Escape Hunt, Punch, Crawshaw, travel plans & other:

A DAY IN THE LIFE:

Ongoing IT issues. On to the news:

PUB, RESTAURANT & DRINK PRODUCERS:

⦁ BrewDog reports full year numbers. Its sales jumped by 97% to £72m and opened 8 bars in the year ending 2016, while the UK’s number one craft brewery’s flagship Punk IPA  continued ‘to drive category growth [of craft beer off-trade sales],’ growing by 137.1% in value per Nielsen data. Gross profit was up by 46% to £24.8m and EBITDA also rose by 46% to £7.1m. The group now has 47 BrewDog bars around the globe and employs over 650 people within its organisation. It aims to open a further 10 BrewDog bars in the coming year, with new units in Edinburgh, Columbus Ohio and London.

⦁ The fast-growing BrewDog has also announced its intention to open a new brewery in Asia to better cater to its audience in China, Japan, and South Korea. Meanwhile, the group is looking ‘to take the same level of disruptive innovation to spirits as we have with beer’ with its LoneWolf DIstillery and is also gearing up for further expansion into European markets with a focus on France, Italy, Spain, and Scandinavia.

⦁ The German-owned pizzeria chain Vapiano has begun trading at 23.95 euros on Tuesday, a 4% rise on their issue price. Vapiano operates 185 restaurants in over 30 countries, and plans to increase to 330 venues by 2020.

⦁ US operator Olive Garden’s LfL sales have increased 4.4% in the fourth quarter ending May 28. This was the 11th consecutive positive quarter for the Italian casual-dining chain. CEO of the group Gene Lee has praised the chains performance with millennials ‘Millennials still want to come to casual dining. Thirty percent of our guests are Millennials, compared to 24 percent of the overall population. So we over-index with Millennials.’.

⦁ Nestlé has started a 20bn Swiss Franc (£16.3bn) share buyback program, days after the US activist investor Dan Loeb bought a 1.3% stake (£2.7bn) in the company.  

⦁ Heineken has put a number of pubs up for sale in 33 area across the UK in order to ‘preserve competition and ensure customers in these locations do not lose out’ due to the Punch deal.

⦁ The BBPA has responded to the second council consultation on the introduction of a Late Night Levy in Tower Hamlets, with Chief Executive Brigid Simmonds saying ‘For businesses in Tower Hamlets, a Levy would represent a damaging new tax – it is the wrong approach. The focus should be on partnership working, with the police and local business, to address any issues in the night time economy.’.

⦁ A flood of pub closures are feared if the a promised rates discount payments scheme to protect them is not extended. Business rates specialist, CVS, has estimated that pubs will face £28m more in rates if inflation reaches a predicted 4% in September.

⦁ Tesco’s new app, called Tesco Now, aims to compete with Amazon by offering customers a 1 hour delivery service, allowing them to order from a range of 1,000 products.

⦁ UK supermarkets sales have climbed 5% in the last 12 weeks, the fastest rate in five years, while online sales grew at 11% the latest data from Kantar has shown. Fraser McKevitt, head of retail and customer insight at Kantar said the ‘marked turnaround’ was in ‘stark contrast’ to the 0.2% decline over the same period last year.

⦁ Crawshaw updates on first 20wks trading saying LfL sales were down by 4.5% over the period. It says, however, that ‘the trading performance of the business continues to be stable following the improvement in like-for-like sales from the initiatives introduced throughout the estate.’ CEO Noel Collett reports ‘we are pleased with the progress we’ve made and the continued level of stability achieved in the core business against the current backdrop of industry-wide cost pressures and a challenging consumer environment.’

HOLIDAYS, LEISURE TRAVEL & HOTEL:

⦁ The Conservatives and the DUP will consult on the impact of APD on tourism in Northern Ireland as part of the ‘confidence and supply’ deal reached by both sides.

⦁ Nearly one-third of British holidaymakers have changed their travel plans due to the fear of terrorism, according to a survey carried out by World Travel Market London. The study of 2,000 UK residents found that 17% of holidaymakers are avoiding countries with a ‘high’ terror threat, while 12% say that they would not travel to destinations that had suffered a terrorist attack. World Travel Market spokesperson Paul Nelson, commented: ‘With most capital cities on high alert, it’s hardly surprising that we are more cautious in our decision when it comes to holidays. However with Brits having such a strong desire to travel, I think it’s unlikely terrorism threats will be too detrimental to the resilient travel industry.’

⦁ Luton Borough Council has approved a new £200m railway station that will allow passengers to access the airport more quickly. The link is expected to be built by 2020 with journey times expected to be reduced down to 30 minutes.

⦁ British Hospitality Association chief executive Ufi Ibrahim says the minority Conservative government’s deal to gain support from the Democratic Unionist Party in Northern Ireland means UK tourism businesses should see a cut in VAT. Ibrahim commented: ‘The UK government has recognised the need to examine how Northern Ireland’s businesses are impacted by the UK’s high rates of tourism VAT. Reducing tourism VAT across the UK is a key pillar of the BHA’s recommendations to government to support the UK’s fourth largest industry and we look forward to working with the Treasury and leading the industry’s representations to this detailed report.’

OTHER LEISURE:

⦁ Escape Hunt reports results for 7mths to end-December. Co has changed year-end, name & strategy since.

⦁ Escape Hunt says that, as Dorcaster, it raised £9.7m when it was admitted to AIM in July 2016. It concluded its deal to buy Escape Hunt in May this year. The group is reporting a loss before tax of £1.6m for the 7mth period. It had £7.9m as at that date. These numbers are historic in more ways than one & have been very much overtaken by events.

⦁ Escape Hunt CEO Richard Harpham comments ‘2016 saw the formation of the Company and it raising almost £10m in new equity in order to make one or more investments in the leisure industry. After reviewing a number of possible acquisitions in 2016, we commenced due diligence on the Escape Hunt Group in the final quarter of 2016 and, given its track record and clear prospects for future growth, we were delighted to bring this acquisition and associated fund-raising to a successful conclusion in May of this year.’

⦁ Mr Harpham continues ‘the predominant strategy in the short term is to begin rolling out owner-operated sites in our target markets of the UK and certain EU territories, whilst continuing to grow the Escape Hunt franchise business globally.’ he adds ‘work to find appropriate sites is well underway as we target rapid expansion in the year ahead. Escape Hunt is one of the global leaders in the high growth ‘escape game’ space, and our expertise, our customer offer and our strong balance sheet gives us confidence for significant growth in the years ahead.’

⦁ Playtech shares fell by 3.6% to £9.58 after its founder announced he would sell the majority of his holding. Teddy Sagi, CEO, will raise almost £340m from the sale of 11.5% of the company, leaving his shareholding at 6.3%. Mr Sagi says he will focus on real estate, and already owns a large area of land in Holborn, London, through his company LabTech Investment.

⦁ Facebook has stated that more than a quarter of the world’s population use the social media platform every month. Mark Zuckerberg said ‘As of this morning, the Facebook community is now officially two billion people’.

⦁ Google has been fined a record €2.42bn ($2.7bn; £2.1bn) by the European Commission after it ruled the company had abused its power by promoting its own shopping comparison service at the top of search results. The tech giant must also end its anti-competitive practices within 90 days or face an additional penalty. If Alphabet fails to change the way it operates the Shopping service before the deadline, it could be forced to make payments of 5% of its average daily worldwide earnings.

FINANCE & MARKETS:

⦁ The Bank of England has tightened its controls on bank credit after deciding that the worst risks post last year’s Brexit vote had now passed. Banks will need to hold some £11.4bn extra in capital in reserve. The Bank of England has implied that banks may be too complacent saying ‘lenders may be placing undue weight on the recent performance of loans in benign conditions.’

⦁ ECB president Mario Draghi hasa suggested that the bank will work to gradually withdraw financial stimulus.

⦁ Fed chair Janet Yellen has said that she does not believe another financial crisis is likely or possible over the medium term. She also reiterated her view that US rates should rise only gradually.

⦁ More than 90% of savings accounts are now paying less than 1%

⦁ IMF cuts US growth estimates on back of uncertainty & White House policies.

⦁ Oil up at $46.59 per barrel

⦁ Sterling up a shade vs US$ at $1.2816

⦁ Pound down vs Euro at Euro 1.1293

⦁ UK 10yr gilt yields up sharply at 1.09% from 1.01% yesterday

⦁ World markets: UK down yesterday with Europe & the US also lower. Far East markets down in Wednesday trade

⦁ Brexit:

⦁ IEA says the divorce bill should be no more than £26bn. Some EU officials have suggested up to £100bn.

⦁ Deloitte reports that attracting EU employees to the UK could be challenging. It reports 36% of current EU employees in the UK are considering leaving. Intentions prior to the Brexit vote are not recorded.

⦁ German engineering body VDMA reports that energy, telecoms, automobile and aerospace companies are finding it harder to send staff on assignment to the UK. The VDMA reports ‘Germans used to see it as a very attractive place to work, a very liveable place. No one wants to be a persona non grata.’

⦁ David Davis has said that his job makes landing on the moon look simple.

⦁ Davis suggests UK will no longer be in the EU’s customs union and single market during any transition period.

⦁ Fed chair Janet Yellen has said maintaining “deep ties” between the UK and the EU was important.

RETAIL NEWS WITH NICK BUBB:

⦁ Dixons Carphone: Ahead of today’s finals (for y/e April), we flagged yesterday that the hard-working IR team at Dixons Carphone had circulated the following City consensus for divisional profits: UK £383m, Nordics £91m, Southern Europe £23m, CWS £20m, interest -£19m, to give adjusted PBT of £498m and the outcome was, predictably, a tad ahead (£385m, £89m, £22m, £21m, -£16m and £501m respectively, if you’re interested). So, the estimable Seb James, the Group Chief Executive, was able to trumpet “record headline profits before tax of over half a billion pounds – up 10%” and he has already tweeted “Another good year from the team, both financially and operationally: growth in every region!”. It would be perhaps churlish to point out that c6% of the 9% revenue growth and most of the 10% profit growth came from FX translation movement. As for the outlook, there is no current trading
update ahead of the Q1 on Sept 7th, but Seb James does go on to say that “While the UK consumer environment seems to be holding up for us, there will undoubtedly continue to be changes in the way people buy all of the products that we sell from phones to washing machines”. No doubt he will say a bit more at the 9am analysts meeting…

⦁ John Lewis Partnership Sales Watch: We flagged a week ago the two JLP businesses often react in differing ways to very hot weather and last week saw more of the same, although John Lewis wasn’t as badly hit as we expected, with the sapping effect of the heatwave on High Street footfall offset by the power of Online shopping and the launch of the summer Clearance Sale. In fact, John Lewis complained in yesterday’s weekly briefing that the slightly later fall of Clearance this year caused an adverse calendar shift in sales, so that the total sales dip of 0.5% gross (about 2% down LFL) in w/e June 23rd wasn’t as bad as it appeared. On a cumulative basis over the last 21 weeks, John Lewis running up only 0.7% gross (over 1% down LFL), but this week could edge that run-rate up a bit. Fashion sales were up by 1.5% gross last week and Electricals were 9.8% up gross, thanks to the launch by
Apple of the new red iPhone and the new iPad, but Home sales were 11.3% down…Over at Waitrose the very hot weather at the start of w/e June 23rd boosted business further and total sales were 5.5% up gross (nearly 4% up LFL) and so over the last 21 weeks combined Waitrose is now running up by 2.1% gross (up a tad LFL), but picnic and barbecue trade will be less good this week…

⦁ Waitrose Eat Watch: We were intrigued recently to read on the Retail Week website that one of the biggest regrets of Mark Price, the former boss of Waitrose, is that they didn’t buy the Eat sandwich chain few years ago. Researching the story, we found one of those Saturday FT “Working Lunch” interviews with the great man back in June 2010, in which he admitted to Beth Rigby (now Sky News’ Political Editor) that he was looking at the idea, when the business was up for sale for approaching £100m. But Eat was bought by Lyceum Capital, the private equity fund, in March 2011. And having won the “Outstanding Contribution to Retail Award” at the Retail Week Awards last year, he admitted to Retail Week in an interview last November that “I’d have liked us to have bought Eat quite a few years ago. When you look now at how the hospitality market has developed, I think that would have been good
for Waitrose to have in its arsenal”.

⦁ News Flow This Week: Tomorrow brings the JD Sports AGM trading update and then, with the end of the month fast approaching, the widely-followed monthly GFK Consumer Confidence survey is out first thing on Friday.