Langton Capital – 2018-01-09 – Tasty, Stock Spirits, discounting, Majestic, MRW etc.:
Tasty, Stock Spirits, discounting, Majestic, MRW etc.:
A DAY IN THE LIFE:
Quite a few RNSs this morning so let’s move straight on to the news:
DISCOUNTING STEPS UP, STRETCHES INTO FEBRUARY:
• Whole new raft of discounts as the majors enter the fray.
• M&B brands Harvester, Toby, O’Neill’s & Browns offering money off. Whitbread’s Beefeater and Brewers’ Fayre too. Casual diners still cutting prices.
• Harvester says ‘we want 2018 to be the year that just keeps on giving’. Hence it is giving 40% off main meals until 14 Jan. M&B sister brands Toby (33% off till 13 Jan), O’Neill’s (40% off till 31 Jan) & Brown’s (25% off till 4 Feb) are also offering money off. All Bar One is 33% off till 31 Jan & Miller & Carter, one of M&B’s more successful brands, is offering £5 off when two meals are purchased.
• Whitbread’s Beefeater is offering certain meals for £5 and sister brand Brewers’ Fayre is offering a BOGOF on mains until 14 Jan.
• Casual diners are continuing to discount. Prezzo is 50% off mains until 14 Jan. Pizza Express is offering £10 dishes until 14 Jan. Café Rouge is 40% off food bills until 14 Jan. Bella Italia is 2-4-1, Pizza Hut is a rather silly 41% off until 25 Jan and Chimichanga is 50% off until 14 Jan. Zizzi is also up to 50% off until 19 Jan.
• Not to be outdone, Domino’s Pizza is offering 30% off deliveries over £25.
PUB, RESTAURANT & DRINK PRODUCERS:
• Tasty says it has accepted the resignation of its CFO, Timothy Cundy. The group says it ‘has identified a replacement with significant sector experience who will take over the finance function upon appointment.’
• Tasty expects trading to deteriorate further in 2018. It says trading for the year to 31 Dec has ‘been in line with expectations’.
• Tasty reports ‘the Company has announced its intention to dispose of sites and the Board is pleased to confirm that progress has been made in this area. The Company has disposed of four underperforming sites and undertaken a sales-and-leaseback of one further site with net proceeds from these transactions totalling £2m. Two further sites are currently under offer and are expect to be disposed of in the coming months.’
• Stock Spirits has updated on full year trading saying overall trading for the year ‘was slightly ahead of our expectations.’ It reports markets in Poland & the Czech Republic ‘continued to show growth in both volume and value terms.’
• Majestic Wine has reported sales over the 10wk Xmas period were +3.2% at the group level. Majestic reminds investors that it delivers c.30% of total annual sales during the Christmas trading period. LfL retail sales were +1.3%. CEO Rowan Gormley comments ‘the team performed brilliantly. The fact that we have been able to grow sales and maintain margins shows that our winning formula of fabulous customer service from delightful people and delicious wines at fair prices works even when times are tough.’ Gormley adds ‘we are on track to achieve our £500m sales goal by 2019, on track to deliver market expectations for the current financial year, and on track to accelerate investment in new customers, new winemakers and more fantastic wines.’
• The latest Visa UK consumer spending index has shown household spending fell by 1% in teal terms in December vs November. This represents the 4th consecutive fall. Over the year as a whole, spending fell by 0.3% in real terms. Visa says ‘Christmas rounded off another lean year for retailers.’ It continues ‘despite some large retailers signalling a strong Christmas performance, it is clear that the high street has suffered recently, while online spending has held up.’ Visa’s survey is based on its own information (just card spending) but is adjusted to take account of people’s growing preference for paying by card.
• EI Group yesterday bought back 130,411 of its own shares for cancellation at 143.75p per share.
• BBC says spending is under pressure in most areas because consumers are having to spend more on essentials such as food.
• Telegraph reports BRC stats as showing ‘High Street retailers faced a dismal end to 2017 despite Black Friday efforts’
• Forward ordering app Beli has reported accounts for the year to 31 July 2017 to Companies’ House showing that accumulated losses increased during the year by £81k. The company does not have to furnish a P&L account.
• Morrison’s has updated on Xmas trading saying that, for the 10wks to 7 Jan, group LfL sales excluding fuel rose by 2.8%. The group says ‘sales were especially strong over the Christmas and New Year period with Group LFL of 3.7% for the six weeks to 7 January, comprising Retail of 2.8% and Wholesale of 0.9%.’
• CEO David Potts reports ‘more and more customers found more things they wanted to buy at competitive prices at Morrisons this Christmas.’ He says ‘our plans to become a broader and stronger business are progressing well, with another period of positive like-for-like sales and the start of the rolling programme to supply McColl’s.’ the group says re 2017/18 ‘our 2017/18 year-end expectations are unchanged.’
• Pub opening hours will be extended over the weekend of the royal wedding of Prince Harry to Meghan Markle in May. The move follows calls from the British Beer and Pub Association (BBPA) to extend hours, asserting that it could give a £10m boost to the trade.
• The BBPA’s chief executive, Brigid Simmonds, commented: ‘This is great news for pubs and pub-goers and shows the government has listened to our calls to put pubs at the heart of the Royal Wedding celebrations. Visitors see the Great British pub as a cultural icon, almost as much as the Royal Family. Extended hours would give a £10m boost to the trade and make the most of the expected increase in tourism.’
Meanwhile, Kate Nicholls of the ALMR, said: ‘Pubs are at the heart of communities and many people will want to celebrate the special occasion in their local, as they have done for the Queen’s Jubilee or previous Royal Weddings. Extended trading for the wedding will provide a welcome boost to the UK’s pubs, restaurants, hotels and bars, so a proposal to extend trading hours is a sensible step by the Government and should provide customers and businesses with a chance to celebrate.’
• The campaign ‘There’s A Beer For That’ is set to change its initiative from pairing food & beer to lobbying against beer and pub duty. The campaign said it has ‘done its job’ and now needed to focus on the biggest threat to the industry.
• Per PMA, managing director of Dark Star Brewing, James Cuthbertson, said on radio that December comes with ‘amateur drinkers’ instead asking customers to endorse the ‘Try January’ campaign, a direct rival to ‘Dry January’.
• Deltic reports LfL sales up 8.2% in December with the group seeing a 20% increase in pre-booked Christmas parties. A bumper New Years Eve brought in sales of £2.4m, up 2.6% year on year.
• Baijiu Beer Company, a Sheffield-based company that makes craft beer combined with the chinese spirit Baijiu, is set to ship its first international order after only three months of development in the Chinese market.
• Pub operator and brewer, Brakspear have appointed Steve Head as BDM. The group’s chief executive, Tom Davies said: ‘Steve has an excellent track record, regularly beating sales and profit targets in all his previous management roles, and achieving outstanding returns on pub redevelopments. We were impressed by his evident talent for all aspects of the BDM role and his experience, and are confident he will be a great asset to the Brakspear team’.
• Lidl has announced that it will open the largest UK regional distribution centre in Luton
• Fresh Food prices have risen 2% in December, as overall shop prices continued to fall, the BRC-Nielsen Shop Price Index has found.
• The number of retailers entering into administration increased by 27% in 2017 to 118 according to data from Deloitte. Dan Butters at Deloitte said: ‘We have seen a significant increase in retail insolvencies in the last twelve months including some well-known names. We see insolvencies in higher value categories, such as furniture, as a leading indicator that falling consumer confidence, and a drop in consumer spending, is starting to bite. This has implications for retail sub-sectors with a lower price point which typically take longer to feel the impact of reduced consumer spending’.
• Debenhams has seen its credit rating downgraded from Ba3 to B1 — four levels below investment grade — by Moody’s in the wake of the department store’s recent profit warning. Moody’s now expects the company’s metrics to deteriorate this year beyond its original expectations. ‘This is because the UK trading environment has continued to be volatile and highly competitive with a combination of weaker-than-expected demand in some areas and more promotional activity,’ analysts at the rating agency said.
HOLIDAYS & LEISURE TRAVEL:
• UK rail services are set for further delays as a further three days of strike action are due to take place this week over safety disputes.
• Elegant Hotels reports FY numbers to 30 Sept. Says it has made ‘a year of decent progress in the context of a changed market.’
• Elegant Hotels reports revenue +5.1% to $59.9m with REVPAR down 4.6%. Adjusted EBITDA was down 7.6% at $18.1m and profit after tax was down 6.1% to $9.2m. EPS was 10.1c. CEO Sunil Chatrani comments ‘the Group delivered a solid performance in 2017 against a background of changed market conditions. The team remains firmly focused on delivering our strategy, and we are pleased with the operational progress that has been made during the year.’
• Elegant Hotels reports ‘trading since the start of the new financial year has remained in line with market expectations, and our bookings are currently tracking ahead of the same period last year. As a result, the Group remains confident in its prospects for FY18 and beyond.’
• New data shows a fifth of holidaymakers have been approached about trying to get compensation, intensifying calls for the Government to begin its planned crackdown against bogus sickness claims. In its most recent results, Thomas Cook said it suffered a £6m charge from dealing with fraudulent illness claims, a figure which contributed to the profit knock within its UK division for the year to September 30.
• UK hotel investment in 2017 hit some £5.4bn — up 35% year-on-year and 51% above the 10-year average of £3.6bn. Savills reports in a news release that overseas investors were the main instigators of the increase and that the ‘high level of individual transactions can be attributed to the break-up of larger portfolios that were bought in 2014 and 2015.’ The advisory firm adds that 60% of the deals in 2017 concerned individual assets and the ‘average price per key has risen from £104,255 ($141,322.47) to £145,303 ($196,964.93) over the last 12 months as investment volumes have increased.’
• Games Workshop’s strong trading performance has continued, with sales and profit growth ‘across all regions and channels’. Basic earnings per share for the six months to 20 November nearly doubled to 97.6p after revenue grew 54% to £108.9m and pre-tax profit rose 181% to £38.8m. The figurine maker and owner of Warhammer remains cash generative and has also more than doubled its H1 dividend to 61p per share.
• CEO Kevin Rountree commented: ‘These cracking results are built on hard work continuing to focus on making and selling an ever better range of Warhammer miniatures. We’re proud of the improving trends, but we are not taking anything for granted, our feet remain firmly on the ground as we stride into the year ahead. We will continue to focus on the core values and activities that drive our business. In the second half of this financial year I will continue to invest appropriately in my team and facilities to ensure we can deliver our ambitious operational plans.’
• Samsung Electronics’ record-breaking profit expectation for the last three months of 2017 is not enough to match analyst expectations. The world’s biggest memory chip maker is aiming to have generated operating earnings of 15.1tn won (£10.4bn), which would mark a 64% jump year-on-year.
• GoPro would be willing to partner with a larger sector peer but is not actively seeking a sale, despite press rumours that it had appointed JP Morgan to explore options. Shares have been weak recently, down as much as 33% on falling demand for its sports cameras and drones.
FINANCE & MARKETS:
• Halifax reports house prices rose by 2.7% in 2017 vs an increase of 6.5% in the prior year. Prices have fallen in real terms. Halifax says the slowdown was driven by a squeeze on real wage growth and economic and Brexit uncertainty.
• Diesel car sales could fall further this year reports Aston University.
• Sterling up vs dollar at $1.3573
• Pound stronger vs Euro at €1.1336
• Oil up at $68.11
• UK 10yr gilt yield down 1bp at 1.24%
• World markets: UK down yesterday with Europe & US up. Far East mostly up in Tuesday trade.
• Please let us know how Christmas trading was. And how does January feel?
ADMIN UPDATE, RESEARCH ETC.
• Langton is between offices. Please communicate via email.
• We are putting together a compendium of 60-seconds pieces for publication this month at £200 plus VAT, free to clients. Please let us know if you would like a copy.
• MIFID II is now in operation.
PRIOR DAY TWEETS:
• Later tweets: Discounting continuing. Café Rouge 40% off food, Las Iguanas BOGOF on mains. Carluccio gives 2nd meal for just £1.
• Retail collapses, poor numbers from Debs, Mothercare, rent cut pleas from H of Fraser, pre-packs (various, including Vital Ingredient)
• Retail, F&B. Some doing well, most finding it tough. Pre-packs likely to continue, overcapacity a real headache
• UK new car reg numbers down 14.4% in Dec (after down 11.2% in Nov) as real wages fall & F&B / affordable treat spending holds up
• Commodities. Hard commodities (metals etc.) on the up, softs falling. In UK, milk price stalls after over a year of rises
START THE DAY WITH A SONG:
Yesterday’s song was late ‘90’s hit All The Small Things by Blink 182. A quick google of the group shows that former singer Tom Delonge is now prefers to spend his time marketing UFO conspiracy theories…
Today, who sang:
“Said—said—said I remember when we used to sit,
In the government yard in Trenchtown. Yeah.
And then Georgie would make the fire lights”
RETAIL NEWS WITH NICK BUBB:
• BRC-KPMG Retail Sales for December (the 5 weeks to Dec 30th): We flagged yesterday that the overnight BRC-KPMG Retail Sales survey for December was likely to show that overall LFL sales were solid, with Food sales/Food price inflation offsetting any weakness in Non-Food sales and we weren’t far out, as the outcome was again +0.6% LFL (the same as in November). But progress was again skewed to Food and to Online…As usual, the exact Food/Non-Food sales split for last month is buried in the 3-month moving average, but it looks to us as if Food was again just over 2.5% up LFL, thanks to food price inflation, which would mean that Non-Food was a bit over 1% down LFL overall, despite the boost to Clothing from increased discounting and the cold weather snap. Helen Dickinson of the BRC noted that “the late lift in sales before Christmas came at the expense of margins for many retailers”.
• Morrisons: Today’s update (for the 10 weeks to Jan 7th) was expected to show Retail LFL sales growth of little more than 1%, but the outcome was +2.1%, thanks to an acceleration to +2.8% over the last 6 weeks (with the expanding Wholesale arm adding 0.9% of growth on top of that). The explanation is that “We again worked hard to improve the shopping trip and serve customers better” and Dave Potts, the CEO, says “More and more customers found more things they wanted to buy at competitive prices at Morrisons this Christmas”. Nevertheless, the message is that “Our 2017/18 year-end expectations are unchanged”, which is a bit of a downer, but maybe management will be more effusive on the 8.30am analysts conf call.
• Other News: The news elsewhere is all good as well: the Games Workshop interims, the Topps Tiles Q1 and the Joules update.
• Majestic Wine: Despite all the discount wine promotions at the supermarkets at Christmas, Majestic didn’t miss out and today’s update flags that Majestic Retail delivered a good result, with LFL sales up 1.3% (versus tough comps of +7.5% LFL a year ago). Rowan Gormley, the ebullient CEO, gushes “The team performed brilliantly. The fact that we have been able to grow sales and maintain margins shows that our winning formula of fabulous customer service from delightful people and delicious wines at fair prices works even when times are tough…We are on track to achieve our £500m sales goal by 2019, on track to deliver market expectations for the current financial year, and on track to accelerate investment in new customers, new winemakers and more fantastic wine”.
• The Grocer Watch: The widely followed Grocer “33” weekly supermarket pricing survey in Saturday’s The Grocer magazine was the first of 2018, but it was carried out on Dec 15th. Yet it was won, again, by Asda: the total Asda basket of £51.67 was £3.46 cheaper than second-placed Morrisons, although Asda still had to dish out a £1.21 voucher for failing to be at least 10% cheaper. Tesco was third on £56.98, before an instant Price Match discount of £2.44. Sainsbury was fourth, on £58.96, with Waitrose a distant last, as usual, on £61.12…The separate Grocer “Mystery Shopper” weekly survey on Store Service and Availability was won by Tesco, as its 15,000 sq ft supermarket in Driffield, in East Yorkshire, top-scored, with 81 marks out of 100. Elsewhere, The Grocer magazine had a selection of industry views on the Highlights of 2017 and the Outlook for 2018, while the Editor’s
• News Flow This Week: The latest monthly Kantar/Nielsen grocery sales data (for the 4/12 weeks to Dec 30th/Dec 31st) comes out at 8am today. And the trading announcements come thick and fast this week, with tomorrow bringing the Sainsbury Q3 update, the SuperGroup interims and Q3, the Ted Baker update, the QUIZ update and the Shoe Zone finals, as well as the Signet update in the US. “Super Thursday” then brings the Marks & Spencer Q3, the Tesco Q3, the Debenhams AGM, the Boohoo Q3, the John Lewis Partnership update, the House of Fraser update, the Moss Bros update, the Game Digital update and the AO.com update. And then on Friday we get the B&M Q3 and the Booker Q3 update.