Langton Capital – 2017-04-11 – On trade sales, Curious Restaurants, Travelodge & other:
On trade sales, Curious Restaurants, Travelodge & other:
A DAY IN THE LIFE:
Langton’s email yesterday morning prompted between 250 and 300 out of office replies.
Suggesting that we, along with a few other hardy (or foolish) souls, are perhaps in the minority in sitting at our desks because if 300 say they’re out of the office then who knows what the true number really is?
Anyway, we’ll continue to add value for as long as we can though even we do have to admit to ‘working from home’ a bit in the run up to Easter.
And very pleasant that is too looking out at the (relatively-recently-cut-but-growing-like-an-idiot) grass and the bullfinches, which seem to be making an industry out of eating or otherwise destroying the blossom that we could reasonably hope would turn into plums, apples and cherries later in the season.
Anyway, it’s time for the news (what relatively little there is of it) but if you would like to come off this email list please simply hit the unsubscribe button above. Similarly, if you are getting it forwarded and would like to go on directly or if you would like to recommend it to one of your colleagues, please just hit the subscribe button and/or suggest that your colleague does too.
PUB, RESTAURANT & DRINK PRODUCERS:
• CGA reports inflation boosted value of drink sales for out of home consumption by 1.8% during 2016.
• CGA reports that the value of alcoholic drink sales climbed to £24.4bn – round £428m higher than in 2015, according to CGA’s exclusive Alcohol Sales Tracker.
• CGA reports that the volume of alcohol sold in 2016 fell by 1.7% last year. It says ‘against a background of sketchy consumer confidence and economic uncertainty it is a solid performance, reflecting the strength and innovation of pub, bar and restaurant operators around the country and the continuing move towards more premium products.’ It goes on to say ‘it shows that people are drinking less, but looking for better quality.’
• CGA reports that food-led pubs outperformed wet-led outlets last year. The value of drink sales across the former rose by 4.4%. CGA says ‘sales in the drinks-led sector of the market rose by 0.6% – a slower rate of value growth but an encouraging achievement given the ongoing closures of many local and community pubs in Britain.’
• CGA reports ‘with many costs rising and real terms growth hard to come by, the eating-out sector is a market share game right now. Restaurants that provide interesting and distinctive ranges of drinks will have a much better chance of driving footfall and loyalty in the years ahead.’
• Curious Restaurants has reported that it is to pull its attempted £600k fund-raise on Crowdcube. The company commented yesterday ‘sadly we wont be closing this funding on Crowdcube. Our aim was to try and get 100-300 investors who would also become brand ambassadors for the business. Everyone has an opinion about restaurants as a consumer, so we thought it would be really interesting to have a pool of brain-power from different industries who would be interested enough to engage with us and the brand we are trying to build.’ Curious says ‘we clearly didn’t get that and maybe this was not the right place for us.’
• Curious Restaurants last seen had raised £241k, of which £140k had been committed by directors. The group comments ‘we will be opening our first Jones Family Kitchen later this year as we have the funding to do so. It’s a really exciting time and we can’t wait to show it to everyone.’
• Barclaycard reports consumer spending rose by 4.6% in March with entertainment spend +11.6% and spending in restaurants +12.2%. Barclaycard reports that pub visit spending rose by 12.5% in the year to March. The group only comments on spending on cards & last year’s contactless move from a £20 to a £30 limit will have boosted this further.
• Telegraph reports households ‘splashed out on entertainment and meals out last month, indicating that they are still happy to spend.’
• LVMH has reported a 15% growth in Q1 sales to €9.88bn. The group comments ‘in a particularly uncertain environment, LVMH will continue to focus its efforts on developing its brands, maintain strict control over costs and target its investments on the quality, excellence and innovation of its products and their distribution.’
• Imbiba-funded bar restaurant chain Albion & East has reported full year numbers to end-June 2016. The newly-funded group increased retained losses from £857k to £1,534k in the wake of the disposal of its first unit, the Fourteenth Colony, in Farringdon last year. The group, which now operates the Martello Hall in London Fields, Hackney, raised further funds during 2016 and, as at its balance sheet date, had some £3.1m in the bank.
• The BBPA is arguing that Hackney Council’s introduction of a Late Night Levy would be akin to a direct tax on local businesses and that instead a Business Improvement District (BID) scheme should be sought. Brigid Simmonds, head of the BBPA said ‘Where introduced, Late Night Levies have proved to be a damaging new tax on local businesses … as recently as last week, the House of Lords Committee on Licensing recommended that they be abolished entirely.’
• The Brighton and London based group, Laine Pub company, has acquired the New Pub Company in a deal worth just less than £4m, reports the MCA. The New Pub Company currently manages seven pubs within the M25, with all but one being taken over by Laine (creating a 19 strong estate).
• Waitrose will hold a ‘Supper Club’ that will offer customers a restaurant-style dining experience. The event will take place at the shop in Haywards Heath, with customers able to choose from a 3 course menu for £35 and if it is successful, will look at introducing the concept to additional branches.
• Accolade UK’s revenue has fallen by nearly £104m with operating profits declining £10m in the year to 30 June 2016. This profit reduction came despite the group’s disposal of the Matthew Clark business to Conviviality for around £80.1m in September 2015. The company reported that it ‘continued to operate in a highly competitive trading environment, which had resulted in the reduction in revenue and operating profit’.
• A survey conducted by Piper Jaffray has found that US teens are spending more than ever before on food, with brands like Starbucks and McDonald’s leading the way. Piper analysts, Nicole Miller Regan and Joshua Long commented ‘We believe this reflects the restaurant industry’s arguably less discretionary nature as a category of spending relative to other consumer (discretionary) categories.’
• The Piper Jaffray survey also found that US teens continued to shift their spending from full-service restaurants to quick-service and fast-casual brands. Survey analysts noted ‘In spring 2009, full-service concepts had a 57 percent preference, which has slowly shifted toward a preference for limited-service concepts now at 67 percent in spring 2017.’
• The British fashion chain Jaeger collapsed into administration last night after Better Capital (owner) was unable to find a buyer. The chain was bought by Better Capital in 2012 for £19.5m and its administration will put almost 700 jobs at risk.
• Sainsbury’s has seen sales increase by 58% in French rosé in the last month. The supermarket has increased its pink wine offerings to 63 in order to supply the demand for more than 15 million bottles of rosé a year. Head of beers, wines & spirits, Elizabeth Newman said ‘Consumer habits are changing as the UK begins to mirror trends in France’.
• Waitrose has begun exporting English sparkling wines to China, with four wines being selected for the Chinese market. Waitrose is one of the biggest retailers for English and Welsh wine and Becky Hull, English and Welsh wine buyer for Waitrose, said that Western wines are becoming increasingly popular in China.
• Glasgow has been selected as the location for Canadian brand Tim Horton’s first UK site. The group, which is owned by PE house 3G, will open its first unit on the city’s Argyle Street later this spring. The UK is the first European country to be targeted by Tim Horton. 3G also owns Burger King and Popeyes Louisiana Kitchen.
• The Californian Blossom Hill Winery has been bought by Delicato Family Vineyards.
HOLIDAYS, LEISURE TRAVEL & HOTEL
• Travelodge reported a 2016 total revenue of £597.8m showing a 6.8% increase yoy. The opening of 19 new hotels brings the chain to 543 in total, consisting of 40,847 rooms. RevPAR grew 2.5% to £39.34 while EBITDA was up £5m to £110.1m.
• Peter Gowers, Travelodge CEO, said ‘we see considerable further potential to expand our network over the years ahead, and expect to open an average of 20 hotels each year over the next three years. Clearly the macroeconomic picture remains uncertain and there are increased cost pressures from the national living wage, business rates and other regulated cost increases.’
• London Luton Airport saw a 15.7% increase in passenger numbers as more than 1.2 million travellers passed through its terminals in the last 12 months.
• Schools are once more being called upon to stagger holidays to reduce premium summer prices following a landmark Supreme Court ruling against dad John Pratt. Writing in a column for The Times, former education secretary Michael Gove, who launched the clampdown on term-time absences as Education Secretary, championed staggered holidays. ‘Schools now have the freedom to vary term times,’ wrote Goves. ‘Schools that opted for a shorter summer break with longer holidays at other times would not only help parents beat the tourist sharks but they would also help ensure that more of what was learnt in the summer term was retained for the autumn.’
• Gatwick reported handling 44 million passengers in the 12 months to Saturday April 8, a record not just for Gatwick but for any single runway airport in the world. Long-haul services have driven much of the growth — the ‘booming’ airport launched 20 new long-haul routes last year and more will start this summer.
• Kew Green was amongst the award winners at the recent annual InterContinental Hotels Group Hotel Stars Award Ceremony, held in Berlin. Alex Pritchard, CEO of Kew Green Hotels said of the news: ‘We’re delighted to be part of the IHG family and it’s fantastic to be recognised for our hard work and commitment.’
FINANCE & MARKETS:
• Reuters’ poll suggests ECB will keep its rate at current levels until ‘at least early 2018’.
• Eurozone investor confidence rose in April.
• Brent up a buck and a half to $55.93
• Sterling up at $1.2418 and €1.173
• UK 10yr gilt rate unchanged at 1.08%.
• World markets: UK mixed yesterday with Europe mostly lower. US up but Asia down in Tuesday trading
YESTERDAY’S LATER TWEETS:
• Later tweets: Milk price continues to edge up. Farm gate now nearly 28p per litre (was 20p in June last year). Important input for many products
• Lumber price very strong. Somebody’s building something somewhere. Soft commodity prices, sugar, cocoa, soybean, rather weak.
• City AM says stores group face ‘triple blow’ of tax hikes, rising costs & sluggish consumer demand. Also online provides further headwind
• Economic stats Friday rather bleak. Experts not infallible & one swallow doesn’t make a summer. But a few thousand do
• Google enters holiday market. Could be a stewards’ enquiry. If you don’t like the Google price do you trust Google to find an alternative??
• Langton checks out London Coffee Festival. Finds a young, vibrant, confident industry. Albeit with a bit of a caffeine buzz about it
RETAIL NEWS WITH NICK BUBB:
• Overall View: Well, the BRC-KPMG Retail Sales for March are heavily impacted by the late Easter this year, but still leave the impression that Non-Food sales have slowed by more than might have been expected…
• NB Just as a reminder, “The Daily Retailer” is still being produced this week from the ski slopes of the Rocky Mountains of Colorado (where we are 7 hours behind BST).
• Sector trends/share prices: The All-Share index was flat yesterday, but the Food Retail sector was up by 1.5% (TSCO +2.4%). The General Retail sector was up by 1.1% overall (JD +4.3%, CPR +4.7%, MTC +4.3%, MKS +2.8%, NXT +1.7%, JOUL +5.1%, ASC -1.4%, DEB -2.9%). First thing today JD Sports will be in focus on the Retail beat, after its finals.
• BRC-KPMG Retail Sales for March (5 weeks to April 1st): As expected the overnight BRC-KPMG Retail Sales for March were not much to shout about, given the impact of the late Easter this year, with LFL sales down by 1.0%, to complete a weak Q1, with total LFL sales down by 0.7% (Food down 0.2% LFL and Non-Food down 1.1% LFL). It looks as if Food was still positive LFL in March itself, helped by rising inflation, which means that Non-Food was again disappointing last month, despite good Mother’s Day trade and some bright spots, eg Footwear. Weak spots in Non-Food included Household Appliances, Furniture and Other Non-Food (despite strong Gaming sales at the beginning of the month), which may be Easter-timing related or may reflect an underlying slowdown. Online Non-Food sales were still up in March, by 6.6%, despite the late Easter, which meant that Non-Food Store LFL sales were down by
• Today’s Press and News: The main news is that the fashion chain Jaeger has finally gone into administration (leaving the future of its 680 staff and 46 stores hanging in the balance), although this was hardly a surprise. The FT article flags that the private equity owner Better Capital lost a lot of money on its 2012 investment in Jaeger…There is also a lot of coverage of the weak BRC-KPMG Retail Sales figures for March (see above), with the FT headline fairly typical: “Consumers rein in non-food spending as inflation bites”, although the Times ran with “Nervous shoppers send retail sales down” and the Telegraph went with “Boom in shopping slows down as inflation eats into spending power”.
• News Flow This Week: Things are quite busy this week, running up to the long Easter weekend, with the JD Sports finals out this morning and then tomorrow bringing the Tesco finals, the WH Smith interims and the Dunelm Q3 update.