Langton Capital – 2016-06-17 – Wet led pubs, buybacks, Hard Rock, easyHotel & other:
A Day in the Life:
So the football was rather enjoyable yesterday.
And yes, seeing the TV only from time to time through all those waving arms and beer glasses didn’t perhaps offer the same view as one could have had in one’s living room, but it’s just not the same, is it?
And getting an involuntary beer shampoo in extra time both added to the enjoyment and the cost of the experience as I’ll need to do something about my jacket and I don’t take too kindly to buying a pint and only drinking a half.
But good times were had by all. Or by nearly all, at least and also, get this, the Mighty Hull City is currently in 7th position in the Premier League. We may not hold that position come August but, for the moment, having played none and lost none is something to celebrate. On to the news:
RECENT WEBSITE ARTICLES:
• Pubs & restaurants, trading trends – here
• Evolution in the coffee market – here
• London pubs – here
• Other recent notes – here
• Ongoing tweets, older emails found – here
PUB, RESTAURANT & DRINKS PRODUCER NEWS:
• The chairman of Carluccio Simon Kossoff is to step down from the group at the end of next month. The group’s owner, Renuka Jagtiani, reports ‘Simon has been integral to the success of Carluccio’s since its inception in 1999; guiding its growth and development from start up to one of the country’s leading restaurant brands. We want to wish him the very best for the future, he will be missed by the whole team.’
• AlixPartners CGA Peach pub & bar monitor reports that pub numbers continue to decline whilst casual dining outlet numbers are rising. It says ‘though this year-long trend is generally positive, it is also less clear than it initially appears.’ It says ‘although many, if not most, casual dining operators continue to expand, the overall pace of restaurant openings is slowing. The number of drink-led licensed premises fell by 1.2% in the year to December 2015, equivalent to 808 sites, with closures occurring in every region of Britain.’
• Pub & Bar Monitor says closed pubs are predominantly wet-led community pubs with numbers for this sector down 12.6% in 6yrs.
• Pub & Bar Monitor says ‘pub closures have not bottomed out, but this [recent] data suggests that point might not be too far away.’
• Pub & Bar Monitor says restaurant numbers rose by 1.6% last year. Langton has suggested that some growth is at the expense of LfL sales. The monitor says that modest growth across pubs and restaurants combined ‘won’t set hearts racing, but after years of decline, it is pleasing nonetheless.’ It says ‘restaurant trends, though, are more complex than they first appear, as the 2015 growth of 1.6% is not particularly impressive in the context of 15.0% growth in the past five years.’
• Over the last 3 trading days, JDW has bought back another c214k of its own shares for cancellation at just over £7 per share.
• DP Poland reported yesterday that NE Director Chris Moore bought another 100k shares in the company at 33p each. Mr Moore now owns some 2.96m shares amounting to 2.3% of the company as a whole.
• Software provider Epos Now found in their sample of 500 UK pub customers that pub revenues over the first weekend of Euro 2016 rose by as much as 26% year-on-year. Pubs in Wales saw sales rise by some 41% on the 2015 average for a Saturday in June, as the country turned out to watch its team play in its first major football tournament since 1958, whiles sales in English pubs increased 23% and those in Northern Ireland grew by 29%.
• Philadelphia has become the first large city in the US to introduce a tax on sweet carbonated drinks, adding to increasing global pressure to limit sugar consumption. The city’s council passed the measure 13-4 after two previous failed attempts and could provide a boost to other cities considering the tax, including San Francisco and Boulder, Colorado.
• The number of convenience stores in the UK grew by 21% to 16,426 in the five years to the end of 2015, according to Local Data Company figures. From 2011 to 2015, the big four supermarkets have opened convenience outlets at a far faster pace than for larger store formats, although growth may have now peaked.
• UberEats has launched and delivers food from 150 restaurants that do not typically deliver in central London via a network of bicycle and moped couriers. The new service can be accessed through new iPhone and Android apps, and connects to the same credit card registered on the phone’s Uber account. Alex Czarnecki, general manager of UberEats in London, said: ‘I think people will come to UberEats for the same reasons they come to Uber in the first place. This is going to be significantly faster than competitors.’ UberEats plans to extend to Zones 2 to 4 and into other parts of the country in the coming months.
• Pho, Comptoir Libanais, Chilango, and Patty & Bun have all signed up to UberEats, which is now available in central London seven days a week. Uber said it will expand its delivery service beyond central London in the coming weeks.
• Patty & Bun has secured a fifth site in London on Redchurch Street, which will open next month, and has lined up another unit in Goodge Street. The Redchurch site will have a 2am late licence, a private room downstairs, and a stripped back version of the main Patty menu.
• Epic Pubs is opening its third pub, the Mill Street Pub & Kitchen in Oakham, Rutland, which is due to open on 21 July following an extensive refurbishment. The site is leased from Punch. Managing director of the pub group, Andrew Coath, said: ‘We are creating a collection of pubs that as well as offering beautiful boltholes for dining and drinking, are investing back into their local communities. Further sites are planned, including more with bedrooms.’
• Harry Ramsden’s has secured the third site in its partnership with Punch in The Bull’s Head near Wakefield, west Yorkshire, writes MCA.
• Hertfordshire-based brewer and operator McMullen saw profit before tax rise 12.5% to £10.4m on £75.4m of sales (up 4%) in the year to 26 September.
• Figures from the Office for National Statistics show retail sales volumes grew by a much better than expected 0.9% in May month-on-month. The increase was helped by a 4.3% pick-up in clothing sales, which suffered during a cold April.
• The price of sugar is touching 30mth highs as concerns over supply impact the price. Whilst currently the subject of some debate as to whether or not it should be used so heavily, sugar is nonetheless a major ingredient in a large number of food products.
• Tesco announces sale of Dobbies Garden Centres for £217m. CEO Dave Lewis says ‘through their hard work and dedication to customer service, Dobbies colleagues have built a great business, and I would like to thank them for everything they have done. It was a difficult decision to sell the business, but we believe this agreement will give Dobbies a bright future, while allowing our UK retail business to focus on its core strengths.’ A bright future, only not within Tesco.
LEISURE TRAVEL & HOTELS:
• The US hotel industry posted positive results in the week ending 11 June, with occupancy virtually flat (+0.2% to 73.7%). Average daily rate was driven up 3.7% to $126.14, generating revenue per available room growth of 3.9% to $92.97.
• Hard Rock International and GLH Hotels have announced plans to convert London’s Cumberland Hotel into a 900-room Hard Rock Hotel. ‘From our foundation in 1971 with the opening of the first Hard Rock Cafe in London to the many days and nights spent at the legendary Hard Rock Calling festival in Hyde Park, London has always been a special city as the birthplace of our brand,’ says Hamish Dodds, chief executive officer at Hard Rock International. ‘We look forward to completing the circle and establishing the Hard Rock Hotel in London, a legendary musical city that brought the greatest styles of rock to the world stage.’
• EasyHotel has announced that its application for retrospective planning permission re 78 of its 160 rooms at its Old St unit has been refused. It says ‘easyHotel had previously been granted planning permission, on appeal, for the conversion of the building to a hotel in 2011.’ The uncertainty may not be welcomed by the market but the group adds easyHotel will be appealing this decision, a process which is expected to take at least six months.’
• More than two thirds of airline passengers are missing out on as much as £460 each by failing to claim compensation for airline delays, according to research by money.co.uk. Industry analysis by the online firm reveals that almost half a million travellers are likely to suffer flight delays of more than three hours this summer. EU regulations state these travellers could be entitled to claim compensation from the airline they travel with, but one third of those surveyed did not know they could claim compensation.
• Crown Resorts’ shares rose 13% as the Australian operator said that it will spin off its international interests into a separate business. The group is 53%-owned by James Packer. The group says ‘we believe that Crown Resorts’ high quality Australian resorts are not being fully valued and the Crown Resorts share price has been highly correlated to the performance of its investment in Macau.’ The Macau gambling industry has recently been under pressure as the Chinese government has been cracking down on corruption.
FINANCE & MARKETS:
• UK rates held at 0.5%, QE remains at £375bn.
• Bank of England votes unanimously for no change, says 12mth inflation (at 0.3%) ‘remains well below 2% inflation target’. It says ‘this shortfall is due predominantly to unusually large drags from energy and food prices, which are expected to attenuate over the next year. Core inflation also remains subdued.’
• Bank of England says risks to the global economy remain. Says ‘growth in the United Kingdom’s major trading partners is expected to continue at a modest pace over the next three years.’
• B of England says referendum is causing slowdown. It says ‘while consumer spending has been solid, there is growing evidence that uncertainty about the referendum is leading to delays to major economic decisions that are costly to reverse, including commercial and residential real estate transactions, car purchases, and business investment.’
• The Yen has jumped to its highest level for 3yrs vs Euro and 2yrs against dollar as traders search for safe havens.
• World markets: UK and Europe down yesterday but US markets up. Far East also higher in Friday trading.
• Oil price up around 50c from yesterday’s lows. Brent Crude now trading at around $47.75 per barrel
RETAIL NEWS WITH NICK BUBB:
• B&M: If you’re wondering where all the analysts have gone today, the answer is that B&M have taken them to sunny Hamburg in Germany to visit their growing business there. And with a market cap of £2.7bn B&M has some pulling power. The visit will comprise store and distribution centre tours, including one of our new trial format stores, plus presentations from company and local management: Simon Arora, B&M’s CEO, will host the event with Ingo Stern, CEO of Jawoll.
• Tesco: We don’t know whether B&M’s Chairman, one Terry Leahy, is in Hamburg today on the analyst’s trip, but his name crops up today in connection with the Tesco announcement about the sale of Dobbies Garden Centres to a private equity consortium for £217m in cash, as he was the Tesco CEO when Dobbies was bought for £156m back in 2007. It was seen as an odd move at the time, but was designed to vaguely help Tesco’s environmental image, but it has not been a great success. The current CEO Dave Lewis says today in the announcement that “It was a difficult decision to sell the business, but we believe this agreement will give Dobbies a bright future, while allowing our UK retail business to focus on its core strengths”. A number of people were interested in buying Dobbies, including its main rival Wyevale and the ubiquitous Edinburgh Woollen Mill group,
• JD Sports: The trading update today from JD Sports, ahead of its AGM at 1pm up in HQ in Bury, doesn’t give much away, but it sounds good, as JD Sports are still doing well, with the lugubrious JD boss Peter Cowgill saying: “After a further boost to sales from Euro 2016…we are well positioned to deliver an excellent H1 result”.
• News Flow Next Week: The uncertainty about the outcome of the EU Referendum on Thursday will obviously be the big talking point for most of next week, but meanwhile Retail life goes on. In terms of company news, the week kicks off with the Majestic Wine finals on Monday and we then get the Debenhams IMS trading update on Wednesday, whilst Thursday (which looks like a classic day to bury bad news) brings the Tesco Q1 update and AGM…