Langton Capital – 2016-07-22 – William Hill, Fuller’s, Britvic, Starbucks & other:
A Day in the Life:
Langton is currently on holiday so a shortened email will be going out for a little while. On to the news:
PUB, RESTAURANT & DRINKS PRODUCERS:
• Starbucks Q3. Comparable store sales +7% in China, +4% in US & +4% in the rest of the world
• Fuller’s has updated on trading in the first 16wks of the current year saying the group has had a ‘solid start’ to FY17.
• Fuller’s LfL managed sales +2.1% in first 16wks of this year. CEO Simon Emeny comments ‘we have seen solid growth in our Managed Pubs business during the first part of the new financial year against tough comparatives from last year and despite some unseasonably poor summer weather and an uncertain economic and political environment.’
• Britvic yesterday updated on Q3 trading saying that revenues were up 5.3% on last year. Organically, however, they fell by 0.7%. CEO Simon Litherland says ‘our Q3 performance was stronger than the first half of the year despite tough trading conditions and the wet weather in June’. The group says ‘we are well placed to continue to deliver our long-term strategic priorities and create value for our shareholders.’
• Coaching Inn Group has reported a three-fold increase in revenue at the newly-refurbished Kings Head in Richmond
• GBK will look to hit 100 sites before the end of Q2 2018 reports the M&C.
• ABInBev has won approval in the US for its purchase of SAB Miller
• Premier Foods yesterday updated on Q1 trading saying that group sales were +1.9% and branded sales were +0.8%. CEO Gavin Darby comments ‘we are very pleased by the further improvement in our sales performance, which demonstrates four consecutive quarters of growth and continued momentum in the business. Our category strategy of investing behind our brands continues to deliver results, despite the wider deflationary grocery market in the UK. While the economic environment is more uncertain following the EU referendum outcome, our immediate financial exposure is expected to be limited. Given our strong brands and UK manufacturing cost base, we believe we remain well placed to make progress and our expectations for the full year remain unchanged.’
LEISURE TRAVEL & HOTELS:
• STR reports that US hotel REVPAR fell by c1.9% in the week to 16 July. Occupancy was down 1.4% but rate was higher
• EasyJet has warned that the impact of any Brexit uncertainty will continue to overshadow the airline industry. CEO Carolyn McCall reports ‘the economic and operating environment has been difficult in the third quarter due to a number of factors including air traffic control strikes and other industrial action, runway closures at London Gatwick and severe weather.’
• William Hill has parted company with its CEO. James Henderson is stepping down with immediate effect. Current CFO Philip Bowcock will take over the role on a temporary basis
FINANCE & MARKETS:
• Commercial property investment is down 45% in Q2 reports the RICS. This covers the period both before and immediately after the 23 June Brexit vote.
• RICS points to a ‘sharp drop in confidence and investment demand’ with regard to property in the wake of the 23 June vote
• ECB holds rates but says further stimulus is possible given ‘great uncertainty’ in world markets
• World markets: UK mixed yesterday but Europe mostly down. US down yesterday & far East lower on Friday trade
• Oil price off a little at around $46.35 per barrel
RETAIL NEWS WITH NICK BUBB:
• Planet ONS Watch: Ahead of yesterday’s Office of National Statistics Retail Sales figures for that strange parallel world, the Planet ONS, for June (the 5 weeks to July 2nd) we highlighted that our friends at Capital Economics looked for a 1.0% dip in “seasonally adjusted sales volume” month-on-month (+4.6% year-on-year) and thought that June reversed some of the previous strength in Retail Sales volume. And, would you believe it, they were right, as volumes fell back by 0.9% (up 4.3% year-on-year), with the ONS blaming weak Clothing sales and poor weather. However, most sensible people only look at the non-seasonally adjusted sales value figures and here the embattled ONS reported that growth slipped back from 3.1% in May to just 1.1%, despite improbably good trading for “Small Businesses”…
• BDO High Street Sales Tracker: As for July, we flagged on Wednesday that John Lewis are still doing pretty well so far, but today’s BDO High Street Sales Tracker for small/medium-sized Non-Food chains for w/e July 17th flags that Fashion Store LFL sales slipped by 2.2% last week, despite a weak comp and the warmer weather at the weekend, although, as boosted by Homewares and Lifestyle sales, total Online sales were up by 23.3%…
• Trade Press (1): The front cover of Retail Week magazine features a rather alarming photo of the new PM Theresa May pictured against a shot of a typical High Street, with the headline “What will Theresa May’s arrival in Downing Street mean for retailers?”. RW also has articles about how Ikea’s first new UK “bigbox” store in seven years is tailored to its area (ie Reading) and Lakeland’s first boss from outside the founding family. In terms of news stories, RW focus on the news that McColl’s has agreed to acquire 298 convenience stores from the Co-op for £117m in cash, Ocado will open a physical shop next month as part of the launch of its new “Fabled” health and beauty venture with Marie Claire (the 7,200 sq ft store will be in London’s Tottenham Court Walk), Tesco have been referred to Trading Standards by the NFU for
• Trade Press (2): The bright and bold front cover photo of Drapers magazine today of a fashion model flags that the main feature in Drapers is on the “Spring 2017 Women’s Fashion shows”. In terms of News stories, Drapers highlights that warmer weather lifted the mood across UK High Streets this week and fashion multiples reported a welcome upturn in trading, Fashion retail sourcing bosses and suppliers have expressed concerns over the safety of their workers in Turkey as a result of the social unrest that followed a failed coup at the weekend and the administrator to BHS is to close the ¬first tranche of 20 stores this weekend. Drapers also has a feature on the UK ambitions of the footwear brand Skechers. And in her column the Editor praises the quality of the entries in the Drapers “Independent Awards” to be held on Sept 14th.
• News Flow Next Week: The last week in July kicks off with the Hammerson interims on Monday. Tuesday then brings the latest Kantar/Nielsen monthly grocery market share data and the Apple Q3 out in the US. On Wednesday we get the McColl’s interims and then Thursday brings the Inchcape interims and the Intu Properties interims, with the widely-followed GFK Consumer Confidence Index following first thing on Friday.