Langton Capital – 2017-06-26 – City Pub Co, Carnival, betting in football, EU staff & other:
City Pub Co, Carnival, betting in football, EU staff & other:A DAY IN THE LIFE: Is it just me or does the UKIP logo, a purple £ sign against a yellow background, look like something you’d expect to see outside a back-street cash-for-gold shop? It does, doesn’t it & it pretty much takes the biscuit when it comes to tasteless monikers because, say what you will about squiggly blue & green trees or red roses, they are, at least, normal. Anyway, today’s email has been beset by Microsoft’s attempts to make my IT work better. Which must be Nirvana by way of Hell as the first upgrade they foisted on me scuppered my Outlook (no outgoing emails from me after about 9am Friday) and the general MS Office upgrade, which installed itself overnight Friday going into Saturday, bust what was left of my laptop such that the thing wouldn’t boot up & threw out some gobbledegook error message ending in 000034 which, when Googled meant that you should ‘consult your dealer’. Wonderful. This forced me to dash my laptop around to some local pointy head IT specialists (£50 minimum, another £50 for data recovery and perhaps another £50 for rebooting the guilty, toxic MS Office software) after which, as I’m coming down to London today & won’t have my old laptop back in time, I’ve had to buy a steam-powered effort from Tesco £179 & find myself perhaps £300 down due to the mandatory improvements. Thank you Microsoft and the same to you. On to the news: PUB, RESTAURANT & DRINK PRODUCERS: ⦁ Moody’s has reported that Diageo’s acquisition of super-premium Tequila Casamigos is credit positive. The ratings agency says ‘the acquisition is credit positive because it will allow the company to extend its participation in the fast-growing tequila category in the US and supports its strategy to strengthen its presence in the super-premium and above segments.’ Moody’s reports ‘we believe Diageo paid a high premium for this acquisition given Casamigos’ luxury position, with bottles priced at $46-$55; the brand’s compound annual growth rate in sales of 54% over the past two years’. However, it says ‘we believe the brand’s strong growth potential will more than compensate for a slight deterioration in Diageo’s credit metrics.’ ⦁ Moody’s says re Diageo’s puchase of Casimigos, the group’s ‘increased exposure in this fast-growing US category will compensate for headwinds in the more mature vodka segment. In the first six months of fiscal 2017 (which ends June 2017), double-digit organic sales growth in North America whiskey (Crown Royal, Bulleit) and tequila (Don Julio, up 10%) supported Diageo’s performance in its biggest and most profitable market and compensated for a 4% decline in Smirnoff, its leading vodka brand.’ ⦁ The FT reports that higher milk prices are increasing margin pressures on some food manufacturers. It says ‘a combination of farmers going out of business and a cold spring have chilled UK dairy production and sent prices soaring for food manufacturers.’ As we have commented on a number of occasions, the farm-gate milk price in the UK is now around 30% above its June 2016 lows. ⦁ Imbiba partner Darrel Connell has told the CGA Future of Finance conference that the investor has looked at 70 businesses with a view to investing in them from its Growth Fund. ⦁ The Bottle Shop is now overfunding on Crowd Cube. It has passed its initial target of raising £350k. ⦁ City Pub Co West has reported FY numbers to end-Dec saying ‘it has been another busy year for the team’. The co says the year ‘has seen a large expansion in the trading estate and significant financial progress’. Sales for the year were +48% at £12.8m with pre-exceptional EBITDA of £1.96m (up 52%). The group reported PBT of £0.46m against £0.51m last year. ⦁ City Pub Co West updates on trading saying ‘trading has been healthy in the first 3mths and total sales are up some 47% on this time last year. All sites are trading in line with expectations or a little better’. ⦁ Pret a Manger has been it must replace KPMG as its auditor, in a strong sign that the firm is to IPO this autumn in the US. KPMG have been replaced by EY, as KPMG recently failed strict US governance rules. ⦁ Drinkaware, the alcohol education charity, is refocusing it efforts to older drinkers, as the young are consuming less alcohol. THe Chief Executive of Drinkaware, Elaine Hindal said ‘Drinking culture and habits in the UK have shifted significantly over the past five years and our new strategy reflects these changing currents’. ⦁ There has been outrage on social media in the UK as a US chain has claimed to have invented a new summer snack that look suspiciously similar to a sausage roll. The supermarket Trader Joe’s has called its ‘invention’ the ‘Puff Dog’. ⦁ Chief Executive of the BBPA, Brigid Simmonds, commented on Theresa May’s speech to EU leaders at the Leaders’ Summit in Brussels: ‘Theresa May’s desire to give citizens who have settled in the UK certainty is most welcome, as we have continually called for clarity for our workforce. It will offer reassurance, too, that both parties want to get this issue resolved quickly, and the BBPA will be closely monitoring the outcome of these negotiations.’. ⦁ M&A activity in the pub industry should keep up over the next two years, as long as sellers are realistic in their expectations, according to Sapient Corporate Finance. The MCA reported that while M&A activity was better now than five years ago, it was far from buoyant. ⦁ Halewood Wines & Spirits has invested in Sadler’s Ales, making Halewood the majority shareholder. Sadler’s Ales will still continue to operate as an independent operator. ⦁ Co-founder of Orderella, Dennis Collet, has told the MCA that the brand will continue to operate though a new company, Nextround Ltd. The order ahead drinks app, Orderella, entered into administration last week. ⦁ The US based casual dining burger chain, Sonic, is to become the first chain to test beef-mushroom blended burgers. The blended burgers are being pushed as healthier alternatives to traditional burgers, and to be less of a strain on the environment. HOLIDAYS, LEISURE TRAVEL & HOTEL: ⦁ Travel industry analyst GfK reports season-to-date outbound holiday bookings up 5% yoy in May for summer 2017, against the backdrop of the formal Brexit talks. Revenue to the end of May was up 10% yoy. Bookings for winter 2017-18 bounced back, rising 10% yoy with revenue increasing 14% yoy for May. ONS data confirmed the growing market, with outbound holiday departures in the first four months of the year up 2% on 2016. ⦁ Kuoni is set to open its 48th travel agency in Oxford as a John Lewis concession. The site will open in October and will be its 16th concession in a John Lewis store. ⦁ Three of Premier Inn’s hotels have cladding that ‘does not appear’ to meet fire safety standards, leaving the hotel chain ‘extremely concerned’ in the wake of the Grenfell Tower fire. The sites in Maidenhead, Brentford and Tottenham did not appear to comply with government guidance for tall buildings, with the company saying that they are ‘are seeking to address this with the developers.’ ⦁ Boris Johnson has described the fake holiday sickness claims debate as an ‘injustice affecting millions of families’. Citing a letter he received from Abta CEO Mark Tanzer, Johnson said that the ‘outlandish numbers’ – referring to a 434% rise in claims across the industry – proved the ‘rampant culture of claiming insurance at the end of the holiday for an upset stomach’ and compared the issue to that seen with whiplash claims. ⦁ Europe’s hotel industry benefitted from a 3.5% rise in occupancy year-on-year to 75.6% this May and a 4.8% increase in average daily rate to €114.35 drove RevPAR up by 8.5% to €86.47. ⦁ Choice Hotels International plans to consolidate its recent expansion in Europe with a pipeline of further openings, according to one of the company’s top executives. OTHER LEISURE: ⦁ The Competition and Markets Authority (CMA) will take action against online gambling companies which it suspects are breaking the law or are ‘unfairly holding onto people’s money’. Nisha Arora, CMA senior director for consumer enforcement said: ‘New customers are being enticed by tempting promotions only to find the dice are loaded against them. And players can find a whole host of hurdles in their way when they want to withdraw their money.’ ⦁ Waterland has put Dutch casino operator JVH up for sale after securing a €330m loan financing that can stay in place for any new owners. ⦁ Wonder Woman is set to become the top grossing live-action film by a female director, generating more than $620m worldwide since launch. Currently the record is held by Kung Fu Panda 2 which grossed $655.7m. ⦁ Three Crown resorts employees, an Australian casino group, have been jailed after pleading to illegally promoting gambling in China. A senior executive in charge of attracting Chinese high rollers called Jason O’Connor was sentenced to 10 months. FINANCE & MARKETS: ⦁ Business confidence has risen to an 18mth high reports the Lloyds Bank Business in Britain report. The index is now standing at 24%. The long run average over the last 25 years is 23%. Uncertainty, input price rises & a labour shortage are the main problems faced by business. ⦁ Eurozone composite flash PMI down a shade in June to 56.8 from 55.7 in May. ⦁ Eurozone manufacturing stronger, services still positive but slightly down June on May. ⦁ Sterling $1.2742 and Euro 1.1385 ⦁ Oil $46.06 ⦁ UK 10yr gilt yield up a shade at 1.04% ⦁ World markets: UK & Europe down on Friday with US markets higher. Far East mostly higher in Monday trade ⦁ Brexit: ⦁ David Davis has told the BBC he is “pretty sure”, but not “certain”, that he will be able to get a free trade deal with the EU. Davis went on to say ‘I happen to think we have got a very good prime minister. I know she is coming under a lot of pressure at the moment, but I have seen her in action.’ ⦁ Andrea Leadsom has told the BBC that the publicly-funded broadcaster, and journalists in general, should be more patriotic when reporting on Brexit. ⦁ Brexit supporter & CEO of Next Lord Wolfson has said that a rough exit from the EU could lead to “years of economic decline” for the UK. ⦁ Politics: ⦁ Mrs May still PM. No deal with DUP. Votes on Queen’s Speech this week. Labour 6pts ahead in polls. Tory leadership scirmishing in Sunday papers. DUP support in short term more likely than not, with or without a formal deal. ⦁ David Davis has said that a leadership contest would have “catastrophic” consequences for Britain’s EU negotiations YESTERDAY’S LATER TWEETS: ⦁ Gen Y more into sharing & experiences, less into ‘stuff’. Fits with ‘experiential’ leisure offers. ‘Here’s a burger’ is no longer enough ⦁ EU staff likely to be allowed to stay. Acceptance of reality & will come as a huge relief to the hospitality industry. RETAIL NEWS WITH NICK BUBB:
⦁ Saturday Press: Thin pickings in Saturday’s papers, although the Times and the Telegraph both had snippets about the news that Tesco is to give its staff a 10.5% pay rise over the next 2 years. The Guardian gave more coverage to the news that Nisa convenience store operators are airing their discontent at the prospect of aSainsbury’s takeover and it gave even more coverage to a feature on “handbags at dawn” with Farfetch, the latest thing in upmarket Online fashion and now backed by Natalie Massenet (“the queen of Online luxury”), said to be lining up a $5bn IPO. The Daily Mail had a prominent, if slightly alarmist, story headlined “House of Fraser is hit by funding fears”, flagging that HoF’s owner, Chinese billionaire Yuan Yafei’s business Sanpower, pulled funding for a small British challenger bank. Finally, Lex column in the FT looked at the increasingly beleaguered Domino’s
⦁ Sunday Press: The Sainsburys bid for the struggling Nisa convenience store chain was the main feature in the Sunday papers, with the Sunday Times running a detailed feature on how “Shopkeepers determined to hold on to their baby”, flagging that there is a chance the Sainsbury bid “could founder on the mistrust between Nisa’s members and their managers”. The Sunday Telegraph highlighted that Nisa members are being offered a sweetener to get them to agree to the buyout and the Mail on Sunday noted that if the Sainsbury deal with Nisa goes through and Tesco end up owning Booker then nearly a quarter of the convenience store marketwill be controlled between them. The Mail on Sunday also had a prominent article about the increasingly lurid legal battle between Mike Ashley and Jeff Blue over his Sports Direct pay deal. The Midas investment columnin the Mail on Sunday highlighted that ⦁ Today’s Press and News: The big story today is that the Holland & Barrett healthfoods chain has been sold by its US private equity owners for the princely sum of £1.8bn to the new investment fund, L1 Retail, of the Russian billionaire Mikhai Fridman. This is a front page story in the FT, which also has 2 other interesting articles: a scoop that the Tiger Global hedge fund is using an offshore vehicle to short Tesco (to get around disclosure rules) and an interview with the Chairman, Dean Hoyle, of The Works discount book chain, which is up for sale (“The Works aims to brew more magic out of chaos”). The Telegraph flags that the Aussie kids stationery chain Smiggle is doing well in the UK and may step up its expansion. Finally, there are plenty of mini-previews in today’s papers of this week’s trading updates and results, eg from Carpetright, Debenhams and Dixons Carphone. ⦁ News Flow This Week: As we head into the last week of June, the pace of company news picks up, with the much-awaited Debenhams Q3 update and Carpetright finals both out tomorrow, along with the latest Kantar/Nielsen grocery market share data. The Dixons Carphone finals are then on Wednesday, with the JD Sports AGM update on Thursday. And with the end of the month fast approaching, we get the CBI Distributive Trades survey for “June” on Tuesday morning and the monthly GFK Consumer Confidence survey first thing on Friday. |
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