Langton Capital – 2016-09-07 – Pret, Ed’s, restaurant deliveries, IPOs, Brexit & other:
A Day in the Life:
So it may be autumn per the meteorologists but it’s pretty muggy down here in London.
In fact, during the afternoons, it feels as though you have to wade rather than walk through the air and it’s set to get warmer before it cools down.
But whether that’s good or bad for the nation’s food & drink and leisure retailers remains something of a moot point.
For pubs, which typically benefit from good weather, comps are soft and a few more warm weekends would work wonders for their P&Ls but, for restaurants, shopping centres, indoor leisure operations including cinemas etc., owners would doubtless like to see it cloud over or at least get a bit cooler. We’ll hear from JD Wetherspoon on Friday & Greene King hosts its AGM on the same day. On to the news:
PUB, RESTAURANT & DRINKS PRODUCERS:
• Pret a Manger is to retain its veggie shop after the trial in which it sold veggie only food in Soho proved to be a success. A spokesperson told The Telegraph ‘we had expected sales in the shop to decline as a result of the pop-up. After the massive hype of the first few weeks, sales at Veggie Pret are still well up on where they were before the conversion.’ The group will consider opening further veggie-only stores in the future.
• The Restaurant Group is expanding its presence on Deliveroo, which has been available to 12 Chiquito sites since May, to include its Coast to Coast brand. The group recently also put 33 of its Frankie & Benny’s, Chiquito, and Coast to Coast sites up for sale through Fleurets and Savills.
• The CEO of Ed’s Easy Diner has admitted the chain is ‘pausing for breath’ after expanding too quickly, and is in talks to hand back three of its 59 sites. The group shelved plans to sell earlier this year after suitors failed to match its £90m valuation target.
• Deliveroo is looking to increase its presence across the UK by recruiting independent wine merchants, craft beer shops, and bars. Currently, 85% of the group’s alcohol sales are made in London, but it is now expanding this part of its business in Manchester, Leeds, Birmingham, Liverpool, Scotland, and Northern Ireland.
• US-based distillery The Sazerac Company has acquired one of the UK’s ‘most exclusive’ premium whisky companies in The Last Drop Distillers. The Sazerac Company, which originates from New Orleans and whose range of spirits brands include Southern Comfort, Buffalo Trace, and Firefly, is set to invest in the new acquisition as it extends its portfolio into the ‘super premium’ craft market.
• Private equity group CenterOak Partners is now a majority investor in Wetzel’s Pretzels, the second largest owner and franchisor of soft pretzel stores. Wetzel’s is headquartered in Pasadena and has 300 stores in 28 states and six countries.
LEISURE TRAVEL & HOTELS:
• Virgin Atlantic is promoting a worldwide fare sale in response to research that suggests a third of the British working population is not taking its total annual leave allowance.
• Naked Wines delivers the most engaging social media content to its customers, according to research from Leapfrogg looking at 10 UK online wine vendors. Berry Bros & Rudd came second and Virgin Wines was third in the study. The other seven retailers included in the study were Majestic, Honest Grapes, Yapp Brothers, Oddbins, Laithwaite’s, Lea & Sanderson, and Swig.
• Hotel group Dalata has posted a 33% increase in revenue to €130.1m as pre-tax profits reached €18.2m in the six months to June. Revenue per available room grew ‘significantly’ by 11.2% to €74.90 and the Clayton and Maldron operator purchased a number of properties in Dublin as part of its aim to develop new hotels in Dublin, Cork, and Galway.
• London City airport was forced to close yesterday morning after activists occupied the runway in protest at the July decision to accept a £344m expansion of the airport. The government-approved plan will see the number of take offs and landings rise from 70,000 a year to 111,000.
• The first next generation mega ship for a British cruise line has been ordered by Carnival Corporation for P&O Cruises. The 5,200-passenger vessel has an expected delivery date of 2020.
• Hotelplan said in its trading update that the Brexit vote has caused uncertainty and the fall in the pound is posing challenges but its outlook is far from ‘doom and gloom’.
• Speaking at Hotelplan’s ski programme launch for its Inghams, Esprit and Ski Total brands in London, chief executive Andy Perrin said: ‘The sense of confidence may not be as good as last year but it’s not a disaster. It’s looking like customers this year will have a wait and see attitude. A lot of folk will sit on the fence and see how they feel at the end of the year’.
• Intercontinental Hotels Group is ready to expand across Eastern Europe and has 46 properties in its pipeline over the next three to five years. Four of these are due to open in the coming months, in addition to the recently opened 160-room Holiday Inn Dabrowa Gornicza, 70km north west of Krakow. Commenting on the expansion plans Robert Shepherd, chief development officer, Europe, IHG said: ‘The success of our strategy in Eastern Europe has been fuelled by growing domestic travel, tourism from visa free countries including China, South Korea, India; as well as sustainable level of demand from our customers in Western Europe who are attracted by new travel experiences and low costs.
• IHG continues: ‘Our outlook for the region is long-term. We are acting in order to ensure we provide options from across our brand portfolio to meet the demand from a range of consumer needs.’
• Jackpotjoy is said likely to push ahead with plans to IPO. The world’s largest online bingo operator may be worth c£430m. Jackpotjoy is owned by Intertain, which shares a name with the UK bars company that owns the Walkabout chain. The company may switch its listing from Canada. Group CEO Andy McIver reports ‘the UK is very much its natural home. Canada has become a bit of an odd place to be.’ The group had previously said ‘Brexit was a bit of a problem’.
• Lego sales grew by 11% in the first half of this year to 15.7bn kroner (£1.8bn), although net profit fell from 3.6bn DKK to 3.5bn DKK (£393m). Sales were strong across Europe and Asia, with both regions enjoying double digit growth, although performance in America was flat. The group poured more money into new factories in Jiaxing, China and Monterrey, Mexico.
• Lego group chief executive Jorgen Vig Knudstorp commented: ‘Maintaining double-digit growth year on year through more than a decade is a testament to the never-ending possibilities that children find in Lego play and the result of the hard work of more than 18,000 Lego colleagues around the world.’
• The CBRE is offering upmarket teahouse Cleethorpes Pier for sale.
FINANCE & MARKETS:
• The UK is reported set to begin preliminary talks with Australia about a future free trade deal between them.
• Eurozone GDP rose by 0.3% quarter-on-quarter in Q2 this year.
• UK new car registrations rose by 3.3% in Aug this year versus last. Some 81,640 new vehicles were registererd.
• World markets: UK & Europe lower yesterday. US markets up and Far East also higher in Wednesday trading
• Oil: Brent crude trading around $47.50 per barrel.
YESTERDAY IN A NUTSHELL – SELECTION OF TWEETS, LIVE TWEETS ON WEBSITE:
• BRC reports sluggish spending in August slackened on the High Street. Concedes pubs & restaurants were OK
• BRC says the warm weather & Olympics directed spending ‘towards leisure and outdoor activities rather than shopping’
• ‘A record rise in the services PMI [etc] …suggest that an imminent recession will be avoided’ says Markit
• Inflation post Brexit vote? Markit reports that the latest PMI data ‘signalled rising inflationary pressure linked to weak pound.’
• Tasty has today reported H1 numbers for the 27wks to 3 July. Sales +28% at £21.8m, adj. PBT +17.5% at £1.6m
• Tasty writes down value on 5 units, reports loss of £2.3m. Says ‘aside from these units, trade remains in line with expectations’
• BBPA calls for ‘period of stability’ concerning review of 2003 Licensing Act. ALMR appeals for same thing
• BRC Neilsen Shop Price Index showed food prices fell by a record 1.1% in August, compounding 0.8% falls in prior 2mths
• The pound is at around 7wk highs. However, it gave back some of its gains following the strong Markit PMI
RETAIL NEWS WITH NICK BUBB:
• Sports Direct: Fresh from last night’s announcement that “a Worker’s Representative will be appointed to the Board of Sports Direct in order to give workers a voice at the highest level and to help ensure that all staff are treated with dignity and respect” (!), the company has also put out a trading statement this morning, ahead of the AGM and “Open Day”, warning that EBITDA will fall from £380m to £300m this year, because of lower gross margins and higher operating costs…a lot of money is being poured into freehold property acquisitions…and advising shareholders that “in response to repeated speculation, Mike Ashley has confirmed to the Board that it remains the case that he has no current intention to take the company private”…and that “Mike Ashley commits to execute the strategic plan over the next 2- 4 years”.
• Joules: The Joules finals today are going to be massively overshadowed by the Sports Direct AGM/Open Day and the Poundland AGM/EGM on the Steinhoff bid, but they make decent reading, with underlying EBITDA up 29% to £13.5m in y/e May and CEO Colin Porter says “Group trading to date in FY17 has been in line with expectations and early feedback on our Spring/Summer 17 ranges from our trade customers has been positive”.
• John Lewis Partnership Sales Watch: The continued hot weather continued to hinder the cause of John Lewis last week, given its impact on High Street footfall, but the “back to skool” business kicked in to save the day, so the sales rise of 0.8% gross in w/e Sept 3rd was better than it might have been (albeit LFL sales were slightly down), given that it was “a week which was on average five degrees warmer than the same week last year”. Electricals had a good week, at +5.5% gross on last year (boosted by mobile phone sales, plus the new Dyson Hair Dryer), but the Home category saw sales fall by 1.9% gross and Fashion down by 0.9% gross. Over the last 5 weeks, gross sales at John Lewis are cumulatively now up by 0.6% (about 1% down LFL). In contrast, bumper sales of ice-cream and picnic and barbecue fare continued to boost Waitrose, with gross sales up by 5.6%