Langton Capital – 2016-10-19 – GNK Tracker, Hotel Chocolat, Accor, Remy & other:
GNK Tracker, Hotel Chocolat, Accor, Remy, food prices & other:
A DAY IN THE LIFE:
So, along with a major chunk of the UK population, we may have to holiday in the UK next year.
And, that being the case, we could hire a Winnebago to tour Cornwall because, though it would get stuck on the small roads and steep hills if we were to stay in Yorkshire and pop across to say, Robin Hood’s Bay or up to Farndale, it should be fine in Cornwall where the roads will obviously be wide and empty next year.
Additionally, a Winnebago would allow us to stock up with food and drink before leaving home & it would have plenty of room for those jigsaws and Scrabble boards necessary when holidaying at home. And our walking boots would have somewhere to dry, we could keep out of the rain, stock up on good Yorkshire beer and we wouldn’t need to leave much money in the local economy down there.
Furthermore, we’d be able to potter around to get the best reception on our portable black & white TV and we could tour the best train-spotting sites, the local knobbly knees contests etc. and check out the campsites. Ah, progress. It feels much like the 1950s, doesn’t it? On to the news:
PUB, RESTAURANT & DRINKS PRODUCERS:
• Greene King Sept Tracker shows spend on eating & drinking out +5% and +9% respectively y-o-y
• GNK tracker: Spending numbers down on August but up y-o-y. Household eating out spend hit £88.70 in Sept
• GNK Tracker: Shows spend on drinking out of the house up for the 2nd month in a row in September. GNK says ‘the end of the summer holidays has inevitably resulted in a month-on-month contraction in Leisure Spend.’ It goes on to says ‘however, year-on-year figures for Eating and Drinking Out remain positive, indicating that consumers are continuing to enjoy the extensive options that the UK’s casual dining market has to offer.’
• Hotel Chocolat reports FY numbers. Revenue +12%, EBITDA +57% at £12.3m, PBT +181% at £8.2m. Group says ‘omnichannel’ approach working well. CEO Angus Thirlwell reports ‘I am very pleased with our performance since we were admitted to trading on AIM in May this year. Our results are strong, the Hotel Chocolat brand has continued to strengthen and we have made good progress with our three strategic priorities of investing further in our British chocolate manufacturing operations, growing our store estate and developing our digital offering.’ Mr Thirlwell continues ‘our plans for the peak winter season are well set and I am confident that our Christmas ranges will be our best ever, as customers continue to appreciate our “more cocoa, less sugar” approach throughout all our categories. I look forward to further progress in the year ahead.’
• Hotel Chocolat reports ‘our multi-channel model continues to work well; each channel supports the others and all channels are in growth. Digital growth of +20% was particularly strong.’ CEO Angus Thirlwell reports ‘I am confident that our plan for the coming year is robust. Our capital plans are based on proven store formats and digital channels, and on making greater use of existing production methods and technology. Our strategy remains on track and our continued innovation and focus on customer happiness aim to deliver increased sales, combined with disciplined capex and a tight control on costs with the goal of improving returns.’ He continues ‘the market and wider economy may not be without challenges, but we still have significant addressable market headroom and benefit from having distribution and manufacturing directly under our control, which supports the resilience of our
• Domino’s Pizza shares jumped more than 5% to an all-time high of $159.90 as improved menu offerings and lower fuel prices helped push US LfLs up 13% in the three months to 11 September. The US pizza delivery chain is the largest in the world and remains popular, particularly with Millennials, while its international division also brought home a 6.6% increase in same-store sales. Total group revenue surpassed market expectations of $543.4m to hit $566.7m for the third quarter and net income rose by nearly a quarter to $47.2m.
• The results suggest Domino’s is in the ascendancy in its battle with fellow pizza operator Yum Brands, whose rival Pizza Hut chain saw same-store sales fall by 2% in the same quarter, although it now also faces burgeoning online competition from digital marketplace and delivery rivals such as UberEats.
• Greggs will now deliver sandwiches and pastries to office workers in trials in Newcastle, London and Manchester.
• Sodexo has acquired Peyton and Byrne’s public contracts business following the company’s pre-pack administration. Foodservice giant Sodexo has bought Peyton and Byrne’s five remaining public contracts at the National Gallery, the Royal Academy of Arts, the Imperial War Museum, the ICA and the Wallace Collection. Nathalie Bellon-Szabo, global COO Sodexo Sports & Leisure, said: ‘We are delighted to join forces with Peyton and Byrne to grow our business in London, a highly strategic market for Sodexo Sports & Leisure, which is already present in several museums and cultural attractions across the UK.’
• Remy Cointreau’s H1 performance was boosted by strong sales of liqueur and cognac, with organic sales of 4.1% to €513.4m. Sales of its flagship The House of Remy-Martin brand continued to be ‘robust’ at 5.1%, while its divisions in the US, China, the UK, Russia and Australia also helped to return a ‘solid’ performance.
• IEA says Brexit may not be as inflationary as some are saying. Says seasonal workers could be imported to keep costs down.
• IEA says UK need not impose tariffs on imported food.
• DEFRA head and would-be PM Andrea Leadsom has said UK food & drink exports will remain a priority post Brexit. She comments ‘leaving the EU will allow us to shape our own international trade and investment opportunities, drive even greater openness with international partners (in Europe and beyond) and put the UK firmly at the forefront of global trade and investment.’
• Sales in the UK grocery market in the 12 weeks to 9 October were 0.8% higher year-on-year, while Tesco managed to grow its market share, according to Kantar. Iceland, Co-op and Waitrose also won an increased share of the market. Food price deflation continued, ‘albeit at a slower pace’, with the drop in prices ‘particularly noticeable among pork, crisps and poultry products.’
• As for Tesco’s positive performance, Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, said growth was being driven by ‘family shoppers [and] improved trading from its larger supermarket and Extra stores. Foods including ready meals and produce have been among the fastest growing areas at Tesco, helped by its ‘Farm Brands’ but also its standard own label lines.’
• Carlsberg UK has launched the Menu Maker app, designed to enable pub and bar operators to create impactful drinks lists.
LEISURE TRAVEL & HOTELS:
• Accor updates on Q3 trading, says LfL revenue +1.8% in the quarter to €1.54bn. Says full year EBIT should be €679-690m.
• Accor Q3: Says ‘business activity was strong in the majority of the Group’s markets.’ Revenues +3% on a reported basis. Chairman & CEO Sébastien Bazin reports ‘during the third quarter, AccorHotels has once again delivered a robust performance that is even more remarkable given the particularly unfavourable situation in France during the summer following the terrorist attacks. He continues ‘with the integration of Fairmont, Raffles and Swissôtel during the period, the Group has established itself as a leading player in the global luxury hotel business. Our brands are attractive, our development is dynamic and our active management strategy for the HotelInvest property portfolio continues to deliver results. Thanks to these strengths, we have been able to hone our outlook for 2016 and consolidate the significant improvement in our operational and financial performance.’
• Accor sees ‘robust growth in all of the Group’s key markets, except France and Belgium’. Terrorism taken a toll.
• Accor opens or acquires 51k rooms during Q3 including the acquisition of the FRHI group. Group says ‘business in Northern, Central and Eastern Europe slowed during the summer, resulting in moderate growth in the third quarter’. Germany was strong &
• Accor says Q3 ‘business in the United Kingdom continued to grow strongly (+2.2%). Third-quarter occupancy rates were extremely high at 85%, notably due to the weak British pound, which boosted the foreign short-stay leisure sector and led to the British favoring the United Kingdom as a main holiday destination. Trends remain mixed, with RevPAR contracting 2% in London but improving strongly in the rest of the country (+5%).’
• Re future, Accor says its ‘favorable outlook [is] maintained’. It grew REVPAR ‘in the vast majority of the Group’s key markets’. Says ‘development continues apace, with the opening of nearly 28,000 rooms on an organic basis since the beginning of the year (up 18% compared with 2015) and the prospect of record growth in 2016.’ Accor concludes ‘in light of these factors and the expected continuation of the trends observed since the beginning of the year in its different markets, the Group expects full-year 2016 EBIT to amount to between €670 million and €690 million.’
• Eurostar is to drop a number of services from December on the back of the introduction of longer trains. Some 80 jobs may be lost. Eurostar says ‘this is a challenging environment for all travel companies and we need to manage our costs very carefully. That’s why we are looking at the size and shape of our business.’
• Downing Street has said a decision on airport expansion in England will be made next week after Theresa May told ministers at Tuesday’s cabinet meeting that the process had been ‘delayed for too long.’
• Unions at Gatwick have moved to vote on strike action that could make for pre-Christmas travel chaos for holidaymakers. A number of staff including firefighters, security personnel and maintenance workers are all preparing to vote on a possible walkout in a dispute over pensions. Gatwick’s owner, Global Infrastructure Partners (GIP), said it would close worker’s final salary pension scheme following a reported shortfall of £90m.
• Ryanair has attributed its profit warning to the sharp fall in sterling following the EU referendum, cutting its net profit guidance by 5%. The budget airline now expects profit of €1.30bn-€1.35bn after seeing marginally weaker H1 fares. Chief executive Michael O’Leary said: ‘The recent sharp decline in sterling post Brexit – which accounts for approximately 26% of Ryanair’s full year 2017 revenues – will weaken second half yields by slightly more than we had originally expected. While higher load factors, stronger traffic growth and better cost control will help to ameliorate these weaker revenues, it is prudent now to adjust full year guidance which will rise by approximately 7% rather than our original guidance of 12%. This decline is primarily due to the impact of weaker sterling on our second half fares.’
• Air New Zealand has joined a growing list of airlines banning the now-recalled Samsung Galaxy Note 7 from its flights.
• The Business Growth Fund has contributed £13m towards a £39m funding package for Gymbox, which will enable Gymbox to roll out further sites in London.
• Sainsbury’s is rolling out its vinyl offer across 67 stores, bringing its total to 238.
• Gaming group Amaya (recent would-be William Hill suitor & PokerStars brand-owner) reports Q3 numbers, says ‘we anticipate our third quarter performance will continue to demonstrate the improving strength of PokerStars’ core poker business, as well as continued growth in our new verticals of online casino and sports betting.’ CEO Rafi Ashkenazi says ‘we are focused on applying our industry leading technology platform to best serve our customers and deliver high-quality customer service and a superior gaming and entertainment experience, while continuing to deliver on our overall strategy and corporate objectives for the benefit of our shareholders.’
FINANCE & MARKETS:
• UK annual CPI inflation rose to 1.0% in September, the highest level in 2yrs. Estimates stood at 0.9%. Inflation was 0.6% in August. RPI rose at 2.0%, up from 1.8% in August.
• FT reports commercial property prices fell for the third month in succession in September. London & Scotland are said to be hardest-hit.
• ONS data shows house prices still rising post Brexit vote. Prices up some 8.4% y-o-y in August. Prices rose by 13.3% in the East of England and by 12.1% in London.
• World markets: UK & Europe higher yesterday & US also up. Far East mostly better in Wednesday trade
• Oil up a shade around $52.10 per barrel
• Sterling falling at the moment but little changed over last 24hrs. Trading around $1.2285 vs US$
• China’s economy grew at an annual rate of 6.7% in Q3 per official figures. The country’s National Bureau of Statistics reports ‘we must be aware that economic development is still in a critical period of transformation, with old growth drivers to be replaced by new ones.’
YESTERDAY IN A NUTSHELL – SELECTION OF TWEETS, LIVE TWEETS ON WEBSITE:
• Resolution Foundation says self-employed workers are earning less now than they did in 1994.
• Deloitte survey shows British consumers at their most confident in 5yrs in Sept. London the exception.
• BBC reading Langton emails, says ‘Inflation means inflation’. It then asks ‘but who wins?’ It says drink, food, clothing, petrol on the up
• JLL has reported that the UK regional hotel market should grow considerably over the next two years
• Staycations are expected to rise over the next 12 months due to Brexit, according to a new survey of 2,000 people from PwC
• William Hill still Standing in the Kitchen at the Party. Will have to go it alone, for the short term at least. Amaya merger now off.
• Ladbrokes has updated on Q3 trading saying that group net revenues rose by 12.1%. this was ‘supportive of full year expectations’
• The fall in sterling has acted as an important ‘shock absorber’ for the UK economy, says Bank of England deputy governor Ben Broadbent
• Gleeful Frankfurt reports banks with large UK operations (currently) are sussing out accommodation etc. in the German city
• Other Tweets: CPI up to 1.0% in Sept from 0.6% in Aug. Slightly ahead of 0.9% estimates. Biggest monthly rise in >2yrs. RPI at 2.0%.
• Sterling up a shade vs US$ but still in collapse territory. Falling against strong Euro just ahead of Langton half term break. Thanks a lot
• Higher gilt yields raise cost of borrowing, cut gov. spending. But should cut (somewhat meaningless) pension deficits
• Trouble in Cabinet behind Gilt tick downwards yesterday? Mr Hammond (or whoever is chancellor then) to update on policy 23 Nov
• Consumer conf. @ 5yr high. Really? Words fail. Lagsville, Arizona, I suppose. Business conf. => investment => jobs => consumer conf
• UK wine & staycations on the up as we may not be able/willing to afford alternatives. Cornwall Winnebago here we come. Hols stuck on the A30