Langton Capital – 2016-10-11 – Pubs, retail sales, overseas visitors, Peel Hotels & other:
Pubs, retail sales, overseas visitors, Peel Hotels & other:
A DAY IN THE LIFE:
I know I’m guilty of this to a certain extent myself but I think that the world ‘clearly’ is overused.
I nearly wrote is ‘clearly overused’ but had to resist the temptation because I would suggest that ‘clearly’ refers to absolutes, the sun will rise, the leaves fall in autumn, Hull City will be in the bottom four of the Premier League this season (but it’s a £130m question as to whether we’re fourth or third from bottom), and it’s a word that is wrongly often attached to opinions.
And it’s been getting one heck of an outing post the Brexit vote because, to say that Brexit will ‘clearly’ lead to higher oil prices or ‘clearly’ lead to increased social tension is simply not true – at least not as it is stated.
It may or it may not.
It may lead to greater prosperity longer term and it may lead to increased independence for the village of Little Fiddler on the Wold, curved bananas etc. but it may not and it won’t actually ‘clearly’ lead to anything. On to the news:
PUB, RESTAURANT & DRINKS PRODUCERS:
• Businesses will not now have to publish how many foreign workers they employ. That policy didn’t last long. Clarity still lacking. Brexit means Brexit won’t cut it much longer.
• The BBPA has set out a manifesto for Britain’s exit from the EU, with policies including a focus on free trade and attracting and retaining overseas skills and labour. The trade body also argues for a more favourable tax regime that encourages low-strength drinks and reduces VAT on pub meals. BBPA Chief Executive Brigid Simmonds commented: ‘Our manifesto sets out how we can meet the challenges of Brexit and make the most of opportunities that will enable our sector to grow, in a post-Brexit Britain. We will also be urging the Government to look hard at how to mitigate the effect of high taxes and regulatory burdens, and in particular ensure that there is no rise in beer duty at this critical time.’
• Jonathon Kaye is to become both chief executive and a director of Richoux Group and will receive up to 23,027,403 shares representing 20% of the group. Jonathon Kaye will be considered as one member of a concert party alongside other family members already in the company, including Phillip Kaye, who owns 24% of Richoux. This means the concert party stands to hold a 41.3% interest.
• Jill Matthews, head of operations at The Coaching Inn Group, has been promoted to operations director and stands to join the board as part of the group’s £20m expansion plans. The Coaching Inn Group currently has 12 sites across the UK and intends to grow its estate to 15 venues by the end of the year.
• Ayrshire-based Crucial Drinks has raised £2m of funds through its bank and existing shareholders as the boutique spirits maker looks to boost international growth and double its business in the next two years. Crucial currently exports to nearly 40 global markets and its brands include The Lost Distillery Company, producer of ‘lost’ craft whiskies.
• Crucial Drinks co-founder Scott Watson said: ‘Our combined efforts with Clydesdale and our shareholders has been extremely successful. These funds are vital to us achieving the growth and scale we have planned to extend existing operations in Scotland, while meeting the increasing consumer demand for our artisan brands,’ while a Clydesdale relationship manager said the regional bank is ‘proud’ to support the business.
• JW Lees has purchased The Groes Inn near to Surf Snowdonia in North Wales and the group says it is ‘proud’ to operate one of Wales’ oldest pubs. The Groes Inn boasts 14 bedrooms and is renowned for great cask ale and fresh food. JW Lees’ managing director, William Lees-Jones, said the group remains ‘hungry for acquisitions of both managed and tenanted pubs as well as hotels in the North West.’
• The Coca-Cola Company has announced its intention to AB InBev to acquire the latter’s stake in Coca-Cola Beverages Africa (CCBA).
• UK retail sales returned to growth in September thanks to higher spending on food, more purchases on big-ticket items, and the back-to-school rush. The British Retail Consortium/KPMG survey says sales rose by 1.3% year-on-year but warned of the risk of the weaker pound on import costs for retailers. BRC CEO Helen Dickinson added that ‘With that in mind the BRC will be ensuring that in the forthcoming Brexit talks, government negotiators have their sights set firmly on lowering import costs as well as avoiding any increase in tariff costs as the UK leaves the EU.’
• Kornicis shareholders voted on 30 Sept to change the name of the company to We Are Bar Group. Kornicis owns the Jamie’s, Smollensky’s & Brodie’s chains amongst others.
• KJS Restaurants is launching the first Deliveroo-only restaurant, Motu Indian Kitchen, which will be based out of the Battersea Roobox. The site will launch on 17 October at Deliveroo’s remote kitchen concept.
• Supermarket chain Booths is working to develop food products and source ingredients from local regions.
• Retail trade gearing up for Black Friday. It falls on 25 Nov this year, the day after Thanksgiving in the US. Last year saw relatively less interest shown in the American import but retailers are still hoping that bargain-hungry consumers storm their stores. The impact on margins tends to be negative and spending may be displaced from the coming three weeks or so, when discounts would not typically be available.
• Motoring organisations are suggesting that petrol prices will have to rise by 5p this month. Further rises may be necessary – see oil price comment below.
LEISURE TRAVEL & HOTELS:
• Peel Hotels reports H1 numbers, sales +1.8% at £9.1m, PBT +19.2% at £592k. REVPAR +2.9% with occupancy down 2.3%
• Peel Hotels H1 numbers. EPS 3.4p vs 2.8p last year. Co chairman Robert Peel reports ‘our challenge is to control our overall costs of doing business in line with modest overall turnover growth. Revpar growth is key to increasing our profits and we have made solid progress in this area albeit at the expense of volume. It is difficult to be certain post Brexit but a low pound certainly should encourage incoming volume as well as serving as an incentive for British residents to spend more of their leisure time at home. Net debt continues to fall with the consequential reduction of finance costs on an ongoing basis. We look forward to another year of progress.’
• Domestic visitors to the UK spend £19.7bn in record growth last year, while China entered the top 10 most valuable markets, reports VisitBritain.
• American visitors still represent the largest group, spending over £3bn in 2015-16 for the first time. British Tourist Authority chairman, Christopher Rodrigues, ‘Tourism is a shining star in an uncertain world. As our fourth biggest service export, and one of our fastest growing sectors, tourism’s importance as a key economic driver and job creator is clear.
• ‘While the talk is of trade deals with new markets, tourism is already leading the way, competing strongly in our most valuable source markets such as the US and in markets that are crucial for our future, including China.’
• Royal Caribbean Cruises Ltd. newest class of ship will be powered by liquefied natural gas which could drastically reduce greenhouse gas outputs.
• Monarch is thought to be close to agreeing a revised aircraft order with Boeing that could help secure the airline’s future. Monarch is finalising a refinancing deal centred around the purchase of 45 aircraft announced in 2014, and Sky News reports that Boeing is likely to contribute to a £165m investment package which will also see Monarch’s owners Greybull Capital inject more capital into the company.
• The UK head of Thomas Cook has ruled out a return to Sharm el-Sheikh before winter 17/18 unless the government changes its advice regarding the Egyptian airport ‘very fast’. Managing director Chris Mottershead has hit out at the government’s ‘unfathomable’ stance on the resort destination, which is now at risk of being ‘destroyed’. The Foreign Office (FCO) imposed a ban on all but essential air travel to Sharm on November 4 last year after a Russian holiday jet crashed soon after take-off from the airport, killing 224 people.
• Pure Gym has cancelled its IPO per Sky News citing challenging IPO market conditions. The company declined to comment. Quite how difficult the market is may be a matter for debate. EasyHotel recently got £38m away at a c18% premium and DP Poland raised a smaller amount at around par.
• William Hill’s planned tie-up with the Canadian owner of PokerStars, which will result in a new £5bn FTSE 250 company, was being discussed before 888 and Rank came forward with their bid reports The Telegraph.
• The Times points out ‘the Canadian online gaming group that was confirmed yesterday to be in merger talks with William Hill was recently fined $870 million and its former chief executive is being investigated over insider trading.’ The proposed merger would create the largest online gaming company in the world.
• Amaya was fined $870m earlier this year for violating Kentucky’s anti-gambling laws. Amaya is currently appealing but the fine will attract 12 per cent interest each year until the judgment is settled. The current proposal is that the combined group would be listed in London.
• Falling interest in the sale of twitter saw shares in the social media platform drop 12% on Monday to $17.56. Shares had been as high as $24.87 on 5 Oct. If a buyer doesn’t appear, Twitter reportedly will try to appeal to more users through a new strategy that focuses on live video.
FINANCE & MARKETS:
• US stocks were buoyed yesterday by what was deemed to be a good Hillary Clinton performance vs Donald Trump. The Mexican peso also rose.
• World markets: UK mixed yesterday with global stocks higher. Europe up, US up on Clinton poll lead but Far East down in Tues trade.
• Oil off the top but still up on the last 24hrs. Brent crude changing hands around $53.05 per barrel. In Sterling terms, the price is up 130% since troughing at c$27 earlier this year
• Eurozone investor confidence recorded a record rise in October
YESTERDAY IN A NUTSHELL – SELECTION OF TWEETS, LIVE TWEETS ON WEBSITE:
• The Telegraph has this morning run with the story that R Capital will announce that it has purchased Ed’s as soon as tomorrow.
• Ed’s may change hands at less than debt-value. That’s not a successful rollout.
• The ALMR has hailed the success of the night tube as the initiative expands to additional tube services, says late-night +21%.
• UK consumer spending grew by 2.4% year-on-year in September, according to Visa UK
• BCC says British manufacturers enjoyed sales boost post EU vote but says larger services sector shows signs of faltering
• BRC says Hard Brexit will lead to price rises. Retail industry is the UK’s biggest importer
• Pragma Consulting says UK travel patterns changed. Inbound businesses ‘benefitted from the post-Brexit boom to the tune of £1.4bn.’
• Press reports have Wm Hill likely to tie up with PokerStars gaming website in £5bn merger. PokerStars’ owner is Amaya of Canada.
• US employment growth slowed in Sept. Some 156k non-farm jobs were added (vs +167k in Aug).
• US unemployment rate up to 5.0% in September from 4.9% in August. Rate rise speculation re December now a shade muted.
• NIESR reports GDP rose in UK by 0.4% in Q3 vs 0.7% in Q2. Says spending buoyant, production meanwhile ‘a drag on economic growth.’
• UK industrial production down by 0.4% in August per ONS. Manufacturing up but oil & gas down
• UK trade deficit with rest of world up in August to £4.7bn including services credit. Deficit in goods rose from £9.5bn to £12.1bn
• Sterling trading at around 124c per dollar. Some airport currency booths now supplying less than one Euro to the pound
• Other Tweets: Sterling circling the drain. Tries to bounce, made back just over half a cent. Big deal, huh? Then it lost it all again. No obvious bottom
• Sterling going for less than a Euro at airports. Not helpful for T Cook (though it has Germany & inbound China business to cushion blow)
• Sugar +63% in last 12mths. And that in dollar terms. Equates to around +92% in Sterling. Inflation, where art thou?
• Yellen speech Friday. Betting on a December rate rise stateside running at 65%. Not likely to give Sterling a boost.
• Overseas stocks (HSBC, STAN, miners, oils) led risers Fri & more today. Losers today & Fri = domestics, stores, UK banks, bond proxies
• Gilt yield on 10yr UK bonds doubled in last 8wks. Yes, doubled. OK, was from 0.5% to 1% but still going up, shows big money is concerned
• Samsung recalls Note 7. Now stop me if I’ve missed something but that wasn’t part of the grand plan, was it?
• Ed’s Easy Diner. Didn’t I see it being touted at £100m in Nov 15? Why yes, I did. Now it’s going for £20m (if the buyers don’t back out)
• Night tube something of a boost. Need to evolve, remain relevant. But later tubes don’t ultimately put more money in punters’ pockets