Langton Capital – 2016-07-28 – Beer sales, Coca Cola, Marriott, UK GDP & other
A Day in the Life:Langton, currently ensconced in Northern Arizona, has just returned from braving the crowds, the heat and the vertigo at the Grand Canyon. It had to be done. A shortened email will be going out for a little while. On to the news: The News:PUB, RESTAURANT & DRINKS PRODUCERS: • The BBPA has reported that 31m pints of beer were sold in the UK in Q2. It says ‘buoyant British beer sales in Q2 shows further signs of reversing a long period of decline, with sales up 1.5 per cent, it has been announced today.’ • BBPA says ‘buoyant off-trade sales during the European Football Championships were a big source of the boost [to beer sales], with sales rising by 4.8 per cent. On-trade sales (pubs, bars and restaurants) fared less well, slipping by 1.9 per cent, although this was one of the lowest Q2 drops for the on-trade in recent years.’ • BBPA CEO Brigid Simmonds reports ‘these are yet more encouraging figures, and the football has given a real boost to sales. It is quite clear we owe a huge debt of thanks to the cuts in beer duty from 2013. I hope the Government continues with this pioneering change in approach, and we continue to see support for fairer taxes for British beer.’ • TUC reports that workers in the UK have suffered the biggest fall in wages across the world’s richest countries since the financial crisis. • McDonald’s is to create 5,000 new jobs in the UK by the end of next year. It currently employs around 115k people in the UK • Kona Grill reports same store sales growth of 2.5% in Q2. The co says ‘same-store sales rose 2.5% during the second quarter despite the soft casual dining environment and we outpaced the industry benchmark by 370 basis points.’ • IGD has suggested that the value of food-to-go will rise by 6.8% this year. The market should be worth c£16bn over the year as a whole. IGD says ‘there are some really clear development opportunities for food to go in the UK, driven by the growth of little and often shopping, the rise in popularity of street food and coffee culture, and shoppers’ increasingly flexible lifestyles. Many suppliers are now starting to expand beyond grocery retail and food to go could present them with considerable opportunities. IGD is now looking to support these suppliers, as we develop our own coverage of this dynamic market, its key players and its shoppers.’ • Coca Cola has reported Q2 numbers saying that net revenues fell by 5% in the period but organic revenue grew by 3%. Muhtar Kent reports ‘despite challenging macroeconomic conditions, structural changes and foreign exchange headwinds which contributed to a 5% decline in reported revenues, we delivered 3% organic revenue growth, gained value share in total non-alcoholic ready-to-drink beverages, expanded our operating margins and grew profits in line with our expectations.’ • Welcome Break has suggested that it is already seeing a drop off in revenue growth in the wake of the Brexit vote. In the longer term, the group sees the lower Pound as a potential positive LEISURE TRAVEL & HOTELS: • UK Inbound has called for continued access to the Single Market in order to ensure the free movement of goods, services & people in the wake of the 23 June Brexit vote. • Flybe has said that Brexit and terrorist fears are presenting “significant external challenges” to its business. The group says ‘travel demand may weaken further if consumer and business confidence suffers, not least against a weaker pound.’ • Marriott International has reported Q2 numbers showing EPS up 10% over the same period last year. The group’s CEO, Arne M. Sorenson, reports ‘Marriott’s second quarter results demonstrate the company’s strength. Leading brands and a focus on bottom line results delivered strong results in the second quarter. While hotel performance reflected generally slower economic growth, leisure travel demand remained robust and group business performed well.’ • A report from Begbies Traynor has suggested that travel agents could suffer as consumers cut back on foreign holidays post-Brexit FINANCE & MARKETS: • ONS has reported that the UK economy grew by 0.6% in Q2. April was the strongest month. Growth slowed in May and June. The NIESR reports ‘this first official estimate of GDP might suggest that the economy grew at a healthy pace in the second quarter of this year, but our monthly GDP estimates suggest there has been a marked slowdown in the latter part of the quarter. We have limited data on the economy post-referendum, but what we do have points towards a significant deterioration in performance in the second half of 2016. In light of this, a move, next week, by the MPC to provide monetary stimulus to a weakening economy would be welcome.’ • US Fed has held rates at between 0.25% and 0.5%. • Taylor Wimpey has said that Brexit has had no ‘meaningful’ impact on the housing market’ RETAIL NEWS WITH NICK BUBB:
• CBI Watch: We have said countless times that the CBI Distributive Trades Survey is a silly, non-quantitative survey and it defies belief that it is still so widely followed by economists and the press. And their view of “July” yesterday that “Retail sales fell at the fastest pace in over four years in July” duly got lots of headlines…But it is astonishing how much weight is put on such tiny samples, as only 66 retailers took part in the survey, so the conclusion that “24% of retailers said that sales volumes were up in July compared with a year earlier, while 38% said they were down, giving a rounded percentage balance of -14%”. And the sample sizes in sub-sectors like carpet retailers and footwear retailers must be even smaller, so it is ridiculous for the CBI to say that “grocers, and furniture and carpets stores were the main drivers of the drop in • News Flow This Week: First thing today Inchcape and Intu are in focus on the Retail/Motors/Property beat. The widely-followed monthly GFK Consumer Confidence Index comes out first thing tomorrow and is likely to confirm the -9 reading from their snap post-Brexit survey, published on July 8th, showing a slump in confidence in the week or so after the EU Referendum. |
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