Revolution, Goals, company reporting, prices and other:

A DAY IN THE LIFE:

We’ve got a note out today. See below for details. On to the news:

LANGTON RESEARCH:

• Langton has put together a compendium of around 3 dozen 60-seconds pieces (c200 words or so each) for distribution at £200 plus VAT, free to clients.

• Please let us know if you would like a copy.

• Topics will be covered under a number of headings: Introduction (demographics etc.), The Disruptors, Drinks & Experiential, Food and Hotels & Travel.

• Titles include Grey Dawn (Generation Have-It-All), Millennials (Generation Rent), Life in the Slow Lane, Prepacks – A Reward for Failure etc.  Full list of titles available on request.

PUB, RESTAURANT & DRINK PRODUCERS:

• Revolution Bars Group updates on H1 trading saying total sales +10.6% with LfL sales in December +5.9%’.

• 72-strong RBG says total H1 sales were £73.7m with four new venues open. Christmas was good and ‘this strong performance built on last years’ record results when even stronger like-for-like year-on-year growth was achieved. This is the fifth consecutive year that the Group has enjoyed record sales in the festive period.’

• RBG says the 27wks to 6 Jan saw LfL sales +1.9%. It says ‘these results are all the more pleasing as they were delivered against a backdrop of inclement weather mid-month in December and between Christmas and New Year.’

• RBG says it expects ‘trading results to be in line with its expectations, reflecting continued growth in the number of venues, revenue and profits.’ Chairman Keith Edelman reports ‘I am delighted with our sales performance in the second quarter and over Christmas. This is the fifth year that the Group has recorded record results over the key trading period and again demonstrates the appeal of our brands. This excellent result underlines that the Group is delivering on its strategy of expanding the two brands whilst continuing to drive like for like growth in the core estate.”’

• Big week for F&B trading updates. Revolution Bar Group today, Marston’s tomorrow and Restaurant Group, Greene King & Fuller’s on Thursday

• Remy Cointreau has updated on 9mth trading (to end-December) saying that on an organic basis, sales rose by 5.5%. This represents a slowdown since H1’s 7% sales increase. Sales rose 85 in Q1, by 6.2% in Q2 and by 3.2% in Q4 (the quarter to end-December).

• Telegraph reports some analysts as saying Restaurant Group may cut its dividend. The group updates on full year trading on Thursday.

• As reported, Galvin Bistrot in Marylebone to close next month. Galvin brothers say the site lost 1/5 of its staff in the wake of the Brexit vote.

• Discounts still coming thick & fast:

o 50% off mains – Prezzo, Strada, ASK, Pizza Expres (2-4-1)

o 41% off food – Pizza Hut

o 40% off mains – Harvester, Café Rouge

o Other – Toby – 25% off mains, Beefeater doing 10 separate dishes for £5 each

• EI Group bought back another 156k of its own shares for cancellation on Friday. It paid 142.9p per share

• Greggs is plans to trial 24/7 trading in 100 of its site, reports the MCA. The bakery chain will be observing how the evening offer could impact its overall trading model.

• The burrito and taco restaurant chain, Tortilla, has reported sales have risen 20% to £30.4m last year with LfLs up 7.5%. The group currently has 39 sites across the UK and the Middle East.

• Average prices in pubs have increased 3.8% in 2017, whereas restaurants prices declined 3.4% according to data released from Christie & Co’s latest Business Outlook. Neil Morgan, managing director of pubs & restaurants at Christie & Co, said: ‘The pubs market in 2017 was tough with the introduction of new or increased operational and financial pressures, such as the Apprenticeship Levy, and exacerbated by increases in the National Living Wage and business rates. Similar pressures will be felt throughout 2018, but the sector is proving itself to be extremely resilient as operators turn towards innovation to improve management and customer service. New avenues of profitability, such as microbrewing and the addition of accommodation have been shown to significantly improve margins’.

• The Dutch Takeaway.com has stated that group may be looking into a merger with German peer Delivery Hero. Chief Executive of Takeaway.com, Jitse Groen, said: ‘In each country, there can only be one supplier. A merger (with Delivery Hero) would be an option’.

• Coca-Cola is taking steps to tackling its ‘packaging problem’ by cutting waste. The group has pledged that it will collect and recycle the equivalent of all its packaging by 2030.

• Alasdair Murdoch, the former CEO of Gourmet Burger Kitchen, has taken up the same role Burger King UK. The MCA has reported Alasdair will take up the position on the 1st Feb.

• Amazon has launched its first public AI-powered Amazon Go store in downtown Seattle. Amazon Go stores allow customers to scan their smartphones upon entry, pick up their shopping items and leave without the need to visit a cashier. The stores have been tested by Amazon staff for more than a year, and are believed to be ready for the wider public.

• ONS reports retailers had their weakest Christmas shopping growth for five years, rising only 1.4%, as higher prices hit family spending.

• Shares in Carpetright fell by 45% on Friday after it warned that sales have shown a ‘sharp deterioration’ in recent weeks. LfL sales have been running at minus 7.1% since Christmas. CEO Wilf Walsh said: “We have seen a significant deterioration in UK trading during the important post-Christmas trading period.

• Moody’s reports Goodfella’s Pizza deal is credit positive for both Nomad and Boparan. It says ‘the transaction is credit positive for both companies: Boparan will improve its liquidity and reduce its refinancing risk and Nomad will improve its product diversification and EBITDA without incurring additional debt.’ It says ‘Nomad’s credit metrics also will benefit from the transaction because the company plans to finance Goodfella’s acquisition using cash available on its balance sheet, while the incremental EBITDA will benefit its ratios.’

HOLIDAYS & LEISURE TRAVEL:

• British holidaymakers in Montego Bay, Jamaica, have been warned to stay in their hotels after a rise in violent incidents in the area.

• STR reports that the US hotel increased occupancy by 2.3ppts in the month of December against December 2016. Average room rates rose by 2.2% and REVPAR was some 4.6% higher. STR reports ‘December fell very much line with the rest of the fourth quarter.’ It continues ‘Demand and occupancy hit record levels for a December, and room rates grew more than 2% for the third consecutive month. Year-over-year supply growth reached 2% for the first time since May 2010, but with demand surging past 4%, the impact on occupancy levels and pricing power was mitigated.’

• Moody’s has reported that Wyndham’s planned acquisition of La Quinta is credit positive. It says ‘although the transaction will increase Wyndham’s leverage, it is credit positive. It adds the well-performing La Quinta brand to Wyndham’s midscale and upper-midscale hotel portfolio, two segments experiencing faster growth of revenue per available room than all but the economy segment. Additionally, the purchase increases Wyndham’s already-large hotel system by 12%, or almost 88,000 rooms.’

• The UK’s regions other than London welcomed 12.7m foreign visitors in the first 9 months of 2017. This represents an increase of 4% over 2016. Scotland saw foreign visitor numbers rise by 14% year on year for the first 3 quarters of the year.

• Marriott International reports that it signed 55k rooms last year, making it the most successful year on record for the hotel brand. At year end, the group’s brand encompasses some 6,500 hotels with around 1.25m bedrooms. Marriott reports it ‘continued to increase its global presence in 2017, opening properties in five new countries and territories and reaching a presence in 127 countries and territories around the world.’

• Softbank is now the largest shareholder in Uber following the latest financing round.

• Boris Johnson has suggested building a literal bridge between Britain and France at a summit with French president Emmanuel Macron. The bridge could cost as much as £100bn.

OTHER LEISURE:

• Goals Soccer Centres updates on FY trading & guides down slightly on numbers saying it ‘is continuing to show progress from its strategic recovery plan with 2017 proving a period of significant investment in the UK and strategic progress in the US.’

• GOAL reports total FY sales +0.5% at £33.7m with LfL sales down 0.5%. The decline ‘was exacerbated by the disruption of closure due to investment in upgrades’. GOAL reports in the UK ‘sites that have yet to receive investment have continued to perform poorly. Just over half of our estate has benefited from investment.’

• GOAL says its N American JV ‘is performing and progressing well.’ It adds ‘our third club in North America opened last week at Rancho Cucamonga in Los Angeles and we expect to commence construction of our fourth club during Q2 2018.’

• GOAL says FY numbers ‘will be broadly in line with the lower end of market expectations.’

• GOAL reports CEO Mark Jones is to leave the business this week. It adds ‘the search for a new CEO is at an advanced stage and we hope to be able to update on this shortly, however in the meantime Bill Gow will assume Mark’s responsibilities as Interim CEO.’ Chairman Nick Basing says ‘our recovery plan remains “work in progress” with 2017 being a period of substantial investment in the UK and significant improvement achieved where major investments have been made.’ He adds ‘we are excited by the progress and the future of our strategic joint venture with City Football Group in North America. With our new developments in North America and further investment in our UK business, we are confident that we can deliver improved returns, over time, for Goals shareholders.’

• Amazon has increased the price of its monthly Prime memberships in the US by $2 to $12.99, in an attempt to encourage more people to move to their annual subscription plan.

FINANCE & MARKETS:

• Oxfam has reported that the richest 1% of the world’s population now has 82% of its wealth

• Sterling down a shade vs dollar at $1.3865

• Pound a little lower vs Euro at €1.1337

• Oil up a fraction at $68.78

• UK 10yr gilt yield up 1bp at 1.34%

• World markets: UK up on Friday with Europe & US also higher. Far East mostly down in Monday trade

• US budget shutdown recrimination begin. Trump blames Democrats, the latter blame Trump for rejecting bipartisan compromise proposals.

• Brexit etc.:

o President Macron tells Andrew Marr France would ‘probably’ have voted to leave the EU if given the chance. He said that such a question – whether to leave or not – is much too nuanced to put to a yes-no vote.

o CBI reports UK should remain in customs union post Brexit.

o President Macron tells BBC it is impossible for a country to remain in the customs union without accepting ‘the three freedoms’

o DEXEU reports ‘we are confident of negotiating a deep and special economic partnership that includes a good deal for financial services – that will be in the EU’s best interests, as well as ours.’ Credibility has suffered since David Davis’s claims, denials and claims that DEXEU had detailed projections for how Brexit would impact the country.

ADMIN UPDATE, RESEARCH ETC.

• Langton is between offices. Please communicate via email. MIFID II is now in operation.

PRIOR DAY LATER TWEETS:

• Later tweets: Coffer Peach Tracker for 6wks of Xmas. LfLs down 0.1%. Pubs up, restaurants down. London restaurants down 2.6%

• Total Xmas sales +3.4% suggesting that capacity has been increased by around 3.5%. This has particularly impacted London

• Jan discounting underlines nature of tough trading. Poor Xmas for many casual diners. More pre-packs likely before next rent bills due

• Tracker highlights 1) overcapacity in London restaurants, 2) impact of Dec snow on some, northern-based, food-led pubs

• Snow in Dec impacts destination pubs. City centre (and S of England), less so, News next week: RBG, MARS, RTN, GNK

• London hotel capacity +4.5% in 2017 (per WTB), London diners +3.5% (Tracker). Too much. Too much. And more capacity coming on

• Construction industry works for prop cos. They try to pre-let space. Long lead time (Hofstadter’s Law) but good luck w. hotels & restaurants

• Deconstructed crash going on. Big ticket (cars, carpets etc.) tough. Carpetright down 45% today on wake up & smell the coffee moment

• Dignity shares halve as it says it will slash prices. Can’t gouge customers forever if competitors up their game, even in that industry

• Bon Marche calendar Q4 sales down 7% LfL. Carpetright seen ‘a sharp deterioration in UK trade’ & ‘significant impact on profitability’

• Carpetright: Says ‘reduced consumer confidence’ as shares plunge. Big ticket a tough gig at the moment. SMMT forecasts further car declines

START THE DAY WITH A SONG:

Last Friday’s song was ‘Don’t Look Back in Anger’ by Oasis. Today who sang the following:

Look at him working

Darning his socks in the night when there’s nobody there

What does he care?

RETAIL NEWS WITH NICK BUBB:

• Saturday Press (1): We had expected the main focus in the Saturday papers to be on the profit warnings/poor trading from Dignity, Carpetright and Bonmarche (what the Evening Standard called “the massacre of the mid-caps”, given the huge share price falls, and what the Daily Mail termed the “bloodbath on the High Street”), but, on a day of shocks, the Times and the Telegraph also picked up on yet another Sky News scoop on Friday night, the amazing news that the estimable CEO of Dixons Carphone, Seb James, is moving on to run Boots UK and will be replaced by the highly regarded Alex Baldock of Shop Direct. The other big news on Friday was the worse than expected ONS Retail Sales figures for December and it’s fair to say that these got the usual uncritical coverage in the papers, although the FT flagged up the problem the wretched ONS is having in seasonally adjusting for the movement of
sales volume from December to November because of the growth of “Black Friday”. The Guardian wrapped it all up as their main Business story, with the headline “Blue Christmas leaves retailers with depressed profits and sales”.

• Saturday Press (2): In terms of the coverage of the company news on Friday, the Dignity warning got pride of place and the Times (which has been flagging up the increasing Online price competition in the funeral market) had a particularly good double-page feature on the background to the news, complete with graphs etc, noting that the FuneralBooker website has been renamed Beyond by its founder, a former City analyst. Lex column in the FT weighed in with a piece entitled “Last rites”, highlighting that “Ageing baby boomers are demanding more of an industry they are coming into contact with increasingly”. And the Business editorial in the Times combined the Dignity and Carpetright profit warnings by mockingly suggesting that a merger of the companies would be “made in heaven” and would be one way for Wilf Walsh to “escape Carpetright with dignity”. In other news, the Times flagged that
the Chairman of Dunelm, Andy Harrison, has shown some confidence by buying nearly £500,000 of shares, and it also had a bullish profile of the Kingfisher CEO Veronique Laury, whilst the Daily Mail had an Investment column feature looking at the retailers being shorted by hedge funds eg Debenhams. Finally, the Money section of the Guardian flagged that Boohoo.com is one of the worst offenders for hyping Sale promotions that “must end soon” and then go on and on…

• Sunday Press: After Friday’s news overload, we expected more follow up in the Sunday papers, but the Sunday Times was the only paper to focus on the news that Seb James is moving on to replace Liz Fagan as boss of Boots UK and will be replaced as CEO of Dixons Carphone by the highly regarded Alex Baldock of Shop Direct, who they called a “data supremo”. The Sunday Telegraph highlighted that private equity funds are circling Poundland (in the expectation that the beleaguered Steinhoff will be forced to sell the business to raise money), the bondholders in embattled New Look have called in advisers to protect their interests in the expected corporate restructuring and that Selfridges left its department store rivals in the shade with a festive sales rise of 10%. The Observer had a snippet about the improved results filed by Waterstones last week and the Business Leader column in the
Observer looked at the supposedly poor December retail sales figures and thundered that “Black Friday was a success, but retailers are blue about winter results”. Finally, the Midas investment column in the Mail on Sunday looked at the Retail “winners and losers” since Christmas (noting that “The High Street’s changing…now it’s survival of the smartest”), flagging, inter alia, that investors face a long wait in Card Factory and featuring Boohoo.com as a Buy (“The only ones crying at Boohoo are investors who failed to buy”).

Dixons Carphone: Not surprisingly, given the CEO change news below, the company has brought forward tomorrow’s planned trading update for the 10 weeks to Jan 6th and the news seems quite good, despite Carpetright’s warning on Friday. The core UK business saw LFL sales growth of 3%, but the Overseas operations were much better than expected, with the Nordics up 11% and Greece up by 23%, so the group was up by 6% (versus the +3% consensus). But given gross margin pressure, there is no real change to the full Year Group PBT consensus, which stood at £377m before today. CEO Seb James says “For the remainder of this year we have an early Easter, a new Samsung phone and the first week or two of our World Cup promotion to look forward to” and there is a conf call at 8.30am.

Seb Watch: As per the Sky News scoop on Friday night, Dixons Carphone has confirmed this morning that the estimable CEO of Dixons Carphone, Seb James, is moving on in April to run Boots UK and will be replaced by the highly regarded Alex Baldock of Shop Direct. Walgreens Boots Alliance confirmed the news in a statement on Friday night and Seb James said: “I am very excited to be joining at this time in its history, and to have been offered the privilege of leading Boots, surely one of the UK’s most iconic, venerable and trusted brands”. In today’s statement he says “I will be very sad to leave, tempered only by the fact that I know that Alex will do a terrific job of leading the company and driving it on to new heights”. The Chairman Ian Livingston says “We wanted Alex for his strategic clarity, relentless execution and his ability to inspire people to get behind him at every step”. And
the new guy gushes “I can’t wait to get started at Dixons Carphone. Seb and the team have achieved an extraordinary amount, not least reinforcing Dixons Carphone’s position as a leading electrical and mobile retailer in Europe at a time of wrenching change”.

Ocado: The Ocado share price has been pretty firm, in the expectation that another Overseas licensing partnership was on the way and, lo and behold, it has announced a deal today with Sobeys. In case you hadn’t heard of Sobeys, it is Canada’s second largest food retailer, operating more than 1,500 stores across the country, and generating sales of C$23.8bn in fiscal 2017, so it is not a small player and Michael Medline, the President & CEO of Sobeys, trumpets “Sobeys intends to play to win in Canadian online grocery shopping. We are very excited to bring this best-in-the-world grocery ecommerce experience to Canadian customers”. A CFC will be built in Toronto and Ocado expects this deal to create “significant long term value” to the business. How much of all this is “in the price” remains to be seen, but there is an analyst’s conf call at 1pm.