Langton Capital – 2017-03-21 – Goals, Fevertree, 888, Brighton Pier Group & other:
Goals, Fevertree, 888, Brighton Pier Group & other:
A DAY IN THE LIFE:
My Fitbit has clearly decided that I’m going to be something of a challenge.
Because it’s moved on from sending me vibrating messages through the wrist-band telling me that I should get up and move around, and graduated to sending me emails, which clearly have as their central theme the idea that I should extend my goals and step up the pace a bit when it comes to pointlessly running up and down stairs to get my pulse above 50, 100 or 200 or whatever it deems a sensible target to be.
And I’m not sure that I really appreciate that because, in this age of the preaching politician, I’ve had just about enough of people – or things in this case – telling me what I should do or say or think or grasp or embrace etc. etc.
So, the Fitbit, if it’s not careful, is going to go the way of all unwanted gifts, impulse purchases (and pets for that matter) and get shut in a dusty drawer for a year or two. It’s a shame that we can’t do that with some of our politicians. On to the news:
PUB, RESTAURANT & DRINK PRODUCERS:
• McDonald’s has introduced mobile ordering for its UK stores, following its successful implementation in US units. The app will only be running in 22 restaurants, but the fast food giant expects to have the app fully operational in all UK stores in the next 18 months. Food may only be prepared once customers enter the store – though one would think this could change if payment is made before arrival.
• Telegraph reports high occupancy costs means ‘innovative young restaurant brands are shunning the conventional and costly growth strategy of multiple bricks-and-mortar sites in favour delivery-only kitchens and pop-up stands.’
• Innovation remains the key, the only constant is change. Demographic & technology developments mean new entrants will usually have more flexibility than incumbent operators.
• Food on the go & anywhere, anytime demands mean delivery likely to continue to grow. Delivery-only kitchens reckoned to cost around 1/5 of a fully-fitted out restaurant.
• Brighton Pier H1 numbers. Chairman Luke Johnson comments ‘this has been a transformational period for the Group. The acquisition of Brighton Palace Pier has delivered a strong financial performance for the Group with its first summer trading period in this half year set of results. I believe there are exciting opportunities to further develop the Pier business over the coming years. We continue to make good progress rationalising the Bars division together with driving operational and financial improvements across the estate.’
• Brighton Pier reports ‘we expect trading to continue to be in-line with market expectations through the seasonally quieter second half as management executes the Group’s strategy.’ It concludes ‘our ambition is to become a leading experiential attractions business in the UK. I believe we now have the correct group structure and appropriate management team to deliver that ambition.’
• Brighton Pier says has generated ‘a strong set of results for the 26 weeks to 25 December 2016, which is in line with the trading outlook published in the Company’s results announcement on 30 September 2016.’
• Brighton Pier: Sales +65% at £17.74m (first time inclusion of Pier) with margin +350bps. EBITDA +266% at £3.5m. Includes busy season for the pier, which will be quieter over the winter. PBT was £2.65m with EPS of 8.2p vs 1.9p last year. The group says ‘as always, the months between September and March are an opportunity to catch up on general maintenance and embark on new projects ready for the busy period from Easter onwards.’
• Brighton Pier – bar division. Has been cutting costs & raising margins. Has been ‘disposing of some of the smaller marginal sites together with any underperforming sites.’
• Brighton Pier outlook. Co says ‘trading for the first half is in line with market expectations and we expect this trend to continue through the seasonally quieter second half as management executes the Group’s strategy.’
• Fever-Tree revenue grew by 73% to £102.2m for the year to 31 December 2016, and an improved gross profit margin of 55.2% (2015: 52.1%) helped adjusted EBITDA increase by 97% to £35.8m. Diluted EPS more than doubled to 23.7p, valuing the tonic-maker’s shares on roughly 61 times earnings. Fever-Tree continues to make progress operationally, with strong sales in its markets and new listings with Asda in the UK, Target in the USA, and Rewe in Germany.
• Tim Warrillow, CEO of Fever-Tree said: ‘2016 has been another exceptional year of growth for Fever-Tree, with strong results achieved across all regions, channels and flavours, emphasising the global appeal of the Fever-Tree brand. As the pioneer and market leader of the premium mixer category, in both market share and reputation, our quality, award winning range of products continues to help drive the momentum towards premiumisation and simple long drink mixability that is transforming both the spirits and mixer categories worldwide.’
• The Gloucester City Council’s decision to postpone a meeting to consider the late-night levy has been welcomed by the ALMR, with the council looking into the possibility of creating a Business Improvement District in the city. Chief Executive of the ALMR, Kate Nicholls, stated ‘A move away from the levy, a blunt and ineffective tool, towards closer partnership working is very welcome.’
• The BBPA argues that beer should have been included in yesterday’s low-strength consultation on duty rates. BBPA Chief Executive Brigid Simmonds, said: ‘As we move towards Brexit, there is an opportunity to ensure a more competitive tax system for beer than is possible within the current tax framework of the EU Structures Directive, which only allows for lower rates of tax for beers up to 2.8 per cent ABV. Now is the time to be looking very seriously at these issues.’
• Chief Executive of the BBPA, Brigid Simmonds, has stated ‘I would urge the Government to look at the value of the UK’s food and drink sector to the British economy and ensure that, as we leave the EU, our sector is protected’, in response to the Prime Minister’s declaration that Article 50 will be triggered on March 29th. She elaborated on British beer exports saying ‘it is important to ensure that we can export on a competitive footing and trade as freely as possible. Currently, 63 per cent of Britain’s beer exports go to the European Union’.
• The Money Laundering Regulation 2017 consultation has given pubs an exemption to new regulation, recognising their status as a low-risk gambling environment, following a BBPA recommendation.
• The first in store supermarket takeaway has been announced in a collaboration between Morrisons and Just Eat. Morrisons aim to roll out the service nationwide.
• Motor Fuel Group has snapped up the latest High Noon Stores site and the administrator of the collapsed c-store business also expects to conclude the sale of the final two outlets ‘within the next week or so’.
• A study from ESA Retail has found that food retailers charge a premium of 4.5%-7.3% premium for customers shopping in convenience stores. The three retailers measured with c-stores and an online offer (Tesco, Sainsbury’s and Waitrose) charged more by either setting higher base prices or by offering a reduced number of promotions in convenience. The total average ‘price of convenience’ across all four retailers is 5.7%.
HOLIDAYS, LEISURE TRAVEL & HOTELS:
• Significant falls in number of travellers to the US is expected due to Donald Trump’s immigration policies, according to the World Travel and Tourism Council (WTTC). These findings come at a time when major US hotels (Hilton, Marriott and IHG) are experiencing slowing growth in RevPAR. The WTTC had already indicated ‘early signs’ of falling interest by showing that airline bookings to the US were down 6.5% a week after the travel ban.
• Italian airport ground handlers and air traffic controllers went on strike yesterday, leaving airlines such as Alitalian and British Airways to cancel as much as 40% of their flights.
• The key takeaways from the International Hotel Investment Forum (IHIF) earlier this month were; a focus on technology allowing companies to ‘own the guest’, the sustained popularity of alternative accommodation (such as hostels or AirBnB) and the similarity in restrictions and costs on hotels that brands and OTAs face.
• Other announcements from IHIF included IHG proclaiming 8 new Holiday Inns & Holiday Inn Express in Germany had been signed for and Hilton reaching the 100,000 rooms milestone across its Europe, Middle East & Africa region.
• Goals FY numbers: Group reports sales +1.6% at £33.5m with UPBT of £7.8m vs £8.3m. EPS 9.7p vs 14.3p. No dividend.
• Goals FY: Says it has seen a return to sales growth with LfL growth in the year of 0.5% vs negative 4.9% in 2015
• Goals FY: Has seen a ‘recovery in H2 with LfL sales, Underlying EBITDA and Underlying Profit Before Tax increasing by 2.9%, 0.2% and 4.5% respectively.’
• Goals FY: Announces ‘exceptional and non-recurring charges of £3.9m (2015: £14.5m) relating to a non-cash impairment of £2.5m, restructuring and strategic projects totalling £1m and non-recurring costs of £0.5m relating to the development and rollout of new brand and values.’
• Goals FY: Group has now completed review, set 5yr plan, strengthened balance sheet & restructured Board
• Goals FY: Says its ‘arena modernisation programme [is] well advanced with £5.1m invested and 136 pitches refurbished during the year.’ The group is on with its 2nd US club and will commence building a 3rd in H1 this year. Chairman Nick Basing comments ‘2016 has been a huge period of transformational Change. It’s a good start to report profit growth and positive trend in like-for-like sales. These results are early but encouraging evidence of our new strategy starting well. The business is on its way to being fit for purpose.’
• Goals FY: CEO Mark Jones reports ‘in the last six months we have made good headway executing our plan: 136 pitches re-laid resulting in a much more attractive proposition for customers; development of the new Clubhouse format which will be trialled later this year; and progress on the food and beverage proposition. Additionally, we have had a successful launch of our second club in the USA and are due to commence construction of our third club in H1 2017. We are delivering a better product which is already showing in the numbers and are confident that we can realise our ambitions.’
• 888 FY: Group reports ‘another year of outstanding progress for 888’. Says revenue +13% (up 18% in constant currency terms) with casino revenue +21%.
• 888 FY: Adjusted EBITDA +12% at $90.2m. EPS +74% at 14.4c. Total dividend of 19.4c for the year including 10.5c one-off payment.
• 888 FY: Says mobile continues to drive growth. Is now 60% of B2C business in the UK, up from 47% last year. CEO Itai Frieberger reports ‘2016 was another fantastic year for 888 during which we continued to deliver very strong organic revenue and profit growth. This was again underpinned by further outstanding progress in Casino, Sport and across regulated markets. 888’s further expansion in the UK, Spain and Italy is a strong demonstration of the Group’s ability to drive excellent growth and build leading market positions across regulated markets as the industry continues to head in this direction.’
• 888 FY: Group concludes ‘the Board continues to see a number of significant growth opportunities for 888 both in new and existing markets and we look forward to another exciting year of progress.’
• Spotify will now restrict some music to paying customers only, after reaching an agreement with record labels.
FINANCE & MARKETS:
• Brexit to be triggered 29 March. Intervening German elections suggest talks could start in the autumn.
• Downing St ‘confident’ it will achieve its Brexit objectives in 2yrs. Was the same with NIC increase, not going to Parliament to trigger exit etc. David Davis said ‘last June, the people of the UK made the historic decision to leave the EU. Next Wednesday, the government will deliver on that decision and formally start the process by triggering Article 50.’ He says ‘the government is clear in its aims: a deal that works for every nation and region of the UK and indeed for all of Europe – a new, positive partnership between the UK and our friends and allies in the European Union.’
• Sterling fell yesterday on the news that Article 50 is to be triggered a week tomorrow. Currently trading at 123.46c vs $ and 114.73c vs Euro
• B of England economist Andy Haldane has said that retaining free trade & inbound investment was key in the Brexit process
• B of England economist Andy Haldane suggested yesterday that low interest rates had helped jobs but held back productivity in the UK. Low rates have effectively kept zombie companies alive. Haldane reports that productivity would be up to 3% higher if rates had been left at their pre-crash levels. More people would have been jobless, however.
• Ex B of England governor Lord King has said that Scotland could exist as a separate country. King said that ignoring the trade deficit and underfunded public obligations such as the NHS were the main dangers being faced by the UK economy.
• Brent $51.82
• UK 10yr gilt yield fown 1bp at 1.24%
• World markets: UK up yesterday with Europe and the US mostly down. Far East markets mostly higher in Tuesday trade
• Later tweets: Chartists say ‘exhaustion gap’ is opening up in FTSE chart. What does that mean? Should I celebrate or throw myself off a bridge??
• Unloved bull market climbing wall of worry. Except for today when it slipped off a bit. Crazy prices with interest rates rising?
• Commodity prices akimbo. OJ +33% (in $$s, up 58% in Sterling) & coffee +47% (in $$s) but cocoa 37% cheaper than it was
• JDW says keep immigration at previous levels. But leave the EU, stop freedom of movement. How’s that going to happen?
• Easter getting bigger per ‘Good Housekeeping’ magazine. Never read it but apparently Easter Crackers are now a thing. Bonkers.
• Evolution as night-time economy keeps High Streets alive. Retail parks, on the other hand, quieter per BRC. Unhelpful for Restaurant Group
RETAIL NEWS WITH NICK BUBB:
• ScS Group: As previously announced back on Jan 31st, the sofa specialist ScS saw 2.7% LFL order growth in the first half (to end Jan) and today’s interims show that it translated that into a useful improvement in profits, but the current trading update may spook investors: “Trading in February was challenging, largely driven by reduced footfall. However, we have seen an improvement since the start of March”. The comps are tough but that has pulled the cumulative LFL order intake over the last 33 weeks back to +0.9%. However, with the key Easter and May bank holiday trading periods ahead, the company says that “Given the year to date performance of the business, the Board currently expects results for the financial year to be in line with expectations”.
• News Flow This Week: The highlight of this week is the Next final results on Thursday, as CEO Simon Wolfson’s view of the economic outlook will be eagerly awaited, but tomorrow Kingfisher will be in the spotlight with its finals. Thursday also brings the Ted Baker finals and the ONS Retail Sales for February.