Langton Capital – 2018-08-06 – Sector acquisitions, crowd funding, Heineken, rates etc.:
Sector acquisitions, crowd funding, Heineken, rates etc.:A DAY IN THE LIFE: It’s summer and, if ever there was a season to remind you that insects sweep the board in most ‘least desirable animals’ competition, now is the time. Because, between horse flies, wasps, mosquitoes and midges, they have a series of contenders that can make life pretty miserable. And that’s even before you bring in the even-less-desirable and thankfully somewhat less common (usually) fleas, nits, bed-bugs etc. which if they were thrown into the mix, would surely make life pretty much intolerable. Anyway, we’re on the Dutch border with Germany just now and we’ve still yet to meet a Dutchman who’s English is worse than our Dutch. Weather glorious but a shade too hot. Meant to be 39 degrees in Berlin later in the week. Just about to set off for Magdeburg where we should be able to squeeze in a McDonald’s in the nearby village of Brumby. We would like to grab a couple of shots of the church etc. and swan about asking locals ‘do you know what our name is?’ On to the news: PUBS & RESTAURANTS: • The Sunday Times has reported that the real estate Aprirose has acquired Wear Inns for £22.4m. • Sky has reported that the American buyout giant, Carlyle has made an offer for Gaucho. Its bid comes just weeks after it offloaded a substantial debt position it held in Prezzo. • Luke Johnson claims many crowdfunding schemes will end in tears in the Sunday Times, saying ‘The promoters are taking advantage of a lack of investing expertise among the public. Good luck to them – but many schemes will end in tears when the uninformed punters realise they’ve been had. I predict returns from the asset class will prove abysmal, especially since investors get few protections or rights in the subscription agreements offered by crowdfunding platforms.’ See earlier Langton ’60 Seconds’’ pieces for our views on Crowd Funding. • Per Sunday Times, Villandry has hired BDO to find a buyer as losses mount up for the restaurant chain. Currently owned by a consortium of City investors led by Philippe Le Roux losses increased to £1.6m in the year to March 2017, up from £847,537 a year earlier. The chain experienced a painful doubling of its rent at its Great Portland flagship site. • Heineken aiming to increase its sales in China after buying a 40% stake in the parent of China’s largest beer company in a £3.1bn investment. • Per Moody’s, Heineken will have to delay its deleveraging following the €2.7bn acquisition of a 20% stake in CR Beer, a Chinese brewery, mentioned above. The deal will also reduce Heineken’s financial flexibility needed to absorb any potential deterioration in its operating performance. • Former CEO of Sainsbury’s, Justin King, claims business rates should be halved and compensated by a 2% rise in VAT in order to combat online companies having ‘an unfair advantage’ when it comes to tax. Mr King also suggested the government should consider a ‘delivery tax’ on online companies that ‘bypass retail space’. • Red Robin Gourmet Burgers Inc has seen same store LfL sales decease 2.6% in its Q2 results. Denny Marie Post, the group’s CEO stated: ‘We are disappointed with our performance in the second quarter. While we remain confident in the strategy that we have in place to address the shifts going on within casual dining, we simply didn’t execute as well as we should have’. • PepsiCo has promised $100m investment in its Shanghai facility in a move to respond to growing demand for its crisps in China. • Wonga has received an emergency £10m cash-injection from a consortium of high profile technology investors, preventing the firm from going bust. Reports say the investment valued the company at $30m, a big decline from when the group had ambitions of listing on the New York stock exchange for around £769m. HOLIDAYS & LEISURE TRAVEL • UKinbound reports members’ confidence for the next 12 months was up month on month in May-June at 47%, but still remains at a low level. But confidence has steadily declined since September-October 2017, when it stood at 60%. • Travelport reports H1 revenue up 6% to nearly $1.36bn driven by a 22% increase in revenue from the company’s Travel Commerce Platform in Europe. President and CEO Gordon Wilson said ‘We’re keeping to our guidance for the full year, but the World Cup, the heatwave in Europe and the fuel price make us a bit circumspect about the second half.’ • Self-catering specialist Hoseasons has increased peak season capacity by 10% and is predicting its eighth record summer in a row as a result of the extended UK heatwave. Hoseasons managing director, revenue, Simon Altham said: ‘The heatwave has clearly played a big part in encouraging UK bookings over the last few weeks, but it’s not the only reason there’s such an optimistic feeling around the UK holiday market at the moment.’ • Spanish hotels are cutting rates this summer season as ‘visitor numbers to Spain start to peak after five record-breaking years,’ with tourists instead opting for destinations such as Turkey and North Africa. • UKinbound’s latest business barometer shows that some 72% of members saw bookings/visitor numbers/customer orders the same or higher compared to the same period last year. Business confidence regarding the impending 12 months remained low at 47%, slightly up on March/April figures. OTHER LEISURE: • William Hill reported a pre-tax loss of £820m on Friday as a result of £916m of exceptional charges reflecting the government’s clampdown on fixed-odds betting terminals. The betting company admitted the decision in May to cut the maximum bet for fixed-odds betting terminals from £100 to £2, will have ‘long-term consequences’ for its business. Adjusting for the charges, pre-tax profit fell 13% to £96m and earnings per share dropped 18% to 9.1p. The group also announced plans to expand its US presence, including opening 11 casinos in Mississippi and partnering with a casino in West Virginia, pending regulatory approval. • Smart wearables company Fitbit beat estimates in its second quarter by $10m with revenue of $299.3m. FINANCE & ECONOMICS: • BBC and others reporting that banks not passing on benefit of interest rate rise to savers. Perhaps millions of people could get a better return by switching accounts. • US unemployment rate dropped to 3.9% in July with the economy adding 157k jobs in July, a few fewer than expected. 1.1238 • Oil $73.30 • World markets: All up Friday, Asia mixed Monday • Sterling $1.2988 and € • Brexit etc.: o Liam Fox says that the chance of a no-deal Brexit is now running at 60:40. Blames EU intransigence. o No10 still ‘confident’ that it can achieve a ‘good deal’ o Bank’s Mark Carney says that chance of a no-deal Brexit is now bot ‘uncomfortably high’ and ‘highly undesirable’. o Jacob Rees Mogg calls Mark Carney the ‘high priest’ of Remain. START THE DAY WITH A SONG: Friday’s song was No One Knows by Queens of the Stone Age. Today, who sang: In your eyes I see the eyes of somebody of who could be strong, Tell me if I’m wrong And now I’m pulling your disguise up Are you free or are you tied up RETAIL NEWS WITH NICK BUBB:
• Saturday Press and News: The better than feared Pets at Home Q1 update on Friday was the lead story in the Telegraph and the Daily Mail market reports, given the c11% rally in the share price and the news was also picked up by the Times (“Price cuts mean Pets at Home can purr once again”). Otherwise, Amazon was in focus in the Saturday papers, after revealing the derisory amount of corporation tax it paid last year, with the Times taking up the running from the Daily Mail (which led its front page on Friday with the headline “They’re taking us for fools”) with a forceful Editorial headlined “Scamazon”, thundering that “The Government should lead an International drive to bring Amazon to heel” and that “enraged consumers and hard-working tax payers should take their business elsewhere”. The FT had a more positive Editorial, headlined “How to create the High Streets of the
• Sunday Press and News (1): The main focus in the Sunday papers was on the beleaguered House of Fraser with the Mail on Sunday and the Sunday Times both flagging that Mike Ashley has backed away from a rescue deal because of worries about the pension funds…The Sunday Telegraph also noted that hopes of a rescue for House of Fraser are fading fast, amidst the gathering cash crisis, and its Business Editorial seemed a bit behind the times in arguing that “House of Fraser offers Ashley shot at retail crown”. The Sunday Times highlighted that Philip Day of the acquisitive Edinburgh Woollen Mill group has been coaching the inexperienced boss of House of Fraser, Alex Williamson, since March and it had a separate feature article on “The fall of the House of Fraser”, noting that Yuan Yafei of the Chinese conglomerate Sanpower “has overseen four years of opaque and shambolic ownership” of House • Sunday Press and News (2): In other news, the Sunday Times flagged that creditors lost £226m in the recent collapse of Poundworld and that the boss of Card Factory, Karen Hubbard, will come under pressure if she cuts full-year earnings guidance in the upcoming trading update, whilst the Mail on Sunday flagged that the discount chain The Range is introducing Iceland frozen food departments into 3 of its stores. Today’s Press and News: The surprise news that the landlords have settled their legal challenge to the House of Fraser CVA plan gets plenty of coverage in today’s papers, with the main theme that the store closures can now go ahead, but the Daily Mail flags that the business could still soon go bust, although it quotes our view that there is now a small chance that House of Fraser can rally enough support to keep going. In other news, the Guardian follows up the Mail on Sunday story that the discount chain The Range is introducing Iceland frozen food departments into 3 of its stores, whilst the FT highlights that hedge funds have been burnt as “shorted UK stocks deliver index-beating performance”, highlighting the outperformance of Ocado, Tesco and Next etc. And talking of Tesco, the company has announced today that its strategic alliance with Carrefour is going ahead, News Flow This Week: As we move further on into August, things are quieter this week, but first thing tomorrow we get the BRC-KPMG Retail Sales survey for July (with good Food and bad Non-Food likely to play a score draw in terms of overall LFL sales), whilst there is a ScS trading update on Wednesday (along with the Footasylum and Majestic Wine AGM’s) and a Card Factory pre-close update on Thursday. |
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