Langton Capital – 2016-08-16 – easyHotel, train strikes, Brexit, Rank & other:
A Day in the Life:
So is this the slowest news week of the year?
I suppose Christmas week would run it close but, with Rank moving its figures into next week, the cupboard looking pretty bare to begin with and the number of out-of-office replies running at biblical highs, we’re going through the dog-days, that’s for sure.
Still, the sun’s shining, we’re picking up medals at the Olympics and the Mighty Hull City is still in the top four in the Premiership – albeit after only one match – what could go wrong? Anyway, on to the news:
PUB, RESTAURANT & DRINKS PRODUCERS:
• Pret A Manger has seen losses narrow in its 65-strong US division to £3.56m after seeing like-for-like sales increase 6.1% in the year ended 31 December 2015, writes Propel. The coffee chain opened four sites in New York during the period and another in Boston.
• Rail fares have grown at twice the speed of wages since 2010, according to trade union research, which shows a 25% jump in rail prices in the past six years.
• Nearly a quarter of Brits would rather binge watch their favourite show than go out to dinner with family or friends, according to new research from Bookatable.
• Sales of sparkling wine in the UK have jumped by 80% over the last five years and sparkling magnum sales have risen by 140%.
• In four weeks’ time the new polymer £5 note enters circulation, to be followed by the polymer £10 note next summer and the new £20 note in 2020. A software update will be required for most machines.
• Pub & Bar Magazine will host its Pub Goers’ Conference on 12 October. The event will feature the announcement of this year’s Pub Goers Survey, as well as provide attendees with bespoke information and understanding around the consumers of the UK on-trade. This year’s guest speakers include Craig Mayes, director of Charles Wells France; Fraser Bradshaw, CEO of saintnicks; Mark Blythman, Greene King’s strategy and investor relations director; James Douglas, co-founder of Red’s True Barbecue; Cardinal Research; BT Sport; Chris Knights, group executive chef of Young’s; Simon Gaske, customer experience director at Novus Leisure; David Clifton, director of Clifton Davies Consultancy Limited; and Brigid Simmonds, CEO of the British Beer & Pub Association.
LEISURE TRAVEL & HOTELS:
• EasyHotel has announced a third franchise hotel in Amsterdam. The 96 room unit will be located on the 9th to 11th floor of the Saentower, 2 Ankersmidplein street, in the heart of Zaandam, next door to the railway station which is only two stops and eleven minutes from Amsterdam Central Station and Schiphol Amsterdam Airport. EasyHotel reports ‘construction is expected to start shortly and the hotel is anticipated to open in early 2017.’ It says ‘this will be the third easyHotel in the Amsterdam region.’
• EasyHotel reports ‘the Group’s Benelux franchisee is due to open easyHotel Brussels in October 2016, ahead of schedule.’ The 107 room hotel will be the first easyHotel in Belgium. The group’s development pipeline now consists of 1,810 rooms under development, 576 of which are owned and 1,234 are being developed by franchise partners. CEO Guy Parsons reports ‘we are pleased to be further extending our presence in Amsterdam which is an extremely attractive market for us, with considerable demand for affordable tourist accommodation.’ He says ‘this development together with the agreements we have recently signed for Istanbul, Lisbon and Bernkastel -Kues (Germany) will further increase our presence and awareness of the brand without direct capital investment across Europe.’
• The Lib Dems say the cost of a typical family holiday to Europe has been driven up by £300 due to the fall in the value of the pound following Brexit. The party used Asda Money data on a 10-day trip to Europe.
• Starwood, Marriott, Hyatt and Intercontinental branded hotels have been compromised by a malware attack ‘designed to capture payment card information’.
• New research shows that almost half of British holidaymakers are booking a long-haul trip this year with the US the most popular destination. The study of 1,000 holidaymakers found that 46% plan to travel long-haul, with 20% heading to the US, followed by Australia at 11%.
• Eurostar has promised to run a normal timetable over the August bank holiday after unions RMT and TSSA called off their strikes.
• STR’s July 2016 Pipeline Report shows a 13% increase in rooms under contract in Europe, with a total of 148,483 rooms in 966 projects. Greater London, reported the most rooms in construction with 5,400 rooms in 32 hotels. Other markets with more than 2,000 rooms in construction were Istanbul (4,192 rooms in 24 hotels); Moscow (3,632 rooms in 15 hotels); and Greater Berlin (2,467 rooms in seven hotels).
• A total of 529,665 rooms in 4,322 projects were under contract in the United States in July, up 22.9% year-on-year.
• Rank has postponed its FY numbers from 18 Aug to 23 Aug. it says ‘the delay is a consequence of the continuing developments in the interest expressed by Rank and 888 Holdings plc in acquiring William Hill PLC and the approaching deadline under Rule 2.6(a) of The City Code on Takeovers and Mergers of 5.00pm on 21 August 2016.’ It says it ‘also confirms that guidance remains unchanged following its Interim Management Statement for the 19 weeks to 8 May 2016 announced on the 12 May 2016.’
FINANCE & MARKETS:
• Brexit slowdown?
o ICAEW says confidence has dipped further, reports that ‘already on a firmly downward trend [it] has been hit further by Brexit.’ The accountancy body says confidence ‘stands now at -10.2 a fall from +0.8 last quarter. Since the referendum some recovery in confidence is evident, but only modest.’
o ICAEW reports ‘the slowdown in domestic sales growth may have come to a halt, while export sales growth has remained modest. As a result overall growth has been subdued and prior to this expectations of a pick-up had already weakened.’ It says ‘with sales slowing, spare capacity is rising thus easing concerns over skill shortages.’
o Accountancy body suggests lower growth, potential downturn. The ICAEW reports ‘companies face rising input prices but flat selling prices, hence profits growth remains below expectations. As a consequence, companies are cutting their investment plans, in areas such as Research & Development and staff development.’ It concludes ‘employment growth has continued to soften and Brexit has weakened expectations further. Sectors such as Construction, Property, Transport & Storage and larger companies contributed to the fall in confidence. This fall is near-universal across all regions.’
o BRC has reported that the national town centre vacancy rate rose to 10.1%
o LCP reports that pension deficits across major companies have soared. Is due partly to lower bond yields post Brexit vote
• Or not?
o High street footfall crept up in July despite predictions to the contrary. Warmer weather helped seasonal sales.
o The IEA has said that an IFS study suggesting Brexit problems was ‘a re-hash of the arguments made by the Remain side during its failed campaign. It ignores the costs of rising levels of regulation we would surely face if we remained within the single market, particularly on financial services with proposals such as the financial transactions tax. We would not have the necessary power to vote against these sorts of measures if we stay in. Leaving EU structures entirely is the only way that we can regain full control over economic policy.’
• Other Finance & Markets:
o Elderly Germans have been told they may have to work to age 69.
o World markets: UK and Europe higher yesterday with US also in positive territory. Far East mostly lower in Tuesday trade
o Oil price up a shade further though weakening at the moment. Brent crude trading around $48 per barrel
YESTERDAY IN A NUTSHELL – SEE LIVE TWEETS ON WEBSITE:
• Greggs’ CFO Richard Hutton has sold 41,170 shares in the company at a price of 1050p per share
• The Local Data Company reports a 46% drop in retail & leisure property activity in July 2016 vs the same month last year.
• Association of Leading Visitor Attractions has reported a sharp bounce in overseas visitors post Sterling’s June 23 fall.
• STR data for London hotels in July shows almost flat occupancy, up 0.2% to 88.4%, with a 3.7% increase in ADR & 4% RevPAR rise
• 888 and Rank Group sweetened their proposed offer for William Hill yesterday. Now equivalent to 352p per share. Group says it is still too low
• Property crunch. Aviva has suggested that its property fund could be gated until 2017. Trading was suspended on 4 July.
• Sunday Times reports lack of preparation means Government not intending to exit EU until ‘late-2019’.
• Other Tweets: Low gilt yields are driving equity prices higher. Yields will stay lower for longer. But they will go up, and how will that impact prices?
• Domino’s UK boss David Wild tells Times he’ll push digital strategy & has ambitious growth plans. DP Poland still out there…
RETAIL NEWS WITH NICK BUBB:
• Overall View: Well, the “feel-good” factor about the performance of Team GB in the Olympics is unlikely to make people rush out and buy a new sofa from DFS, but DFS will be pushing its brand partnership with gymnast Max Whitlock for all it’s worth in the next few weeks…
• DFS Watch: How shrewd of DFS to sponsor the British Olympic team and have the gold-winning gymnast Max Whitlock as one of its ambassadors. No wonder the DFS CEO Ian Filby has even been out in Brazil to see him perform…
• Sports Direct Share Buyback Watch: In case you thought the rally in the Sports Direct share price above 300p on Friday was down to aggressive share buyback activity, we can inform you that the company bought just 30,000 shares at c300p. That means they have been in action every working day since the programme began on July 28th, but thus far Sports Direct have bought only 1.73m shares or c£5m worth, at an average price of c287p.
• Yesterday’s Press and News: The front and back pages are full of the “Super Sunday” for Team GB in the Olympics, with a flood of golds pushing us ahead of China in the medals table…but the main Retail story is the improvement in the BRC-Springboard footfall figures last month (total footfall dropped by only 0.4% in July compared with a 2.8% drop in June), although the Times buries that under the headline about the latest shop vacancy figures: “Number of empty shops highest in two years”. The Telegraph has a story that “BHS staff face more uncertainty over closure” and that BHS workers have accused the company of holding them “to ransom” after threatening long-serving staff they will lose redundancy pay if they leave, while repeatedly pushing back notice dates. It has also emerged that liquidators Hilco are using BHS’s
• Marshall Motors: Having floated back in April last year, Marshall Motors is a relatively new kid on the block in the Motors sector, but it has also been a bit out of favour post-Brexit, with the cloudy industry outlook compounded by the timing of the “strategic acquisition” of the Ridgeway Garages group in Newbury for £107m at the end of May. Today’s interims are its chance to fight back and they make good reading, with revenues up by 31% in the six months to end June and underlying PBT up by 34%. In terms of the outlook, Marshall’s says that “Trading since 30 June 2016 has continued to show positive like-for-like new unit sales growth outperforming the wider UK market. Whilst still early, the current new car order bank for the important September plate change month is building in-line with expectations” and “Whilst the Board believes it is
• Retail Week Rich List: Our eye was, inevitably, drawn to the ranking of Philip Green when Retail Week magazine published a list of the “Richest 100” people in Retailing yesterday. Zara owner Amancio Ortega tops the list, with Amazon’s Jeff Bezos the highest riser. And Philip Green (and his wife Tina)? Well, he was only 46th…on £3.22bn. The methodology owed much to the Sunday Times “Rich List”, so that the valuations of Top Shop and Arcadia are a little fanciful…but at least £280m has been knocked off the total as a provision against any demand that the Pension Regulator may make to help towards the BHS pension deficit…
• News Flow This Week: Thursday brings the Kingfisher Q2 update, the ONS Retail Sales figures for July and the Asda/Wal-Mart Q2.