Langton Capital – 2018-04-03 – Discounting, ethical buyers, Conviviality & other:
Discounting, ethical buyers, Conviviality & other:
A DAY IN THE LIFE:
First of two short weeks this week. The email will be going out in somewhat shortened form as Langton will be away from the office until next Wednesday. On to the news:
PUB, RESTAURANT & DRINK PRODUCERS:
• Discounting still around with Prezzo and ASK both offering 30% off mains.
• The North American brewing giant, Molson Coors has shown its interest in acquiring part or all of Conviviality Retail following the latter’s failure to raise £125m in an emergency rights issue, the Sunday Times has reported.
• The Latest research from Fourth has shown that 90% of Brits believe they are ‘ethical consumers’, with a additional 67% stating they would boycott brands lacking an ethical conscience. Simon Bocca, Fourth’s COO said: ‘We are seeing the rise of the ethical consumer, with people becoming increasingly concerned about what they eat and drink, where it comes from, how it was made, and what impact it is having on the environment. This presents big risks for unethical businesses as consumers are clearly willing to boycott brands; but also big rewards for operators with conscientious policies and procedures’.
• The on-trade is already experiencing staffing shortages following Britain’s planned exit from the EU, a report from GS1 UK. The report also found that the fall in sterling following the referendum has led to an increase in food exports from the UK, adding a further £2.6bn to the UK’s export market.
• Some restaurant chains are still demanding waiting staff hand over some tips, as restaurateurs feel the pinch of rising minimum wages and increased competition, the Guardian has reported.
• Irish pubs have made £35m after opening on Good Friday for the first time.
• Technomic’s 2018 Pizza Occasion Consumer Trend Report shows increased competition in the US pizza segment as consumers eat pizza more regularly and more options emerge. Sales among the limited-service pizza industry grew by 3.7% in 2017, while units grew by 0.9%. ‘Increased demand for quality and authenticity is influencing consumers to become increasingly discerning about each component on their pizzas,’ said Anne Mills, senior manager of consumer insights at Technomic. ‘As consumers’ expectations rise and competition increases, pizza operators will be driven into niche, specialized areas such as Roman-style, Detroit-style, and even convenience-focused offerings.’
• The WSTA has reported that a record number of bottles of UK-made wine were sold last year with volumes up 64% from 2016.
• Constellation Brands last week reported Q4 sales & profits ahead of estimates. Strong demand for Corona & Modelo beers boosted sales. The group’s shares rose 3% on Thursday
• AB InBev has completed the merger of its existing Russia and Ukraine businesses with Anadolu Efes’ as part of its combination with SAB. AB InBev will stop consolidating the operations, which will instead be fully consolidated in Anadolu Efes’ financial accounts.
• Bad weather put people off from shopping this Easter weekend, with total shop visits down by 2.4% year-on-year between Friday and Easter Sunday. Springboard said High Street footfall fell by 9.6% on Good Friday year-on-year, and by 6.9% on Easter Saturday, as people avoided the wet weather.
• Amazon shares fell 6% yesterday after US President Donald Trump attacked the online retailer over the pricing of its deliveries through the United States Postal Service. ‘Only fools, or worse, are saying that our money losing Post Office makes money with Amazon,’ Trump tweeted, adding: They lose a fortune, and this will be changed. Also, our fully tax paying retailers are closing stores all over the country…not a level playing field!’
• Australian retailer Wesfarmers is sounding out potential buyers for Homebase just two years after its ill-fated £340m takeover of the DIY chain. Homebase slumped to a £97m trading loss over the second half of last year and Wesfarmers was forced to write-down the value of the UK business by £550m.
HOLIDAYS & LEISURE TRAVEL:
• UK demand for overseas holidays is at record levels despite rising prices for consumers. Office for National Statistics (ONS) data released last week confirms UK consumers took a record 46.5 million overseas holidays last year, one million more than the previous high of 45.5 million a decade ago.
• Room rates at UK hotels rose 1.3% to £106.70 in February despites a 0.6% fall in occupancy to 73% as operators battle increasing staff costs and other overheads. Although RevPAR increased 0.4% to £77.85, profit per room fell 5.1%. Pablo Alonso, CEO of Hotstats, said: ‘It’s been a tough start to 2018 for hotels in the UK. After several years of consistent growth, the upward trajectory has stalled somewhat, which seems to be as a result of occupancy levels hitting a ceiling.’
• STR figures show US. hotel industry occupancy grew 1% to 69.4% during the week of 18-24 March, while ADR increased 4.4% to $133.42 and RevPAR rose 5.4% to $92.53.
• Hotstats has reported that year on year profits at UK hotels fell by 5.1% in February.
FINANCE & MARKETS:
• The ONS has reported that the UK was the slowest-growing major economy in the world in Q4 last year. GDP rose by 0.4% in the quarter and by 1.8% on the year to Q4.
• PwC comments ‘among the G7, the UK was the only economy to see a deceleration in growth between 2016 and 2017, which does point to the dampening impact of Brexit-related uncertainty on UK business investment and the squeeze on consumers from the weaker pound pushing up UK import prices in 2017.’
• China has imposed tariffs of up to 25% on certain US imports, including pork and wine. President Trump has said that trade wars are ‘good’ and that it should be ‘easy for the US to win one’
• ONS reports that for the first time since it began to keep records, more households in the UK are now borrowers than savers. Savings levels are at their lowest since 1963.
• Nationwide reports house price growth fell to an annualised 2.1% in March from 2.2% in February. Both numbers are below inflations.
• Sterling down vs dollar at $1.4059 and up slightly vs Euro at €1.1422
• Oil down at $67.73
• UK 10yr gilt yield down 3bps at 1.34%
• Brexit etc.:
o Liam Fox has said that he hopes to roll over trade agreements with 70 countries post the UK’s exit from the EU. Whether the countries on the other end of the agreements will go along with this remains to be seen.
START THE DAY WITH A SONG:
Last Thursday’s song was Mr Brightside by the Killers, but today who sang:
I just win again, then win again like Wimbledon, I serve
Yeah, that’s him again, the sound that engine in is like a bird
You see fireworks and Corvette tire skrrt the boulevard
I know how you work, I know just who you are
RETAIL NEWS WITH NICK BUBB:
• “The Daily Retailer” is going to be on holiday now until after Easter. Nick will be back, bright and early, tomorrow.