Langton Capital – 2017-12-18 – Byron, gin sales, Royal Wedding, new openings & other:
Byron, gin sales, Royal Wedding, new openings & other:
A DAY IN THE LIFE:
So, as we’re approaching the 20s of December, it’s nearly time to man-shop.
Indeed, the crowds should have diminished by Thursday or Friday, town should be pretty empty on Saturday. Sunday afternoon should be quiet and the petrol stations are open on Monday 25th so what’s the panic?
A pair of driving gloves, a road map of Europe (hinting at great things to come) and a bottle of anti-freeze have always done the job in the past and they might have to do so again.
Substitute a family pack of Maltesers for the anti-freeze if the recipient is below legal driving age and job done. On to the news:
LANGTON IS CURRENTLY HOMELESS:
We are between offices. Alie Street no longer works & nor does the phone number shown below. We’re not really set up to pay two lots of rent so, rather than there be an overlap, there is currently a gap. The new office (on London Wall) should be functioning early in the New Year. Details to follow but, for the moment, please communicate via email.
LANGTON RESEARCH, GET IT WHILE IT’S HOT @ £200 + VAT:
Langton is putting together a compendium of 60-seconds pieces for publication early in the New Year.
These are all new (though we may put some historic 2017 efforts in the appendix) & will focus on two areas; companies & themes.
Themes will include discounting, cost pressures, overcapacity, the coffee phenomenon, delivery, the use of apps, Millennials, the grey market and so on and so on. There are more than you might think.
We’ll be busy over Christmas and the doc will be ready in early Jan but, if you would like a copy, please let us know. As mentioned, £200 plus VAT but free to clients.
PUB, RESTAURANT & DRINK PRODUCERS:
• Former Byron owner Hutton Collins is reported to have sold a majority stake in the company to Three Hills Capital Partners
• Hutton Collins paid £100m for Byron in 2013. The company is currently thought to be worth a fraction of that. The company, which numbers former Morrison’s CEO Dalton Phillips amongst its directors, last reported (very historic) numbers to the 26 June 2016.
• Byron last seen (to June 2016), had seen sales of £80.5m (up from £69.0m in 2015) but was only marginally profitable with profits of £194k for the year (2015: £4.0m). Trading has worsened materially. The group suffered from food poisoning issues in 2016.
• Hutton Collins remains a minority owner in Byron. A spokesman has said that the size of its remaining stake and the value of what it sold will not be disclosed. A further number of restaurants are likely to be closed.
• The BBPA is calling for an extension of pub hours on the Royal Wedding (set for Saturday 19 May, 2018), which could boost trade by £10m. BBPA Chief Executive, Brigid Simmonds, comments: ‘A Royal wedding is a great national celebration, and a wonderful opportunity for us all to get together in the pub. I know this would be warmly welcomed by pubgoers and the pub trade. It would put pubs at the heart of the celebrations, something which has been a great success for previous major Royal events. I hope the Government will embrace this idea.’
• Vodka has fallen out of fashion this year as consumers opt for ‘more interesting’ gin cocktails. Vodka sales fell by 3% from this year to last year, according to the annual poll by the Wine and Spirit Trade Association (WSTA). In 2016, 21% of respondents said they drank gin compared to 26% who had vodka. This year, of the 2,038 asked, 29% said they drank gin as opposed to just 21% for vodka.
• The Food and Drink Federation (FDF) wants a binding guarantee over the status of EU workers as Brexit negotiations progress. FDF Director General Ian Wright CBE said: ‘It is great news that the European Council has agreed to progress talks to phase 2. We welcome the immense efforts of both sides. But there is a mountain of work ahead. While our valued EU workers have some comfort for Christmas over their future status, we want to see a binding guarantee and for Government to deliver on their promise to create a simple online registration system.’
• SSP has opened a new bar and restaurant at Birmingham Airport called Factory Bar & Kitchen – a reference to the city’s heritage and place in the industrial revolution. Simon Smith, chief executive of SSP UK and Ireland said: ‘The Factory Bar & Kitchen has been designed in partnership with our clients at Birmingham Airport to offer all our customers a fantastic experience. We are delighted to provide local favourites to create a sense of place, all served in a warm and inviting environment. We look forward to welcoming all our guests to enjoy this great new concept.’
• EI Group has bought back another 163,343 of its own shares at 143.8p for cancellation.
• Vianet has announced that it is being re-classified for FTSE sector purposes from Support Services to Technology. The group, which is focussing on its Internet of Things (IOT) platform, recently announced a deal to supply information on its remote machines to a global coffee company. Vianet Chairman James Dickson comments ‘the re-classification of Vianet’s sector on the London Stock Exchange to Technology more accurately reflects the Group’s IOT and data analytics business model. We believe that this should also bring Vianet to the attention of a wider audience, which is a positive development.’
• The Sunday Times has reported that Pizza Hut’s UK business is close to being sold to PE backers for around £100m. Rutland Partners is said to be in advanced talks to sell the business to debt investor Pricoa. Rutland Partners bought the business for £1 in 2012 but have since spent around £60m in modernising the business.
• Restaurant chain Meatcure reported to Companies’ House on 14 Dec that it had voluntarily appointed a liquidator. Liquidators Peter Windatt and John Rimmer reported to Companies’ House on the same day that there would be a shortfall of some £292k for creditors. Assets stood at £12k with liabilities of £304k.
• Sunday Times points out employment has slipped from its highs. It says this could put a brake on spending.
• Sky reports that Corbin & King, which owns the Wolseley and The Delaunay amongst other units, is to be taken over by Thai hotelier Minor. Minor has more than 150 worldwide. Sky suggests that the deal is worth around £60m.
• Sunday Times runs story suggesting Whitbread boss Alison Brittain must wake up and smell the strategy. A split (between budget hotelier Premier Inn and Costa Coffee) has been rumoured for some time.
• Bank of England survey says more UK households now expect a deterioration in their finances rather than an improvement for the first time in 3yrs. The Bank reports ‘households’ expectations of income and spending have both increased since last year, which likely reflects the rise in cost of living following the depreciation of sterling.’ Current real earnings growth is negative.
• CEO of the BBPA, Brigid Simmonds, responded to the publication of a regulatory compliance handbook by the Pub Code Adjudicator by saying ‘there is a concern that this could create another level of complexity… It does, however, reflect discussions between the CEOs of individual companies covered by the Statutory Code and the Adjudicator’.
• Per MCA, food-to-go visits have declined across all day-parts, with overall frequency down 9% in the year to September 2017. Breakfast time visits were up 2%, lunch-time frequency down 3% and dinner visits down 19% according to the MCA’s Food to Go tracker.
• Per MCA, motorway service operator Welcome Break will add five PizzaExpress restaurants in the coming year and promising drive-thrus at most of its sites by the end of 2018.
• The IFS reports that a floor of 50p per unit of alcohol would raise the cost of 70% of alcohol bought in shops, creating a ‘strong-case’ to reform alcohol duties instead. Scotland is set to introduce a minimum price in May.
• Figures from national charity Alcohol Concern show that more than 3 million people will participate in Dry January, foregoing alcohol for the first month of 2018.
• Becle, the owner of Tequila brand Jose Cuervo, has agreed to purchase Canadian whiskey brand Pendleton for $205m. ‘The Pendleton Whisky brand will fill an important strategic position in our portfolio, as we add a fast-growing, super premium whisky to complement our broad selection of international spirits,’ said Mark Teasdale, president and chief executive officer of Proximo Spirits Inc, the United States operating subsidiary of Becle.
Conviviality has offered to buy a chain of 127 Central Convenience retail stores for £25m in the wake of the latter’s administration.
• Diageo has secured over 5 million pledges never to drink and drive through its global programme Johnnie Walker #JoinThePact. The group has also increased its 2025 target tenfold to 50 million pledges.
• Snack food maker Snyder’s-Lance has received a takeover approach from Campbell Soup Co.
HOLIDAYS & LEISURE TRAVEL:
• The new Uniworld’s UK managing director, Chris Townson, is aiming to double its business in the UK and change the way the brand talks to the trade.
• Virgin rail workers have stated their intentions to go on a 24-hour strike in the first of a number of walkouts across the UK. Virgin has said it has offered a ‘significantly above inflation pay rise’, but unions rejected it.
• Global international arrivals came in at a worldwide record 1.1 billion in the first 10 months of 2017, according to the UN World Tourism Organisation (UNWTO) World Tourism Barometer. The report finds a 7% increase in international travellers — equal to an additional 70 million arrivals and reflective of a ‘global economic upswing’.
• Gfinity has reported that Team Fnatic is to compete for the first time in its Elite Series. Gfinity reports ‘Fnatic is a professional esports organisation headquartered in London, United Kingdom, and has established itself as one of the leading franchises in global esports with teams competing in over 20 global competitions each year. Founded on 23 July 2004, the team has players from around the world, across a variety of games, such as FIFA, Counter-Strike: Global Offensive, League of Legends and Dota 2. Earlier in 2017, Fnatic signed an exclusive partnership with Italian football club, AS Roma.’
• Gfinity CEO Neville Upton comments ‘having established the Elite Series as one of the leading esports tournaments in the world, we couldn’t be more excited by expanding and bringing in a team of Fnatic’s calibre.’ He says ‘with their inclusion, an already competitive roster and more announcements to come, this will be our most action-packed season to date.’
• The latest Star Wars film generated more than $450m (£337m) in global ticket sales in its opening weekend, which also saw The Last Jedi place second in the all-time list in America.
• The 2018 US IPO market is expected to see the debut of some of the world’s most high profile ‘unicorns’ (companies that have reached a $1bn valuation without tapping the stock markets). The list of anticipated new entrants includes: Spotify, Airbnb, Dropbox, and Lyft.
• Snapchat has launched its augmented reality developer platform, Lens Studio.
• Jackpotjoy plc has entered into a ten year framework services agreement with Gaming Realms plc.
FINANCE & MARKETS:
• Oil up a shade at $63.50
• Sterling down over the weekend at $1.3337 and €1.336
• UK 10yr gilt yield down 3bps at 1.15%
• World markets: UK up on Friday with Europe & US also higher. Asian markets mostly higher in Monday trade
• Brexit etc.:
o Mrs May is thought likely to drop a firm date for Brexit from upcoming legislation.
PRIOR DAY LATER TWEETS:
• Later tweets: Best in class operator Fulham shore reports H1. Tough summer. Signs of improvement but headwinds remain.
• Fulham Shore backing Made of Dough as venture into urban pizzas. Group to slow openings.
• Prezzo is offering 30% off food bills until Sunday. That’s a week before Christmas.
• BDO points to decline in fashion sales of 5.2% in week to 10 Dec on back of 4.4% fall a year ago. Was snow-impacted, though
START THE DAY WITH A SONG:
Last Friday’s song was Feelin’ Good — recorded perhaps most famously by Nina Simone (although Muse and Michael Buble have also recorded their own versions). To kick off what is the final work week of the year for many of us, a classic:
But the film is a saddening bore,
For she’s lived it ten times or more,
She could spit in the eyes of fools
MIFID II – YES, IT IS AS MUCH FUN AS YOU THINK IT IS:
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RETAIL NEWS WITH NICK BUBB:
• Saturday Press (1): The main focus in the Saturday papers was on a gloomy Bank of England survey of the increasing financial strain on consumers, as highlighted by the Times and the Guardian, whilst the FT had a big page 3 News article headlined “Christmas shoppers show caution amid price squeeze”, noting some “vox pop” from shoppers in Birmingham who had brought their Christmas spending forward to take advantage of discounting. The Daily Mail flagged up on its News pages a gloomy survey from PWC about increased pre-Christmas discounting (which even made the BBC TV News on Saturday evening), with the headline “Desperate stores launch Sales even bigger than Black Friday” and a long table of the price cuts at such chains as Debenhams and House of Fraser. The Telegraph had a long article by shopping expert Mary Portas that concluded, inevitably, that “the High Street is not dead, it just
• Saturday Press (2): In other news in the Saturday papers, the Guardian highlighted The Grocer website story that credit insurers are cracking down on suppliers to Poundland, the Telegraph had a snippet about the Conviviality/Palmer & Harvey stores deal and the Times noted the defence of former Tesco UK boss Chris Bush, in the ongoing Tesco accounting trial, that he was a loyal, hard-working, company man…The FT flagged that Wall Street banks have lost billions in the collapse of Steinhoff bonds and in his column the veteran City commentator Neil Collins mocked the latest excuses from Carpetright for poor performance (“On the carpet, again”). Finally, the FT and the Times flagged up the disastrous H&M Q4 sales update on Friday (with LFL sales in the three months to end November said to be as much as c9% down, because of Online competition and range weaknesses) and many of the
• Sunday Press (1): The main story in the Sunday papers was the Sunday Times scoop that the embattled Steinhoff is meeting with its creditors and suppliers on Tuesday, in an effort to reassure them, after worried credit insurers cut their cover to Poundland’s suppliers. However, the Sunday Telegraph noted that two South African retailers, Foschini and Truworths, are still battling to take over the fashion chain Jigsaw. The Sunday Telegraph also took the photo opportunity provided by the news that Harvey Nichols has reported a loss for last year because of the revamp costs in its Knightsbridge flagship store. Questor column in the Sunday Telegraph had a detailed look at the success of WH Smith and its Travel shop arm and said the shares are worth holding onto, Midas column in the Mail on Sunday looked at Conviviality and said that although it is tempting to take some profits the shares
• Sunday Press (2): There were a couple of bullish feature interviews in the Sunday papers: the Sunday Times profiled Mountain Warehouse boss Mark Neale (noting the launch of his new Neon Sheep gift and accessory chain) and the Mail on Sunday interviewed, in a rather uncritical way, the boss of Waitrose, Rob Collins, who said he was “very encouraged” by the way in which sales are surging before Christmas. There were also a couple of big double-page feature articles about the big mergers in the UK shopping centre industry, contrasting the moves with the pressures on US shopping malls: the Observer feature was headlined “Global shopping centre giants go on a big Christmas buying spree”, highlighting Westfield Stratford, whilst the Sunday Telegraph feature focused on Brent Cross and was headlined “Super-malls counter Amazon with a bigger day out”. In other news, the Mail on Sunday
Today’s Press and News: The news that worried credit insurers have cut their cover to Poundland’s suppliers gets followed up by the Times in some detail and the Times also flags the worries in the industry that Black Friday “has put a gun to the head of Christmas”, by bringing sales forward. The front page of City AM takes a similar line (“High Street faces Christmas battle”), noting the pressures on High Street footfall and consumer spending power. And SuperGroup has confirmed that Superdry is to be the official Clothing supplier to next year’s Invicta Games in Sydney.
News Flow This Week: A quiet week lies ahead, with no company news scheduled, but the wretched CBI Distributive Trades survey for “December” is out on Wednesday morning and then the widely-followed monthly GFK Consumer Confidence Index is out first thing on Thursday.