Langton Capital – 2017-01-20 – Heineken, Remy, UK levies, delivery, Brexit & other:
Heineken, Remy, UK levies, delivery, Brexit & other:
A DAY IN THE LIFE:
It was my birthday the other day and, as I somewhat surprisingly received a number of cards, I sent out a few ‘thank you’ texts.
But it was only when sending the 4th or 5th that I realised I’d developed a bit of a tick in my thumb and was spelling the odd word wrong.
That’s where Google’s auto-correct came to the rescue but, in its enthusiasm, it had me thanking people for sending me the cats rather than the cards followed by comments such as ‘they got a bit squashed in the post’ or ‘they were a bit mangled after the dog tore them through the letter box’.
So a few raised eyebrows when next in Hull where the mighty City of Culture’s football team will take on Chelsea at the weekend. What could go wrong.
Anyway, it’s the end of the week but, courtesy of the book Freakonomics, here’s a thought for you; how many ways, including you-neek, etc. are there to spell the name/word Unique? On to the news:
PUB, RESTAURANT & DRINKS PRODUCERS:
• Heineken confirms ‘in response to press speculation…it is currently in discussions with Kirin’ regarding buying its Brazil business. Financial newspaper Valor Economico said the deal could be announced by February. In Japan, Nikkei reported in September that Kirin was negotiating with Heineken and other companies for possible partnerships.
• Café, bar, and restaurant group Loungers has opened its first site of 2017, Renato Lounge, in Mere Green, following a £525k investment. Renato is Loungers’ third Lounge in the Sutton Coldfield district of Birmingham and brings the overall number of Lounges in the city to six, plus a Cosy Club on Bennetts Hill.
• Shares in Rémy Cointreau jumped as much as 8% at the start of trading on Thursday after the French spirits maker reported a 9% increase in third-quarter sales. The House of Rémy Martin, which generates more than half of sales, enjoyed particularly strong trading, with sales up 9.6% in the first three quarters to €534.4m
• Big Hospitality reports that Karaoke bar Lucky Voice is to open a 3rd site in London. The co is said to be looking in the east of the city
• The ALMR has criticised Tower Hamlets Council’s decision to implement a Late Night Levy, calling it a ‘hugely retrograde step’. ALMR chief exec Kate Nicholls added: ‘Pubs and bars in Tower Hamlets already make a substantial contribution in the form of taxes and business rates, and an additional cost burden will only undermine their ability to invest and employ in the area. The borough’s pubs, bars and nightclubs are an asset to the community. They attract customers, bring money to the area and contribute to the unique character of this part of London.’
• UberEats is preparing to launch in Manchester and is gearing for a nationwide roll-out, writes MCA. The group has appointed Lizzie Lang to recruit restaurants for this year’s launch in Manchester, while Daniel Calvert comes in as head of partnerships for London.
• Pizza Hut has pledged to fill 11,000 job openings in the US in anticipation of its busiest sales day – Super Bowl Sunday, 5 February.
• British Land has warned of ‘potential headwinds’ with regard to footfall & traffic across its retail estate
• Profit warnings rock market, companies turn to cost cutting, jobs may be lost. Premier Foods ‘consulting with staff’ etc.
LEISURE TRAVEL & HOTELS:
• A total of 3,500 British Thomas Cook holidaymakers are expected to have been evacuated from The Gambia by the end of today. A 90- day state of emergency has been declared and the FCO is warning against all travel to the capital of Banjul amid reports of possible military intervention by neighbouring states.
• Many tourists have been killed after a ski hotel in Italy was hit by an avalanche following a series of earthquakes on Wednesday.
• An ‘unprecedented’ study by STR compared 32 months of Airbnb proprietary data with hotel data in 13 major global markets finds the traditional model has remained broadly unaffected by the new entrant. Markets included: Barcelona, Boston, London, Los Angeles, Mexico City, Miami, New Orleans, Paris, San Francisco, Seattle, Sydney, Tokyo and Washington, D.C.
• AccorHotels is in talks over the sale of the majority stake in its HotelInvest division so that its core business might have greater financial flexibility.
• Shadow chancellor John McDonnell joined picket lines at Heathrow yesterday as British Airways cabin crew embarked on a three-day strike over ‘poverty pay’.
• Tourists made more visits to the UK (+1.5%) in the three months following the EU referendum but stayed for fewer nights (-0.2%), according to official figures.
• A record 12.2 million visits were made by foreign tourists to UK regions outside London in the first nine months of last year, up 4% year-on-year. Spending grew by 2% YoY to £5.9bn, per VisitBritain figures. It was also a record-breaking summer for inbound visits to the English regions with 4.9 million visits from July to September, up 3% on the year before. Spending by overseas visitors during the summer reached a record £2.9bn, up 11% on 2015.
• Sir Paul McCartney is suing Sony over control of the Beatles’ back catalogue and is looking to regain the publishing rights to 267 of the band’s classic songs.
FINANCE & MARKETS:
• The ECB has kept its main interest rate unchanged at zero for another month. It will hold bond-buying at current levels. ECB boss Mario Draghi reports ‘it warranted, to achieve its objective, the ECB will act by using all the instruments available within its mandate.’ He adds ‘in particular, if the outlook becomes less favourable, or if financial conditions become inconsistent with further progress towards a sustained adjustment in the path of inflation, we stand ready to increase our asset-purchase programme.’
• ECB’s Draghi reports ‘underlying inflation pressures remain subdued.’
• EU Economic Commissioner Pierre Moscovici says the UK leaving the EU will be bad news economically for both parties. He told the BBC in Davos ‘I am convinced that it is not an example to follow, that it’s not positive neither for us neither for the UK.’
• Despite a number of banks announcing relocations, PM Theresa May has said she has had “very good, positive discussions” with the UK’s big banks. They maybe haven’t told her to her face that they will be withdrawing staff.
• Chancellor Philip Hammond is on the naughty step after trying to tell a room full of business leaders in Davos how to do their jobs
• Donald Trump, we’re going to have to get used to saying that, will be inaugurated as the 45th President of the USA later today
• Billionaire speculator, philosopher & philanthropist George Soros has called Trump ‘an imposter, a conman and a would-be dictator.’ Soros says ‘the ideas that guide him are fundamentally contradictory. He has three chiefs of staff instead of one and his cabinet are very fragmented and fighting with each other.’
• China’s economy is officially reported to have grown by 6.7% in 2016. This, though good, is the slowest rate in 25yrs. The economy grew by 6.8% in Q4.
• Brent little changed at $54.40 per barrel
• Sterling stuck at around $1.235. Trading at 115.7c vs Euro
• UK 10yr bonds sharply higher at 1.41% (yesterday 1.34%, Wednesday 1.31%). US 30yr treasuries up to 3.04% (was 3.00%)
• World markets. UK & Europe down yesterday with US also lower ahead of Trump coronation. Far East lower in Fri trade
TODAY IN A NUTSHELL – TWEET VERSION & YESTERDAY’S LATER COMMENTS:
• Heineken confirms ‘in response to press speculation…it is currently in discussions with Kirin’ regarding buying its Brazil business.
• The ALMR has criticised Tower Hamlets Council’s decision to implement a Late Night Levy, calling it a ‘hugely retrograde step’.
• UberEats is preparing to launch in Manchester and is gearing for a nationwide roll-out
• A total of 3,500 British Thomas Cook holidaymakers are expected to have been evacuated from The Gambia by the end of today
• Shadow chancellor John McDonnell joined picket lines at Heathrow yesterday as BA staff protested over their ‘poverty pay’.
• A record 12.2 million visits were made by foreign tourists to UK regions outside London in the first nine months of last year, +4% y-o-y
• The ECB has kept its main interest rate unchanged at zero for another month. It will hold bond-buying at current levels
• EU Economic Commissioner Pierre Moscovici says the UK leaving the EU will be bad news economically for both parties
• Philip Hammond tells business leaders how to do their jobs. Well, where do you start with that one…?
• Donald Trump, we’re going to have to get used to saying that, will be inaugurated as the 45th President of the USA later today
• China’s economy is officially reported to have grown by 6.7% in 2016. This, though good, is the slowest rate in 25yrs.
• Later tweets: Daily email free on website. Original & best. Now incl. tweets. News, views & analysis. Sign up & no strings. www.langtoncapital.co.uk
• JDW shares powered ahead yesterday after sanctioning upgrades. It said the overall environment was becoming more challenging
• Premier Foods comments on lower Sterling’s exacerbating impact of higher food input costs. Inflation is being pushed through the system
• Inflation watch: Full employment & exit of some EU workers to put further upward pressure on wages. Good time to introduce NLW then?
• Labour costs. Compound a shortage with a shortage & then introduce the NLW & jack up the NMW. Inflationville, here we come…
• Market only modestly down as profit warnings & bank re-locations sink in. St Ives, Pearson, Royal Mail, Premier Foods, Pets at Home all warn
RETAIL NEWS WITH NICK BUBB:
• Bonmarche: The update today from the struggling Bonmarche fashion chain for the 13 weeks to Dec 24th is a bit late in the day, but they would have said something by now if things were off course and investors will be relieved to see that there is no profit warning: “the Board’s expectation for the full year is unchanged, with our expectation being that the Group’s pre-exceptional PBT is likely to fall within a range between £5.0m and £7.0m”. The good news is that the gross margin was 220bps up, thanks to much reduced discounting, and Store LFL sales were marginally up, by 0.8%, helped by the colder weather and more modern ranges, albeit Online sales were, disappointingly nearly 4% down. Helen Connolly, the new CEO of Bonmarché, says: “Given the backdrop of the current trading environment, our third quarter store sales were satisfactory, particularly in light of the business still
• MySale: There is stronger news today from the pre-close update of the Online retailer MySale, which was one of the great unsung recovery stocks of 2016, flagging that a strong trading performance combined with a carefully controlled cost base will result in underlying EBITDA double the prior year at circa A$3.0 m for the first half (the six months to end December). That is “ahead of the group’s expectations”, but at this stage the company is keeping to its previously upgraded full year guidance.
• Planet ONS Watch: In the real world, December (the 5 weeks to Dec 31st) was a good month for Food Retailers, thanks to the favourable calendar shift, but Non-Food Retailers had a flat time, despite the big Online growth, as per the BRC-KPMG Retail Sales survey last week. But we will find out at 9.30am this morning how life was like last month on that strange parallel world, the Planet ONS, via the Office of National Statistics Retail Sales figures for December (and whether it has revised down its extraordinarily bullish estimates for Small Retailers in November). For what it’s worth, our friends at Capital Economics think that things will be strong and have pencilled in a rise of 0.2% in “seasonally adjusted sales volume” month-on-month (increasing the year-on-year growth to a heady 7.3%), including petrol. We will, as usual, be focusing on the year-on-year movement in
• BDO High Street Sales Tracker: We flagged on Wednesday that the fair time that John Lewis had last week reflected a rally in Electrical sales and today’s BDO High Street Sales Tracker for small/medium-sized Non-Food chains flags that w/e Jan 15th saw Fashion Store LFL sales drop back against last year by 6.0%…Including Homewares and Lifestyle chains, total Store LFL sales were down by 4.5%, but overall Online sales were up by as much as 39%, on top of 16% growth last year.
• Trade Press: Drapers magazine today is a Menswear special, featuring reports from the London Fashion Week Men’s catwalks and from the key menswear trade show Pitti Uomo held recently in a freezing Florence, plus a preview of the new autumn Menswear collections. Drapers also has a feature interview with SuperGroup boss Euan Sutherland (who says “Just under 25% of the Retail business comes from Online and that’s grown from 14%-15% when I joined”) and an overview of House of Fraser’s “game-changing” first store in China. The main News story is that the fashion retail industry has urged PM Theresa May to steer an orderly exit from the European Union, ensuring British businesses are not hit with high trade tariffs. The front cover of Retail Week magazine is a montage of photos illustrating the main feature about Trading trends: “From fashion to food, the key takeaways from the seasonal
• News Flow Next Week: The flow of news is much quieter next week, but there’s still plenty of interesting news to come: the Dixons Carphone update is on Tuesday (with an analysts meeting), the WH Smith update is on Wednesday ahead of their AGM update and the Card Factory update is on Thursday.