Langton Capital – 2018-07-30 – City Pub Group, Heineken, Byron, UK hotels & other:
City Pub Group, Heineken, Byron, UK hotels & other:
A DAY IN THE LIFE:
So, the heatwave has been broken by a series of thunderstorms that included, in York at least, a hailstorm that singled out and smashed up the Langton greenhouse.
Said structure had never really caused offence to anyone but, on Friday, it was pretty much destroyed by a sustained volley of cherry-tomato-sized hailstones that left it looking as though it had been punched through by a couple of blasts from a shotgun.
And as, if say 10% of houses in York have greenhouses and each lost say 10 panes of glass, you won’t be able to get a glazier in the region this side of Christmas, not for love nor money you won’t.
Anyway, more importantly ahead of a round-trip to Berlin, Prague and back, the car’s windscreen seems to have survived. On to the news:
PUBS & RESTAURANTS:
• City Pub Group has announced the acquisition of 3 pubs and the exchange of contracts on one other.
• CPG has bought 3 pubs in London for £8.1m. With another in the pipeline, CPG will have 46 units. Chairman Clive Watson comments ‘the purchase of these pubs demonstrates CPG’s broad acquisition network. All fit our criteria and will sit well alongside our existing sites.’ Mr Watson comments ‘we are confident that we will own c.50 pubs by the end of this year, ahead of the plan set at IPO and have the potential to continue to grow the estate faster than planned.’
• TDR’s Manjit Dale has joined the board of Flight Club Darts.
• Discounts still rumbling around the market like Friday’s thunder. Prezzo 30% off food, Pizza Express 25% off, Beefeater 33% off and Domino’s 30% off orders over £25
• Heineken has reported H1 numbers to end-June saying organic revenue rose by 5.6% with revenue per Hectolitre +1.1%
• Heineken reports beer volumes +4.5% with volumes of the Heineken brand +7.5% as shipments rose ahead of the World Cup
• Heineken reports operating profits +1.3% at €1.076bn with EPS of €1.89. CEO Jean-François van Boxmeer comments ‘top line came in strong in the first half, with organic net revenue growth across all regions. Europe was back to growth in the second quarter whilst the other regions maintained their positive momentum. The Heineken brand grew strongly by 7.5%. Operating profit margin was lower than last year mainly due to the consolidation of Brasil Kirin, adverse currency effects and higher input costs.’
• Heineken reports ‘in the second half, we expect a continuation of our revenue growth and an acceleration of our operating profit growth on an organic basis. We continue to invest steadily behind our brands, innovations, e-commerce platforms and commercial strategy. For the full year, given the marked acceleration of our business in Brazil with margins still below group average and the negative impact from currencies, we now expect the operating profit margin to decrease by approximately 20 bps.’
• Regarding the outlook, Heineken reports ‘economic conditions are expected to remain volatile and we assume a negative currency impact comparable to 2017 on revenue and operating profit.’ Full year margins will be down around 20bps on a stronger performance in Brazil and ‘a higher than anticipated negative translational mix impact from currencies.’
• Heineken reports craft beer sales up strongly in the UK.
• Byron Hamburgers has reported overdue full year numbers to 25 June 2017 to Companies House showing that the group lost £55m (after write-downs) in the year to take it to negative shareholders’ funds of £41.5m.
• Byron reports ‘the period under review was a difficult trading environment casual dining market’. Many operators have suggested that trading in London actually worsened around a year ago, outside Byron’s reported trading period.
• Byron reports Brexit problems, cost headwinds and the negative PR following a Home Office review.
• Byron reports on post-period events such as its CVA but says that ‘conditions continue to be difficult.’ It reports ‘there is a risk that a further deterioration in trading conditions could result in liquidity problems for the company’.
• Sunday Telegraph reports ‘Burger chain Byron admits it may need another lifeline.’
• Chinese investor C Banner International has delayed its cash injection into House of Fraser. Telegraph reports this leaves ‘the department store chain facing a cash crunch.’
• Domino’s Pizza franchisees are slowing down the rate of new opens as hostility is growing against boss, David Wild. A spokesperson for the franchisees stated that Wild’s ‘hard-man’ attitude was causing the unrest, and has resulted in 11 big franchisees creating a Domino’s Franchise Association in the UK & Ireland.
• Soho House has opened its latest club in Amsterdam’s iconic Bungehuis building on Spuistraat.
• The eating out sector has been found to be growing at its slowest rate for five years, according to data from MCA. The MCA has reported that the sector is set to grow by 1.5% in 2018, down on 1.7% in 2017.
• Production of English sparkling wine is anticipated to double within the next decade to 8-10m bottles.
• The founder and former chairman of Papa John’s, John Schnatter, is taking legal action against the group in order to gain access to documents related to his exit from the pizza chain. Mr Schnatter’s attorneys said they were ‘seeking to inspect Company documents because of the unexplained and heavy-handed way in which the Company has treated him since the publication of a story that falsely accused him of using a racial slur’.
• Chipotle has announced it will close 29 of its stores across the US, as the group tells investors that it is halfway through its ‘big fix initiative’. The group reported Q2 figures showing LfL sales increases of 3.3% and revenue up 8.3% to $1.3bn.
• BJ’s Restaurants Inc has reported profits up 76% to $16.9m in Q2 figures, with LfL sales up 5.6%. The group reported revenue climbing 8.2% to $287.6m.
• Pint Shop, the two strong craft beer, gin and british food concept is opening its third site in Birmingham.
HOTELS & LEISURE TRAVEL:
• PPHE has reported that it is to move its shares to the Official List in the UK.
• Unite will ballot members with regards to industrial action among staff at Glasgow airport. Staff who provide baggage screening services are in a pay dispute with International Consultants on Targeted Security (ICTS) after rejecting a recent pay offer from the firm.
• Per HotStats, UK hotels record 3% growth in profit per room in June to £67.82, thanks to increases in revenue which outpaced the ongoing increases in costs. Rooms (+3.2%), Food & Beverage (+3.2%), Conference & Banqueting (+5.2%) and Leisure (+4.3%) all increased in revenue on a per available room basis.
• Europcar reports H1 revenue up 28% at constant exchange rates to €1.29bn. Europcar stated that it expects to realise its target synergies from the integration of its acquisitions of Buchbinder and Goldcar over the course of the year.
• Hyatt Hotels Corporation is considering the acquisition of Spain’s NH Hotel Group. Thai hospitality firm Minor International holds a 25.2% stake in NH and intends to offer an all-cash purchase of the remaining shares. A Hyatt offer would put the two firms into a bidding war.
• Eurostar reports passenger traffic up 6.5% yoy in June with more than one million passengers in the month. H1 figures were up 3% to 5.2m with opening of the London-Amsterdam service boosting traffic.
• ‘Unprecedented’ high temperatures have led to Eurotunnel warning of further delays. The cross-Channel rail operator said the heat had put pressure on air conditioning in the tunnel on Friday and Staurday.
• South Western Railway (SWR) and Eurostar staff will strike for 24 hours over separate disputes. Eurostar staff are striking over ‘shocking and dangerous’ working conditions.
• Thomas Cook has announced it will stop selling holidays to animal parks where killer whales are kept captive, such as Seaworld and Loro Parque.
• Ladbrokes and Coral owner, GVC Holdings, has revealed that the group will create a long-term joint venture with the world’s biggest casino operator, MGM Resorts International, as the group looks to dominate what is set to become a multibillion dollar US sports betting market.
• Green Man Gaming have reported revenue up 28% to £45.7m with losses before tax down to £931k from £2.4m, during the year to December 2017.
• Spotify has reached 180m users in Q2, pushing revenue up 26% to €1.27bn. The group also saw the number of paying subscribers increase by 8m to 83m.
• Twitter shares have fallen 20% after the messaging platform reported a fall in active users, decreasing to 335m in Q2 down a million from the previous months. Jack Dorsey, group CEO stated that Twitter had deleted many fake accounts, a move that has been reflected in the results.
FINANCE & ECONOMICS:
• US economy grew by 4.1% in Q2, its highest rate in 4yrs.
• US Treasury Secretary Steven Mnuchin comments that the US could grow by 3% to 4% for the next few years.
• Sterling $1.3103 and €1.124
• Oil $74.28
• UK 10yr gilt yield 1.28%
• World markets: UK & Europe up on Friday but US lower. Far East down in Monday trade.
• Brexit etc.:
o Michel Barnier has rejected the idea that the EU would collect tariffs on behalf of a third party and says it would not allow other parties to collect monies on its behalf either.
o PM & cabinet launched short charm tour of Europe before parliament shuts down for 6wks.
o Mr Raab will meet Mr Barnier again in mid-August
START THE DAY WITH A SONG:
Last friday’s song was Nina Simone with I Put a Spell On You, today who sang:
Made of stone
No way home
RETAIL NEWS WITH NICK BUBB:
• Saturday Press and News: The Hotel Chocolat International franchise agreement in Scandinavia gave the share price a decent lift on Friday, as flagged by several of the market reports in the Saturday papers. The FT and Telegraph market reports also noted that the Inchcape share price was hit badly on Friday by an HSBC downgrade. The Times had a snippet about the “revolving door” of Asda management, following the sudden departure of the CMO (the oddly named Jesus Lorente), whilst the FT had an article on the differing impact of the heatwave on High Street retailers. And the veteran City commentator Neil Collins lashed out at the hapless management of the shopping centre company Hammerson in his column in the FT, mocking the fact that the “two Daves” (CEO David Atkins and Chairman David Tyler) have survived another volte face in strategy.
• Sunday Press and News (1): The main Retail story in the Sunday papers was the front page Business article in the Sunday Telegraph picking up the Guardian’s focus on Friday on the fact that the House of Fraser rescue deal has been thrown into doubt by the legal challenge to the CVA and the delay in the much-needed £70m cash injection by the shadowy Chinese company C.Banner, noting that the share price of this Hong Kong-listed business has plunged by over 70% since the deal to buy 51% of House of Fraser was first mooted at the end of June. The Sunday Telegraph also had a column by Chris Grigg, the CEO of British Land (which voted against the House of Fraser CVA), arguing that the decline of Retail creates an opportunity to bring cities back to life. High Street property was also in the spotlight in the Sunday Times, which highlighted that retailers are increasingly using CVA’s to cut
• Sunday Press and News (2): The story that Tesco is secretly planning to create a new discount food chain called Jack’s this autumn continued to get plenty of coverage, with the Sunday Telegraph noting that Aldi and Lidl have the most loyal customers in UK grocery retailing. The Sunday Telegraph also had a feature interview with Gary Grant, the boss of the fast-growing toy chain The Entertainer, in which he noted that the secret of success in the toy market is “anything soft and squidgy” and mocked the poor lighting in WH Smith stores (“you need a miner’s lamp to see what you’re buying”). The Mail on Sunday flagged that Mike Ashley has now lost around £100m on his punt in Debenhams and that his son Ollie has lost a small fortune on his Online radio station Radar Radio. The Sunday Times noted that Next is likely to announce decent sales growth in its Q2 update next week, thanks to strong
Clipper Logistics: The logistics company Clipper hit the headlines at the end of April by winning the prized contract to run the new Sheffield warehouse for Boohoo’s fats-growing subsidiary Pretty Little Thing, but since then the share price has drifted back quite a long way (the market cap is down to £410m), as if logistics isn’t simply a licence to print money…So we had a look at today’s final results for y/e April to see if Clipper is clipping along. And PBT is up 15% to £14.3m, on the back of 18% revenue growth to £400m, but you have to wonder why the business isn’t growing faster, given that it trumpets that it “commenced significant new contracts with high profile retailers including Edinburgh Woollen Mill, River Island, M&S and ASOS” and saw “significant growth in activity with many of our customers including Asda, Morrisons, Philip Morris, Wilko and s.Oliver”.
News Flow This Week: This week is busy again, in terms of Retail news, as August hoves into view, kicking off first thing tomorrow morning with the monthly GFK Consumer Confidence index. Tomorrow also brings the Greggs finals, the Games Workshop finals and the Travis Perkins (Wickes) interims, together with the Apple Q3 out in the US. On Wednesday we get the Next Q2 trading update and the Dignity interims. Thursday brings the much-awaited MPC interest rate meeting and then the Pets at Home Q1 is on Friday.