Langton Capital – 2016-07-20 – June Tracker, Deliveroo, Revolution Bars, Brexit & other:
A Day in the Life:
So while there may be some debate as to the dog’s favourite word (it’s got to be either ‘rabbit’ or ‘walkies’), there’s no doubt but that his favourite sound, by a wide margin, is that of food hitting the floor.
Because, despite the fact that he’s so lazy it’s clearly a major effort to lift an ear when there’s nothing much going on, he can be with you in a flash if you drop a piece of carrot or a chip, let alone a sausage or a piece of burger on the floor.
He’s a firm believer in the old adage that, if it’s on the ground, it’s in the hound and, to that end, he’s got to put himself where food is, in order to be well-positioned as and when the opportunity to snaffle a mouthful arises.
And, though we might well have been able to train it out of him if we’d laboured at it for days, weeks and months when he was a puppy, it takes a brave man to get between a piece of wasted burger and an 8 stone dog’s teeth hence, with that in mind, it suits us both that I just scold him with my hands, and particularly my fingers, well out of reach.
Holidays from tomorrow, shorter email on the way. On to the news:
RECENT WEBSITE ARTICLES:
• Recent notes – here
• Ongoing tweets, older emails found – here
PUB, RESTAURANT & DRINKS PRODUCERS:
• June Coffer Peach Tracker has LfL sales +1.8% with total sales including new openings up by 5.7%.
• Tracker: June numbers helped by better weather, shift in half-term holiday & football. Pubs outperformed casual diners. Some observers may suggest that, aided by the above tailwinds, the June numbers are somewhat sluggish.
• Tracker: Pub LfL sales were +2.0% for the month whilst restaurant sales were +1.4%. Pubs should have benefitted from football & sunshine. CGA Peach’s Peter Martin comments ‘the later school half-term break, which this year fell in June against May in 2015, was a big factor in the improved performance, having had a corresponding negative impact last month.’ He continues ‘the truth is that the eating and drinking out market remains sluggishly slow with underlying growth of only around 1% year on year. The sales growth in June essentially all came in the first week, which enjoyed a double digit boost. Our weekly figures show that the rest of the month was generally negative, despite football being on TV.’
• Tracker: Peter Martin says ‘the sales growth in June essentially all came in the first week’. Little data yet for post Brexit vote trading. Peter Martin comments ‘pubs did benefit from the football, with drink-led pubs and bars, especially those outside of London, up 3.8% on last June, but that was generally evened out by a drop off in eating out. There is also some evidence that drink-led businesses have benefitted from the National Living Wage putting a few more pounds in the pockets of younger, blue collar workers, although that’s not replicated across the market.’
• Tracker: London performed less well that the provinces in June at +0.1% with the latter at +2.5%.
• Tracker: Slower growth down to ‘both increased competition and more uncertain economic times’. Y-o-y LfL growth only 1.1%
• Tracker: Brexit period trading? Data ‘suggest little difference either way, although that might be down to the weather.’
• Tracker: Coffer Lyons says ‘corporates are winning trade from independents.’ It goes on to say headwinds will be with us through 2017
• Tracker: Says a weaker pound should boost tourism ‘but will lead to increased cost pressures for all operators.’ The Tracker suggests that prices may have to rise over the coming months.
• Revolution updates on year to end-June, says total sales +6.9% and LfL sales +2.3% in the period.
• Revolution FY update. Group opened four sites in year, says results ‘are expected to be in line with the Board’s expectations’. CEO Mark McQuater reports ‘we are pleased with performance this year and particularly pleased with the performance of our new openings, all of which are trading ahead of our pre – investment expectations.’ He says ‘we continue to make progress in developing our new site pipeline and look forwar d to opening a new Revolución de Cuba bar in Reading in the autumn. We are today announcing the continued implementation of our rollout plan with three more new sites being confirmed for FY17. We have exchanged contracts, with full licensing and planning consents, on sites in Harrogate, Glasgow and Aberdeen.’
• Just Eat has announced that it has completed the sale of hellofood Brazil to IF-JE1, its Brazil joint venture, as previously contemplated. David Buttress, CEO of JUST EAT, said: “The iFood joint venture in Brazil has been a huge success for JUST EAT and has enjoyed impressive growth since it launched in 2014, thanks to its intimate understanding of local markets and strong track record of executing against its strategy.’ He continues ‘these transactions with iFood will create additional volume and scale that will generate significant benefits in these markets. They will provide the perfect platform for iFood to expand further in the largest and most exciting markets in Latin America, creating real value for JUST EAT and its shareholders.’
• Deliveroo is expanding into alcohol delivery with a host of vendors following its successful trials with BrewDog, Majestic Wines, and others. The delivery service is promising an average delivery time of 20 minutes at a time when competition in the delivery arena is heating up, with UberEats and Amazon set to enter the fray.
• Enterprise Inns has partnered with The Marylebone Leisure Group (MLG) to launch its fifth Managed Expert operation, called Marmalade Pub Company. MLG has six sites across London, including the Marylebone, Clerkenwell & Social, Bar Italia in Uxbridge and The Princess of Wales in Primrose Hill, and focuses on high-quality infused spirits and liqueurs made in-house.
• Charles Wells has joined up with Fitzrovia Pub Company to invest £600k into the refurbishment of The Anchor at Aspley Guise, near Milton Keynes.
• Imbiba’s events-focussed group, Camm & Hooper, has secured its fifth site – Six Storeys on Soho, in Soho Square, which is slated for a November opening. The concept is described as a member’s club without a membership fee and will consist of a ground floor and first floor restaurant and bar, as well as another four stories available to hire out individually.
• The average pay of a hospitality worker over the age of 25 was 27p higher than the national living wage at £7.47 as of June, according to research from Fourth.
• Wahaca is set to roll out a range of Soft Taco Kits in 900 Tesco stores from 25 July to allow ‘loyal fans to create a taste of Mexico in their own home’.
• Ruth & Robinson says the Black Cap in Camden ‘may well remain empty’ due to campaigners’ concerns that it should remain an LGBT venue. A spokesperson for Ruth & Robinson told MCA: ‘This venture would have been inclusive to the whole community and maintained a pub in the centre of Camden’s High Street. In addition, we presented what we believed was an offer that was sympathetic to the history of the Black Cap, celebrating past performers and continuing the tradition of cabaret while providing significant new employment in the area.’
LEISURE TRAVEL & HOTELS:
• A central London Travelodge’s freehold has been bought for £42.3m by Chinese firm YT Group. Arguably deals already in progress are less at risk than are deals not yet started
• Holidaymakers who booked with Lowcost Holidays are likely to receive compensation of just £7.50 each, its administrator has warned. The company has placed a ‘very limited’ bond of £1.09m with the Spanish travel agency regulator, compared to expected claims in excess of £50m.
• Travel stocks fell again yesterday as more details of the fallout from the failed Turkish military coup, with Tui finishing at 942.5p and Thomas Cook down at 63p.
• Twelve hotel groups have expressed an interest in running the iconic grade I listed Admiralty Arch in London, which was built in 1910.
• The Original Bowling Company has invested £300k in the refurbishment and rebranding of Bowlplex at Basingstoke Leisure Park.
• The Hippodrome Casino saw losses close to double to £7.35m as revenue grew by 11.9% for the year to 31 December 2015. Operating profit, before £9.48m of financial costs (up from £3.9m), jumped 235% to £3.32m. The London-based casino’s net cash inflow from operating activities increased to £4.8m, though there was some £23m of creditors falling due within the period, compared to c£12m in the year ahead.
FINANCE & MARKETS:
• General news:
o UK inflation picks up a little. June CPI rose by 0.5% per ONS compared with 0.3% in the year to May. Air fares & fuel price increases were said to be behind the rise. An ONS spokesman said ‘the rising cost of European air flights, possibly boosted by the Euro football championships, was the biggest reason for this month’s increase in inflation. The growing cost of oil, feeding through to petrol prices, also helped nudge up CPI.’
o World markets: UK up a shade yesterday but Europe down. US markets mostly down & same in Thurs Far East trading
o Oil price up a shade at around $46.85 per barrel
o The ONS says that the average house price in the UK in May (pre Brexit vote) this year was +8.1% over the last 12mths
• Brexit – economy:
o The European Commission has suggested that the UK could slip into recession next year as a result of Brexit uncertainty
o EC lowers 2016 estimate for UK growth from around 1.8% to c1.3%
o IMF says UK Brexit vote has “thrown a spanner in the works” of its global growth forecast. It has edged down its estimate for global growth in 2016 from 3.2% to 3.1%.
o IMF cuts UK growth estimate from 2.2% to 1.3% next year. European Commission is looking for a worst case minus 0.3%
o IEA says foreign takeovers should not attract more scrutiny than those from UK buyers. It says ‘the concept of a foreign takeover is largely meaningless’
• Brexit – property:
o Investment Week has suggested that buyers are beginning to bargain hunt in the beleaguered London commercial property market
o L&G has cut the charge on cash withdrawals from its property fund down to 10%.
o LonRes says that transaction volumes in central London fell in Q2 to a level lower than that seen in 2008.
YESTERDAY IN A NUTSHELL – SEE LIVE TWEETS ON WEBSITE:
• Some of our morning tweets: DP Poland updates on H1 trading, says LfL sales +28% in H1 with system sales up by 57% and 5 new stores opened
• DP Poland H1 update: Group now has 17 corporately managed & 11 sub-franchised units operating in 6 Polish cities
• DP Poland H1 update: Group has achieved 15 consecutive Qs of double-digit LfL growth. Sub franchisees growing
• DP Poland H1 update: CEO Peter Shaw says is seeing ‘better than anticipated sales performance of our newer stores’
• SSP updates on Q3, says performance ‘in line with the expectations set out in our 2016 H1 announcement’
• NPD reports decline in consumer confidence though figure remains positive. Numbers refer to Q1 & are rather historic.
• Institute for Fiscal Studies says young people have suffered drop in income since financial crisis while pensioners have enjoyed a big rise
• B of England’s Martin Weale says ‘nation’s income & thus people’s incomes, are likely to be reduced as a result of choice made on 23 June’
• Weale says incomes may fall by c3% to c12% (a wide range). Says trade & competitiveness may be harmed. Confidence also hit
• Accountants PwC say that up to 100k jobs may be lost in the financial services sector & c950k across the UK as a whole
• SocGen suggests that London commercial rents could fall by 24%. It says yields could widen, values drop by perhaps a third
• Later Tweets: EU contributions. UK a net beneficiary re science & tech spending. Hopefully cut here won’t dissuade the next ARM from setting up in UK
• Rightmove says house prices down 0.9% in June. Prices still +4.5% on year, however. Biggest drops Yorks. & Wales
• DP Poland steps up a gear. LfL sales +28% y-o-y. More to go for. Circa £50m (cap less debt) gets you 28 stores & growing
• Pensioners better off, youngsters worse off. Will impact spending. Not to say incentive to work, pay taxes etc. Thanks again, Baby Boomers
• Baby Boomers had 60s architecture, 70s fashion, 3dy week, etc. Now, in retirement, they’re getting better and better off at cost to young
RETAIL NEWS WITH NICK BUBB:
• Vertu Motors: The fast-growing Vertu Motors has issued a detailed AGM trading update this morning, to reassure investors about the outlook for the UK car industry post-Brexit: “The Board, at this stage, does not anticipate any major changes to the franchise contract position under which the Group transacts with our Manufacturer partners resulting from the UK leaving the EU…Whilst sterling has declined against the Euro following the Referendum result, it remains at levels above the lows seen in 2008/9, and more recently throughout much of 2013, and at levels which the Board believes remain attractive for European Manufacturers to export vehicles to the UK…In line with trends in recent months, since the Referendum new retail vehicle sales volumes have been behind last year. However, the important revenue streams of used cars and aftersales have not seen any negative impact to
• John Lewis Partnership Sales Watch: There was again no sign of a post-Brexit slump at the great Retail bellwether John Lewis last week (w/e July 16th), with gross sales up by 3.8% on last year (nearly 2% up on a LFL basis), as “preparing for the height of wedding season” boosted women’s formalwear and accessories and Home sales (with Gift Wrap sales soaring 136%). Over the last 24 weeks John Lewis sales are running up by 5.2% (a bit under 4% up LFL), with Electricals up by 8.4%. And the warmer weather at the weekend helped John Lewis’s sister company, Waitrose, which saw gross sales 2.9% up (up c0.5% LFL) last week. Waitrose sales over the last 24 weeks are up by 2.3% gross (a tad down LFL).
• Kate Swann Watch: The highly estimable Kate Swann, the former CEO of WH Smith, is now CEO of the Travel restaurant franchising group SSP and on the back of the solid Q3 update yesterday (with LFL sales up by 1.8%) they announced that “The second half of the financial year has started in line with our expectations. Whilst a degree of uncertainty always exists around passenger numbers in the short term, we are well placed to continue to benefit from the structural growth opportunities in our markets and to create further shareholder value”.
• Digital Innovation Watch: If you think it’s literally too hot to shop, then, as you ferret around Online on your laptop/PC/smartphone, ordering, say, a giant paddling pool or another electric fan, then spare a moment to look at the recently published Digital Innovations Report 2016 produced by the excellent Retail Insider blog of the estimable Glynn Davis. Interestingly, according to the distinguished panel of judges, the top new ideas over the last year all came from big companies, rather than small start-ups based on so-called “Silicon Roundabout” in uber-trendy Shoreditch. Top of the tree was Amazon Echo: “Looking like a wireless speaker, which now comes in three formats, it is capable of voice interaction, music playback, making to-do lists, ordering goods, setting alarms, as well as providing weather, traffic and other real-time information. It can also