A Day in the Life:

Langton, still roaming the USA, has just been to Taos near Santa Fe before being dragged back to go in the pool and drink beer. Still managing to get in the odd restaurant – making this a study tour, of course – and have been chronically over-ordering food, especially when it comes to pizza. I mean who serves an 18” pizza?

Slightly more serious issues. Is craft beer simply too strong? The choice here is bewildering but is 7% ABV, cinnamon-flavoured beer with 3x the normal level of hops a good idea? Also re tipping; we think it’s an issue in the UK but try leaving 10% in the US. Some of the burger offers are really rather good. It’s giving us a number of ideas. Also Tex-Mex is clearly major over here, explains perhaps why so many operators have beaten their heads against that particular brick wall in the UK.

Anyway, a shortened email – with perhaps some delay – will be going out for a little while. On to the news:

The News:

PUB, RESTAURANT & DRINKS PRODUCERS:

• Horizons has suggested that healthy eating and ‘dude foods’ remain key trends in the UK market. Horizons reports ‘healthy food dishes are fighting ‘dude food’ such as burgers, burritos and barbecue foods for menu space as consumers’ appetite for dishes made with nutritious ingredients continues to grow.’

• Horizons reports ‘customers are now much more willing to try new foods, particularly those with perceived health benefits. Social media has also prompted the sharing of recipes and food ideas, while the popular lifestyle and fitness bloggers have made an impact on what we eat at home, and therefore what we expect to see on eating out menus.’

• JD Wetherspoon has confirmed that The William White pub in Warwickshire, which was closed last month due to a ‘pest infestation’, will not be reopened.

• MCA data suggests the UK’s contemporary fast food segment should grow outlets by 20% and increase turnover by 25% this year.

• Charlie McVeigh’s London-based craft beer concept The Draft House will open its first site in Milton Keynes in October after acquiring the Secklow Hundred. Speaking to MCA, McVeigh said that despite trading in the year to date being ‘variable’, the group had seen like-for-like sales growth of between 4% to 6%.

• Fast-growing consumer ratings agency TruRating has closed a £9.5m funding round, taking its total funding to date to £13.7m, writes MCA.

• Scotch producers believe that Brexit could lead to a 20% increase in tariffs on exports to key growth markets such as South Korea, South Africa, and Columbia. The Scotch Whisky Association (SWA) says the EU has agreements in place with these countries that avoid tariffs on whisky products, but this level of protection is no longer in place. Meanwhile trading with the industry’s important European partners is also uncertain.

• SWA chief executive David Frost said: ‘We are calling on the UK government to bring clarity to the transition to Brexit as soon as possible, and to negotiate to ensure that the current open trading environment is not affected. Finding practical ways forward on export practicalities and on free trade agreements should be high on the agenda as negotiations begin in the coming months.’

• Brewers are being asked to provide information and artwork on all their beers ahead of Cask Marque’s latest upgrade to its CaskFinder app.

• Dishoom is expanding outside of London, with its first site in Edinburgh confirmed as the three storey unit in the former Forsyth department store building at St Andrew Square.

LEISURE TRAVEL & HOTELS:

• Millennium & Copthorne yesterday reported H1 numbers showing REVPAR (in reported currencies) down by 0.5% at £67.9m and REVPAR down 4.2%.

• MLC H1 EPS is down 17% at 9.3p but the H1 dividend has been held at 2.08p. Mr Kwek Leng Beng, Chairman commented ‘we are disappointed by our hotel operating performance during the first half of 2016, particularly in New York and Singapore, which remain areas of focus for the Group. The UK referendum vote to leave the European Union, together with recent terrorist activity, has further intensified uncertainty over the direction of the global economy.’ Mr Kwek continued ‘the Group has a history of successfully navigating difficult economic environments given its broad geographic exposure and strong balance sheet. Against a backdrop of economic uncertainty, we are adopting a prudent strategy to protect the Group’s strong financial position, including a review of capital expenditure, whilst taking appropriate steps to strengthen areas of operating weakness.’

• Melia Hotels has reported a double-digit fall in REVPAR across its UK properties in H1 this year. The group says ‘in the UK visibility regarding the impact of Brexit is still reduced. Although there have been a small number of cancellations of groups and business trips directly related to the financial sector, at the same time the market is beginning to see the positive impact of the depreciation of the pound on incoming tourism to the UK.’

• Royal Caribbean Cruises has reported strong demand for bookings for the remainder of 2016, with similar levels of growth to last year expected.

• easyHotel has received permission for a 94-room easyHotel at 3-5 Northgate Street in Ipswich. The owner, developer, operator and franchisor of ‘super budget’ branded hotels is expected to complete its purchase of the freehold in the coming weeks and will open the unit in September 2017.

OTHER LEISURE:

• Harry Potter and the Cursed Child, the script for the eighth story in the popular boy-wizard series, has sold more than 680,000 print copies in the UK in three days.

FINANCE & MARKETS:

• Markit has reported that the UK economy is contracting at its fastest rate since the financial crisis in 2008.

• NIESR is forecasting 3.0% growth across the world in 2016.

• NIESR is now forecasting UK growth of 1.7% this year and 1.0% next.

• Germany’s DIW economic institute has suggested that Brexit will knock 0.3% off UK GDP growth this year and 1.2% next year.

• Financial markets expect the Bank of England to cut UK interest rates today. A move from 0.5% to 0.25% would leave little further room for manoeuvre

RETAIL NEWS WITH NICK BUBB:

• Next: As well as edging up their central profit guidance for the full-year yesterday (from £800m to £810m PBT), on the back of a slightly better than expected Q2 outcome, Next flagged that “given the favourable market conditions for share buybacks and successful issuance of a new bond, we have returned more capital to shareholders than originally anticipated”, with £176m of share buybacks so far in the current financial year (versus the £112m envisaged at the time of the finals on March 24th). Next also said that “We currently anticipate spending a further £30m on share buybacks during the remainder of the year, subject to market conditions”, but there was no sign of the shrewd “Mr Share Buyback Man” in action at Next yesterday…

• Game Digital: The share price of Game Digital has rallied strongly in recent weeks, as if some people thought it may be benefiting from the Pokemon Go craze, but there is no mention of the latter in today’s surprise pre-close trading update (which is cautious, as might have been surmised by the late dip in the share price yesterday afternoon). Game say of their y/e July that “Market trends experienced in the first half of the year have continued into our second half, with a challenging UK trading environment set against good growth in Spain” (UK gross sales were down by 11% and Spanish sales were up 12%). Overall, the group expects to report adjusted EBITDA for the 53 week year within the range of current market expectations of £26m-32m (down from £47m last year), but it has warned that it remains cautious about the sales outlook and is not planning on any recovery
in profits in the new-year: “overall, the Board plans to deliver adjusted EBITDA for FY16/17 broadly level to the current year (on a 52 week basis), before the financial impact of its planned new live gaming  activities”.

• John Lewis Partnership Sales Watch: As we flagged a week ago, the slump in sales at the great Retail bellwether John Lewis in w/e July 23rd was just down to the impact of the very hot weather on store footfall. Trade recovered last week, w/e July 30th, with sales up by 3.4% (c2% up LFL). It was a good week for Fashion and Electricals, with sales up by 7.9% and 10.5% respectively, in gross terms, but the hot weather continued to hit the Home department, which was down by 7.2%. Over the last 26 weeks, ie the first half of the financial year, John Lewis sales were up by 4.7% (a shade over 3% up LFL), with Electricals up by 8.4%. The continuing warm weather last week was good for picnic trade for John Lewis’s sister company, Waitrose, which saw overall gross sales up by 4.3% (c2% up LFL). Waitrose sales over the last 26 weeks were up by 2.6% gross (marginally up LFL).

• Retail Sales Watch: We noted back on Friday July 22nd that the ONS Retail Sales figures for June were weak, but, what with one thing and another, we haven’t got round to looking at the ONS figures in any great detail. There is, however, a new consultancy group to do that for us, namely Retail Economics, which is run by the estimable Richard Lim, who used to be in charge of the BRC-KPMG Retail sales survey. And the Retail Economics overview is that gross Retail sales rose by only 0.7% in June (down from the 2.6% seen in May) year-on-year (non-seasonally adjusted), which is again roughly half-way between the rival BRC and ONS measures of the June outcome, suggesting that consumers did rein back ahead of the EU Referendum (particularly in Clothing). We will have to see whether July saw a recovery, given the more helpful weather noted by Next, but for more detail on how Retail
Economics saw June see this 30 side report: http://bit.ly/retailsalesreportJuly2016

• Sports Direct: The much-touted £90m share buyback (5% of the company’s share capital) continues to look like a feeble affair, particularly for those people brought up on the vigorous interventions of “Mr Share Buyback Man at Next. Sports Direct announced this morning that just c234,000 shares were bought yesterday, at c282p, which is about in line with the average buying in the first 3 days of the programme and which will therefore further encourage the bears…First thing today the price is trading at about 280p.

• Today’s Press and News: With Travis Perkins, Greggs and Pendragon in focus yesterday on the Retail/Building/Motors beat the papers have plenty to chew over today and Greggs win hands down, in terms of coverage, given the scope for headlines such as “Greggs: We might be going gluten-free but nothing will beat our sausage rolls” (the Telegraph) and “Healthier food offerings pep up Greggs” (the FT). And there is plenty more about Philip Green and the BHS pension deficit in today’s papers, with the Daily Mail picking up the comment from the former chairman of the Pension Protection Fund, Lady Barbara Judge, that Philip “should be writing a cheque and saying ‘I’m sorry’”. By the way, the veteran City Editor of the Daily Mail thundered yesterday that “Green’s unfulfilled pledges, threats and the like are
unconscionable. He should stop the cruising, put his shirt top back on and do the decent thing without delay”.

• News Flow This Week: The much-awaited MPC interest rate announcement comes out at mid-day and before that we get the SMMT new car sales figures for July at 9am. And then tomorrow night brings the Opening Ceremony of the 2016 Olympic Games in Rio.