than rest of Britain’
• Tracker: LfL sales down 1.4% overall. Within that, pubs up 1.0% and casual diners down a whopping 5.6% LfL.
• Tracker: Says late Bank Holiday may be partly to blame. June figures should even out but will be distorted by football.
• Tracker: CGA Peach’s Peter Martin says ‘the later school half-term break, which this year fell in June against May last year, appears to have been a major factor – demonstrating how important the family market still is to the sector.’ He continues ‘overall, casual dining chains suffered most, with collective like-for-likes down a hefty 5.6% on last May, while pub groups actually saw a 1.0% increase in same store sales for the month, driven mainly by drink-led outlets which were up 4.5%.’ He says ‘it was definitely a tale of two markets last month.’
• Tracker. London outperforms. Says LfL sales +0.9% (down 1.4% for total UK) with London pubs +3.8%.
• Tracker: Says ‘the distortion caused by the school holiday shift will work its way out next month, and operators will be encouraged by early indications of bumper sales in the first week of June, which also enjoyed good weather.’ It says ‘however, there will be caution too, as May’s performance follows a drop in sales in April and a generally flat start to the year overall – and the underlying annual trend shows sector like-for-likes running at just 0.9% up for the 12 months to the end of May.’
• Tracker. With LfL sales down 1.4% but total sales +2.2%, the impact of new openings is still clear to see. The Tracker says groups ‘are still opening new sites, if at a slower rate than previously.’ The total figures given above will only comprise new openings by the 31 companies that contribute data to the Tracker. Large numbers of units are being opened by new entrants and vibrant smaller operators.
• Tracker: Downbeat tone sounded by Coffer Corporate Leisure. Says ‘the pub and restaurant sector has been dealt an undeniable blow by declining consumer confidence over the course of this year. For the most part, this has stemmed from general economic fears that have been worsened by the impending EU Referendum next week. With each of the home nations represented in Euro 2016, excepting Scotland, we hope to see an upturn in next month’s data, but overall, restaurant operators are undeniably struggling while pub companies are experiencing strong like-for-like growth.’
• JDW has reported that, due to the company buying its shares back, the holding of its chairman Tim Martin has now hit 29.0%
• Restaurant Group’s new hire received well. Telegraph hails Barry Nightingale as a turnaround specialist after he spearheaded ‘an 18-month cost-cutting exercise at Monarch, the budget airline that at one time was on the brink of collapse’. It says ‘it is thought that Mr Nightingale could now mirror the complete cost overhaul he undertook at Monarch, which more recently posted £40m of underlying profits before interest and taxes in the year to October 31.’
• Yesterday people around the country celebrated the second Beer Day Britain, which looks to champion Britain’s favourite beverages.
• Chancellor George Osborne has warned the price of alcohol and fuel would rise as part of a new £30bn emergency budget if Britain opted to leave the EU. Writing in the Times, Osborne said that tax rises and cuts to frontline services would be an inevitable response to the ‘profound economic shock that would hit the economy’ of Brexit, which could ‘tip Britain back into recession’.
• Retail sales will fall by 3% in 2017 if the UK leaves the European Union amid a ‘short and relatively sharp retail shock,’ according to the Economist Intelligence Unit (EIU). The report found that retail sales would be 6% lower in 2020 than if the UK votes to remain and concludes that leaving the EU will also lead to an increase in red tape.
• Wagamama, which is backed by Duke Street Capital, has signed a lease on a second New York city site at 55 Third Avenue in Manhattan. Speaking to MCA, David Campbell said: ‘All the research we have done in NYC, and our experience in urban Boston, shows a strong market for the Wagamama brand in the US. While trading was OK in suburban Boston, and we had a great team, we are really, at this stage of our development in the US, an urban brand.’
• Pret CEO Clive Schlee the coffee chain’s site in Broadwick, Soho, has seen a more than 70% jump in sales year-on-year with the introduction of its vegetarian pop-up. Pret is considering whether to extend the life of the pop-up trial beyond its initial four-week period.
• A number of Unilever bosses, both past and present, say the consumer goods giant would be ‘negatively impacted’ if the UK were to leave the EU.
• Sainsbury’s is trialling one-hour delivery with Chop Chop app for customers in Wandsworth, London, just a week after Amazon launched its Fresh grocery business.
LEISURE TRAVEL & HOTELS:
• A lot of businesses are not prepared for Brexit, according to Deloitte’s lead partner for travel Graham Pickett. ‘Tui believes it is prepared, but a lot of businesses are not,’ Pickett told a Travel Weekly Business Breakfast audience. ‘If corporates have not organised their foreign exchange planning, that’s an issue. The second factor is if they are not communicating [the impact of Brexit] with employees who work overseas. Any sensible business should be doing sensitivity analysis around what will happen [but] from what I am hearing, for a lot of corporates, it’s business as usual.’
• The president and chief executive of Visit Orlando has said Florida will remain a ‘destination of choice’ despite Sunday’s night club massacre. UK Foreign Office advice currently says that there is a ‘general threat’ of terrorism in the US.
• A two-year-old boy was dragged into a lagoon near a Disney World hotel in Orlando, potentially further denting the area’s appeal among families.
• Hollywood Bowl Group (Original Bowling Co.) to IPO for around £280m. PE house Electra bought the company c2yrs ago for £91m and last year added rival chain Bowlplex for c£30m. The enlarged operator has 54 sites. CEO Stephen Burns says ‘we are very excited about the next stage in the development of Hollywood Bowl Group, and believe we have all the attributes to succeed as a listed business. We have achieved a huge amount in the past few years, revolutionising the customer experience and transforming the business through investment and acquisition. We provide an outstanding family entertainment experience and we are looking forward to taking that experience to more and more people across the UK. The IPO will allow us to continue to build the momentum of the business, providing a solid platform for further growth.’
• Disney has opened its first theme park in mainland China in what CEO Bob Iger described as the group’s ‘biggest step’ ever taken. There has been criticism in the Chinese media about the cost of tickets for visitors.
FINANCE & MARKETS:
• The UK unemployment rate has fallen to its lowest level since October 2005 of 5%, according to ONS figures which had total unemployment at 1.67 million in the February-to-April period. The employment rate also remained at a record high of 74.2%.
• Earnings excluding bonuses rose by a better-than-expected 2.3% year-on-year thanks in part to the new National Living Wage, according to the ONS. Some 1.8 million workers benefited from the implementation of the NLW, which supports pay at £7.20 an hour for workers aged 25 and above.
• US Fed leaves rates unchanged but signals its intention to raise them two times in the remainder of the year
• World markets: UK & Europe up yesterday but US lower. Far East down in Thursday trading
• Oil price slips a little further. Now trading at around $48.60 per barrel.
• EU trade surplus slipped to €27.50bn in April from €28.60 in March.
RETAIL NEWS WITH NICK BUBB:
RETAIL NEWS WITH NICK BUBB:
• Poundland: Ahead of today’s finals from Poundland, the South African group Steinhoff (which suffered a humiliating rebuff to its previous plans to buy Argos and Darty) announced yesterday that it is weighing up a bid for Poundland and it seems to mean business this time, as it has announced today that it has a 22.8% stake in the group. Needless to say, there is no mention of this in the statement with the final results, which flags that “It’s been a challenging yet transformative year for Poundland” after the botched 99p Stores acquisition. And Poundland keep their powder dry in terms of the outlook, although there is a Q1 trading update (with underlying sales up by 29%, whatever that means). Management will be pressed for LFL sales information at the 9am analysts meeting, although new CEO Kevin O’Byrne (who faces a baptism of fire) doesn’t take over as
• Today’s Press and News: The news that the South African retailer Steinhoff is looking at a bid for Poundland gets a decent amount of coverage (with Lex column in the FT struggling to understand the reasoning behind the move), but the main focus is obviously on the news that Philip Green was in combative form in his marathon appearance before MPS at the BHS hearing yesterday and promised to sort out the BHS pension fund. The Telegraph highlights that MPS now want to interview his wife Tina…and the Business editorial thunders that he gave a “master class in how not to face a grilling”, whilst the Business editorial in the Times noes that he used the word “respect” as a form of expletive…
• Wolfson Watch: If Philip Green’s appearance before MPs yesterday morning was a red-letter day, so was the reclusive Simon Wolfson’s appearance yesterday evening in the City to give the prestigious BRC Annual Lecture. His views on the scandalous lack of new road-building and house-building in the UK and the wretched state of the planning system are well known to analysts, as he tends to go on about such topics every time he hosts a results presentation (with the planning officers in Maidstone and Camberley singled out for treatment). But they appeared to be a surprise to the retailers in the audience, who may have been expecting some trenchant observations from the Next boss on the UK retailing scene. Instead, he argued that “We need to push for the choice of uncomfortable/challenging economic growth over comfortable/gentle economic decline”.
• Grocer Awards Watch: Tuesday night saw the prestigious “Gold Awards” for the Food industry organised by Grocer magazine and Aldi was crowned “Grocer of the Year”, fighting off Lidl and Ocado to scoop the trophy, after the judges said it offered up a “compelling” case for victory.
• Retail Week “Power List 2016” Watch: Last year, the estimable Dixons Carphone CEO Seb James rocketed up the rankings to take the top spot in the Retail Week “Power List 2015” as the most influential person in UK retailing. But today RW has announced that the ubiquitous Jeff Bezos of Amazon (who was 2nd last year) has overtaken him this year
• Royal Ascot Watch: The “toffs” in their silly hats will be out in force again for the third day of Royal Ascot and the intrepid tipster “Honest Nick” will be chancing his arm again. Yesterday started very well, as his e/w tip Ribchester romped home the 7-1 winner of the 2.30pm, but Blond Me came nowhere in the 3.40pm and the Japanese superstar A Shin Hikari was a big disappointment in the 4.20pm. Today, Honest Nick is tempted to include the Queen’s horses in his “3 to Follow”, but that might be too good to be true. Scotland would be a topical (e/w) bet in her big race, at 4.20pm, although Clever Cookie is a more likely winner. Before that We are Ninety (e/w) has a good/topical chance in the 3.40pm and then Out and About is the banker in the 5pm.
YESTERDAY IN A NUTSHELL – SEE LIVE TWEETS ON WEBSITE:
• Key Early Tweets. An updated pubs code was published yesterday. Drafting errors are said to have been ironed out.
• Fitch Ratings has reviewed the UK pub sector & concluded that the outlook is still negative.
• Fitch says re pubs ‘there are new drivers of ongoing structural decline.’ It says younger people may shun the pub
• Fitch on pubs: Says ‘we see a potential slowdown in organic revenue growth as estates move towards being fully invested.’
• Restaurant Group has announced that Barry Nightingale, last CFO of Monarch but also ex-Airtours, Betfred, is to join as CFO
• DP Poland has reported that NE Director Chris Moore has bought 1.2m shares at around 32.5p per share. Mr Moore now owns 2.19% of Co.
• Sky has announced a 10% price increase for its commercial customers from 1 August 2016 ahead of the new football season
• STR’s May Pipeline Report for Europe shows 145,299 rooms in 960 projects under contract, up 9% year-on-year
• Security at US theme parks has been stepped up following Sunday’s shootings in Orlando
• UK inflation rate (CPI) remains unchanged at 0.3% in May. Transport costs rose but clothing & other costs fell
• UK house prices rose by 8.2% in the UK as a whole over the last year reports the ONS’s UK House Price Index
• Other Tweets: Move towards ‘risk-off’ continues with bond yields falling, currencies unstable, oil down and gold up. Still a week to go till vote
• Gold/oil edging up. Takes 26.3 barrels to buy an ounce of gold versus 24.0 only a week ago. Admittedly it was 34.5 in February
• Commodity prices largely up over last few weeks. Exception is red meat. Feeder cattle prices down 35% over last year
• Restaurant Group’s new CFO Barry Nightingale starts work next week. Future of CEO Danny Breithaupt still uncertain?
• Fitch makes some good points re UK pubs. Are the young shunning them? Is it a matter of money or are coffee shops more popular?
• STR says European hotel pipeline up 9% y-o-y. A case of ‘brick wall approaching, stamp on the gas’?