Britvic, Nando’s, over-capacity, confidence & other:

A DAY IN THE LIFE:

So, if we’re leaving behind all those good folks in Holland, Scandinavia, Germany and the like (a bit liberal, sure, but otherwise OK) & we don’t like Putin and are worried about China, it’s perhaps not surprising that we only have the wall-building, Muslim-excluding Mr Trump left to cosy up to.

And that will be 1) fun and 2) a partnership of equals, won’t it?

Well, not really. Indeed, it not altogether pleasantly brings to mind an image of Mrs May in the Sarah Jessica Parker Chihuahua character in Mars Attacks alongside a grumpy Queen Elizabeth being led around on a lead by a rather larger Mr Trump.

The latter could then show the UK off as a friend whenever he feels isolated [which might be often] but occasionally forget all about it, leave it tied to the bumper of his car and set off on a 100 mile drive dragging us with him to heaven knows whichever crazy policy he sets his mind on.

All the wrong people are cheering, Theresa. Read the odd history book but anyway, I may be wrong, enough of that. On to the news:

PUB, RESTAURANT & DRINKS PRODUCERS:

• Britvic updates on Q1 to 25 Dec saying it has made a ‘strong start to the year [and is] confident of meeting market expectations’

• BVIC Q1: Group says ‘the trong start to the year was underpinned by volume growth of 3.9%.’

• BVIC Q1: CEO Simon Litherland comments ‘the new financial year has started well with group revenue 4.3% ahead of last year, continuing the good progress we made as a business in the prior year. Encouragingly all our key markets have delivered revenue growth.’ He says ‘whilst the external environment remains uncertain, we are confident that the strong execution of our marketing and innovation plans combined with disciplined revenue management and our cost saving initiatives will deliver full year results in line with market expectations.’

• BVIC Q1: UK sales +2.2%. Says ‘whilst the grocery channel remained subdued, we delivered growth from our focus on the convenience and foodservice channels, including Subway.’

• BVIC Q1: Says ‘France revenue increased 6.3% with the branded portfolio in strong growth, led by Fruit Shoot and Pressade, whilst lower margin private label revenue continued to decline.’

• BVIC Q1: In Ireland, revenue increased 6.4% ‘with both Counterpoint and our branded business performing well.’ Britvic says ‘Ballygowan water was in very strong growth, which has an adverse impact on the average Ireland ARP.’

• BVIC Q1: Group concludes ‘we continue to make good progress with the implementation of our three-year business capability programme.’

• Nando considering UK stock market listing per Bloomberg reports. Co said to have appointed advisors.

• Nando’s itself has denied speculation saying ‘speculation about a Nando’s IPO is incorrect, nor are they currently considering fundraising.’ Spokesman says ‘Nando’s is a privately owned business that is still owned by the entrepreneurs who set up the business in the first place.’

• Nando’s started in South Africa & currently has >1,000 outlets in 23 countries.

• MCA says that ‘given the rapid pace of expansion’ across the restaurant industry, there could be casualties in 2017, 2018.

• MCA says ‘after rapid expansion, 2016 was a turning point in terms of outlet growth rate.’ it says ‘the fear is that the sector could possibly be returning to a 2002 or 2008-11 scenario, where a race for space – especially on the high street – led to a spate of closures – with the re-emergence of pre-packs looming large on the horizon.’

• Recently Ed’s has failed, RTN has shuttered shops, MAB is selling c75 units and JDW is selling c99. The ‘nought to sixty’ club could also be regretting some of their more speculative (or high rent) openings. MCA concludes ‘most wounds in life tend to be self-inflicted – and those warning signs are starting to re-appear – let’s hope they are heeded in time.’

• Some concerns that weak Pound could push up price of foreign hops & hinder craft beer’s further growth

• The BBPA and ALMR have welcomed the second round of the Home Office’s two-year Local Alcohol Action Areas, which aims to reduce alcohol-related crime and disorder.

• Weetabix has become the latest company to warn of price rises as, even though it takes its wheat from within 50 miles of its processing plants in Northampton, wheat is priced in dollars. The warning came as the company announced it was investing £30m in its UK manufacturing sites. A range of companies, including Apple, Next, Easyjet, AB InBev, Carlsberg and Heineken have all warned of higher prices thanks to sterling’s fall since June’s vote to leave the European Union.

• Bank of America Merrill Lynch suggests Sainsbury’s and Morrisons might be compelled to merge following the proposed £3.9bn tie-up between Tesco and Booker. Tesco’s move for Booker, which operates Londis and Budgens, would create Britain’s largest wholesale and retail food businesses, with combined annual sales of almost £60bn.

LEISURE TRAVEL & HOTELS:

• UKinbound and the British Hospitality Association oppose plans put forward by councils and London mayor Sadiq Khan to introduce a bed tax for tourists. Findings endorsed by the mayor for further powers to be devolved to the capital following the Brexit vote include ‘modest tourism levy’ – a measure already present in international cities such as New York, Paris, Berlin, Rome, and Amsterdam, and ‘would be used to promote tourism in London’.

• Khan commented: ‘London has the same population as Wales, Scotland and Northern Ireland combined, but we have far less control over how our economy and public services are run. Giving London more control would allow us to manage the current economic uncertainty in the aftermath of the EU referendum, giving London the stronger voice it needs so we can protect jobs, growth and prosperity for the future.’

• The BHA, however, has attacked the plan as ‘absolute folly’ and UKinbound chief executive Deirdre Wells described the introduction of a levy on tourists as a ‘retrograde step’ for UK tourism. She said: ‘Every inbound tourist already contributes an additional £630 in export earnings and £216 to the Exchequer, and the UK has one of the most punitive tax systems for tourism in the world. Inbound tourism generates over £22bn for the UK economy making it our seventh biggest export earner and one of our largest employers.’

• Long-haul operator Gold Medal has recorded a 15% increase in year-on-year sales so far this peak season.

• The chief executive of the Board of British Airline Representatives (BAR UK) will be one of several aviation organisations meeting with the government this week, with Trump’s travel ban high up on the agenda. President Trump signed an executive order on Friday, barring immigrants and visitors from seven predominantly-Muslim countries from entering the US for 90 days. The UK Foreign Office says only those with dual nationality travelling from one of the blacklisted countries would be subject to extra checks and stressed that those travelling between the UK and US would not be affected.

• Iberostar is to open six hotels in 2017 following a spike in business that saw holidaymakers move away from the eastern Mediterranean to Spain last year. Turnover at the Spanish chain rose by 10% year-on-year in 2016 to €2.03bn.

• As many as 35 councils in England have changed their policy on fining parents for taking children out of school for holidays in term-time

• Cabin crew at British Airways will stage a six-day walkout next month in a dispute over what has been labelled ‘poverty pay’ from 5-7 February and 9,10, and 11 February.

• EasyHotel chairman Jonathan Lane buys 57,500 shares in the company at 87p. CEO Guy Parsons & CFO Marc Vieilledent awarded zero price options

• Travel managers report at Business Travel Show that 80% are seeing no change to travel plans post Brexit vote

OTHER LEISURE:

• Stride Gaming updates on Q1 trading, says it is ‘in line with management expectations & integration of recent acquisitions [is] progressing well.’ Chairman Nigel Payne will tell the group’s AGM later today ‘the Group’s performance in the financial year is in line with management expectations. Performance of the real money gaming vertical has been strong which has more than offset weaker than expected performance in the social gaming vertical.’

• Stride says ‘with material scale and 105 brands following these acquisitions, Stride Gaming has 10% share of the UK online bingo market making it the fourth largest online bingo operator in the UK. The Board believes Stride Gaming is well positioned to capitalise on the opportunities in the sector and to increase our market share through strong organic growth and selective acquisitions.’

• Fitbit warns on profits & is to lay off c110 staff. Q4 disappointing as sales top out. Co is undertaking a ‘reorganization of its business.’ Fitbit sold 6.5m devices in Q4. CEO James Park says the slowdown is ‘temporary’. He says ‘we believe we are uniquely positioned to succeed in delivering what consumers are looking for in a smartwatch: stylish, well-designed devices that combine the right general purpose functionality with a focus on health and fitness.’ Park concludes ‘with the recent acquisition of assets from Pebble, Vector Watch and Coin, we are taking action to position the company for long-term success.’

• The Association of British Bookmakers has angrily called a report by MPs on fixed-odd betting terminals (FOBTS) ‘deeply flawed’ and has called for an inquiry. The MPs are recommending that the maximum stake for gambling on the electronic terminals in a bookmaker’s shop is cut to just £2.

• Currently the maximum stake on the electronic terminals is £100.

• Snap Inc, the parent company of messaging service Snapchat, is to IPO on the Intercontinental Exchange Inc’s (ICE.N) New York Exchange (NYSE). The listing is expected to occur in March, with Snap Inc hoping for a IPO valuation of around $25bn, which would make it the largest tech company listing since Facebook in 2012.

FINANCE & MARKETS:

• ECB likely to review its monetary policy in June. Germany pushing for rate increases, southern Europe opposed. ECB member Ewald Nowotny reports ‘the discussion about our overall economic assessment will probably [happen] in June.’ He adds, however ‘this is not a tapering discussion.’

• Germany’s regulators met c50 top foreign banks yesterday to discuss their potential move from London to Frankfurt

• World markets: UK & Europe down yesterday & US also lower. Far East mostly down in Tuesday trade

• Oil down a little at c$55.20 per barrel

• Sterling a shade higher at $1.2514 per US dollar. Falls slightly vs Euro at just under 117c per Euro

• UK 10yr gilt yield down to 1.45% from 1.47%. US 30yr bond yield up 2bps at 3.08%. Bank of England MPC to speak on Thursday

• Consumer confidence fell in January as price rises ate into disposable income. European Commission’s sentiment index fell to -5.1 from -4.6.

• Meanwhile, a Deloitte survey quoted by the Telegraph is said to show that consumer confidence levels ‘remain high’

TODAY IN A NUTSHELL – TWEET VERSION & YESTERDAY’S LATER COMMENTS:

• Britvic updates on Q1 to 25 Dec saying it has made a ‘strong start to the year [and is] confident of meeting expectations’

• BVIC Q1: Group says ‘the trong start to the year was underpinned by volume growth of 3.9%.’

• BVIC Q1: UK sales +2.2%. Says ‘whilst the grocery channel remained subdued, we delivered growth from our focus on C-stores & foodservice’

• Nando considering UK stock market listing per Bloomberg reports. Co said to have appointed advisors.

• MCA says that ‘given the rapid pace of expansion’ across the restaurant industry, there could be casualties in 2017, 2018.

• Recently Ed’s has failed, RTN has shuttered shops, MAB is selling c75 units and JDW is selling c99.

• Bank of America Merrill Lynch suggests Sainsbury’s and Morrisons might be compelled to merge post Tesco/Booker

• As many as 35 councils in England have changed their policy on fining parents for taking children out of school in term-time

• EasyHotel chairman Jonathan Lane buys 57,500 shares in co at 87p. CEO Guy Parsons & CFO Marc Vieilledent awarded zero price options

• Fitbit warns on profits & is to lay off c110 staff. Q4 disappointing as sales top out. Co is undertaking a ‘reorganization of its business.’

• Germany’s regulators met c50 top foreign banks yesterday to discuss their potential move from London to Frankfurt

• Later tweets: Fed & Bank of England meet this week. UK Bank will opine on interest rates (likely no change) & inflation (big changes on way)

• B of England Inflation Report (Thurs) to point to sharp rises in prices. Perhaps 3%, even 4% by year end. Rate rise, at some point, likely

• Tesco Booker; who’d a thought it? SBRY & Argos also. Will MRW feel left out? ASDA bid possible? Or MRW to buy food manufacturer?

• SBRY the loser in TSCO bid? Latter to big-up in C-Stores where SBRY is currently the leader?

• MRW the accidental winner? Got out of C-Stores (avoids TSCO competition) & now could be corporate activity

• Inflation to squeeze real wages, interest rates to rise. Job market slowing? Small ticket should hold up. Got SCS & Carpetright tomorrow

RETAIL NEWS WITH NICK BUBB:

• Consumer Confidence Watch: The outlook for discretionary spending is closely correlated to consumer confidence, so the monthly GFK Consumer Confidence survey published overnight will be pored over by the likes of Carpetright and ScS and the news is…mixed. The overall index has crept up two points to -5, but GFK pose the question themselves: “does January’s dip in the Major Purchase Index (from +12 to +10) predict slowing consumer spending for 2017?”.

• Carpetright: Ahead of today’s Q3 update, we haven’t heard much from the Furniture and Furnishings retailers about recent trading, but the vibes from Dunelm and Topps Tiles have been subdued, so it’s fair to say that the Carpetright share price has not exactly been pricing in a lot of good news…and the news is not bad! In fact, there has been a return to quarterly sales growth in the UK, with LFL sales up by 6.8% in the key 4 weeks to Jan 28th and up 1.9% in the full 13 weeks, as boosted by the success of the store revamp programme (now up to 120 stores). Europe has also been better than expected, with LFL sales up by 5.4%. There is no mention of gross margins, but the estimable Wilf Walsh, the CEO, says “Whilst the outlook for the UK consumer remains uncertain, we remain confident in our plan and are comfortable with the current range of market expectations”, which should do the
share price a power of good this morning.

• ScS: Today’s trading update from sofa specialist ScS brings the news that “the group has traded in line with the Board’s expectations in the first half of the financial year and continues to make progress with its strategy for growth”.  The group achieved LFL order intake growth of 2.7% for the 26 weeks ended 28 January, “a pleasing performance against particularly strong comparatives” and trading over the Christmas and January sales period was also in line with the Board’s expectations. The four new stores in Aberdeen, Thanet, Plymouth and Straiton (Edinburgh) have seen strong trading since opening. ScS’s great rival, DFS report next week, on Feb 9th.

• Ocado: Ahead of today’s finals (to y/e November), Ocado issued the sales figures back on Dec 8th in the pre-close/Q4 update, with gross Retail sales up by 13.6% in the year, so the market was looking today for good bottom-line progress, as well as news of the recently opened “CFC3” in Andover and the long-awaited Overseas licensing deal…And the bottom-line progress is a bit feeble, with EBITDA edging up by 3% to £84m, and all Ocado can say is that there are “Continued discussions with multiple international retailers regarding adoption of the Ocado Smart Platform.” So all management can focus on in the strategic update is the news that “market-leading service levels remain high at 94.9% for delivery punctuality (2015: 95.3%) and at 99.0% (2015: 99.3%) for order accuracy” etc etc. Management will have to put up with more questions from the City today about the failure to deliver an
Overseas deal in the analysts meeting at 9.30am

• Joules: Today’s interims cover the 26 week period ended 27 November, but on Jan 8th Joules issued a bullish trading update on Christmas (total Retail sales were up 22.8% in the seven weeks to Jan 8th), so there is not a lot new in the outlook statement. Meeting 9am

• News Flow This Week: As January draws to an end over in the embattled US, the Apple Q1 is out this evening, with the Amazon Q4 out on Thursday. Thursday is also “Groundhog Day” (!) and sees the latest MPC interest rate announcement and the Bank of England Inflation Report.