Games Workshop, food prices, TCG, outlet numbers etc.:

A DAY IN THE LIFE:

The prize for the ‘thickest bird in our garden’ is hotly contested each year.

And this year the finalists are 1) the male blackbird that sits on the wingmirror of our car and fights its reflection for hours whilst pooing on the car door and 2) the series of pigeons that hop around on the grass and consider that the fox lurking in the undergrowth is a harmless ornament.

Of course, the second contender is a series of different birds as individual ‘players’ are dismembered and ingested messily by a hungry Vulpes Vulpes.

Meaning that we may have to give the award to the blackbird which, though irredeemably thick, does seem to know that if it stays close to the car, I’m unlikely to take a pot shot at it or even throw anything more harmful than a cherry tomato in its direction.

So well done the blackbird – though it would have been put in the shade by one of our turkeys, which used to lay its eggs on the cambered roof of the hen house (to see them all roll off and smash) and then drowned when it stood in the rain for too long with its mouth open and forgot to breath.

It no doubt thought that it was dogged and determined and, had it been around now, we would have had to call it Theresa. On to the news:

PUBS & RESTAURANTS:

• The annual CGA Prestige Foodservice Price Index has reported that ‘whilst food and drink inflation for foodservice operators has reduced during 2018, many food markets remain highly unstable in the period leading up to Brexit.’

• The report says ‘the Fish & Seafood category for example has risen over 25% in the past year…and Oils & Fats have leapt over 30% as higher butter prices have filtered through.’

• CGA Prestige reports ‘sugar is the only market to see consistent falls in price driven by higher global production in a market with flat demand. On the full basket of goods average inflation in 2018 currently stands at 3.3%.’

• Prestige adds ‘many commentators predicted much lower inflation this year, because of the much higher base created in 2017, when inflation was 6.1% following the Brexit generated falls in the value of Sterling. But prices have continued their inexorable climb, and this pattern may well continue perhaps sharply as we progress through Brexit in the months ahead’.

• Contrary to comments made by JDW chairman Tim Martin, CGA Prestige believes that prices would rise if Brexit becomes even messier and says ‘a no-deal departure from the EU creates a particularly unstable position on food prices due to the likelihood of up to 20% fall in the value of Sterling, shortages of fresh product for an unpredictable period, and the possibility of new trade tariffs with the EU.’

• EI Group yesterday bought back c244k of its own shares for cancellation at 179.8p

• AlixPartners reports a 3.2% decline in the number of licensed premises over the last 12 months, with 3,878 pubs, bars restaurants and other venues closing. In the year to September, the number of restaurants fell by 2.0%.

• The BBPA argues against mandatory calorie labelling on menus for pubs, claiming the ruling would be costly and would disproportionately affect smaller pubs.

• NewRiver has agreed to acquire 76 pubs from Heineken in a deal believed to be valued at c £12m, The Times has reported.

• Wages for jobs in the hospitality sector have increased 38% as businesses struggle to find staff, a report from the jobseeker site CVLibrary has stated.

• Nando’s has reported revenue for the 12 months to February 2018 rose 14% to £969.3m driven by new openings and franchise acquisitions. Operating profit was found to decrease £4m y-o-y to £42.8m due to higher costs associated with expanding the business.

• Founder of the Pizza Express restaurant chain, Peter Boizot, has died aged 89.

• US restaurant sales rose 1% on a LfL basis in November reports TDn2K. It says ‘although we have been excited to report on positive sales growth for most of the year, there was always the caveat of this only being a recovery from a short-term perspective. The industry’s sales were better than a year ago, but in reality, we were still negative compared with where we were two years prior.

• Technomic has reported in its 2018 Future of FSR Consumer Trend Report that ‘cautious optimism’ is warranted re the US full service restaurant segment. It says ‘following a year in which the total unit count for Top 500 casual-dining chains declined 1.5%, some brands are starting to see positive signs at the unit level.’

• The New York based Halal Guys restaurant group is set to open three London sites in 2019, with the group aiming for further expansion across the UK.

• The collapse of the trial of former Tesco bosses with regards the misstatement of profits to the tune of c£250m, has heaped pressure on the SFO. The judge for the proceedings ruled last week that there was no case to answer.

HOLIDAYS & LEISURE TRAVEL:

• Invesco, Thomas Cook’s largest shareholder, has increased its holding in the company from 14.2% to 15.2%, following the company’s sharp fall in share price.

• Chris Mottershead is set to take back leadership of Thomas Cook’s UK business as Ingo Burmester departs for Kuoni parent DER Touristik.

• Staycity Group appoints Wayne Arthur as its new CFO, set to join in mid-January.

• VisitBritain reports positioning the UK as an outward-looking country which is open for business would  ‘counter perceptions that leaving the EU would result in Britain isolating itself internationally’ and drive inward investment and business.

• Global airline demand rose by 6.3% in October with demand for European carriers climbed 7.5% year-on-year. Iata CEO Alexandre de Juniac welcomed the recent easing in fuel prices amid airline anxiety over Brexit.

• Warner Leisure Hotels acquires Heythrop Park, a four-star property on the edge of the Cotswolds in Oxfordshire.

• Gatwick handled 26.5 million passengers in the six months ending September 30, 2018, an increase of just 100,000 yoy as airlines worked to fill the holes left by Monarch’s collapse.

• STR reports US hotel occupancy up 1% to 57.3%, with ADR up 2.2% to $120.23 and RevPAR up 3.3% to $68.39 for the week ending 1 December.

• Wall Street Journal claims Lyft is planning to IPO in spring 2019 with investors speculating the company’s valuation could exceed $15bn. Uber has also indicated it may IPO in 2019.

EASY HOTEL:

• We produced work on it yesterday that is available to clients.

OTHER LEISURE:

• Games Workshop has updated on H1 trading to 2 Dec saying ‘preliminary estimates indicate sales of c. £124 million in the first six months of 2018/19 and an operating profit of c. £41 million.’

• GAW adds ‘these results are in line with expectations for the year ending 2 June 2019 although the Board is aware that it is still early in the 2018/19 financial year.’

• GAW continues ‘these results show the Warhammer Hobby is in great shape in our core markets. We have built on the progress we made last year and the results are considerable given the backdrop of major projects; increasing factory capacity and ERP system implementation.’

• GAW has declared a dividend of 30 pence per share to be paid on 25 January 2019 with an xd date of 20 December 2018. The group says ‘we expect to announce our half-yearly report for the six months to 2 December 2018 on 15 January 2019.’

• Cybermen have been have been spotted in Birmingham and Leeds as Escape Hunt launches ticket sales for its first Dr Who escape rooms. Fans can now book tickets to play the game in the new year with CEO Richard Harpham saying ‘We are extremely proud of Worlds Collide and look forward to giving fans a unique Doctor Who escape game experience.’

• Acast, a podcast platform, raises $33m from investors including Swedbank Robur and Fokus Fund.

• Alibaba will open an e-commerce trade hub in Belgium as part of the Electronic World Trade Platform.

FINANCE & ECONOMICS:

• Sterling up at $1.2764 and €1.1228.

• Oil down at $59.39

• UK 10yr gilt yield sharply lower at 1.23%

• World markets down sharply yesterday with FTSE100 down to its lowest level in two years. A bounce is due this morning.

BREXIT OP-ED:

In June 2016, the referendum winners lied and lied and lied. They didn’t think they would win. They were jockeying for position in a post-Cameron Tory Party.

The losers were complacent. They inhabited a bubble & discounted or diminished the opinions of the JAMs. They appeared out of touch & invited a bloody nose.

And now we are where we are. Mrs May can only save two of the following: Herself, her party or her country. She may be going for the first two at the expense of the third.

She’s being egged on. Over-optimism, dogma & sound-bites have overshadowed expertise such that experts are derided and ignored. Would you try that with your dentist or heart surgeon? Thought not.

Charismatic

• Leavers had (and still have) the best sound-bites. As the ‘challenger’ they have been able to promise any old rubbish. Disproving their assertions is virtually impossible. So is disproving the assertion that Langton will be a billionaire this time next year. That it will never have to work again and that the rest of the world owes it a living.

• And talking of the insulated rich, bully billionaires have in some cases backed Brexit and made wild assertions from behind their walls of money. And they must know what they’re talking about, mustn’t they?

• So, the choice may be between wild eyed optimists (also known in more normal times as ‘crazy people’) and dull, grey ‘experts’. Just put an X in the box and your troubles will all disappear – at least that was the promise.

To see oursels as ithers see us…

• Der Spiegel re Brexit ‘the country’s leaders have bumbled their way into catastrophe…An entire country is degrading itself and many EU diplomats believe its political class has turned itself into a laughing stock.’

• Der Spiegel re the red bus. It ‘was emblazoned with the claim that the UK transfers 350 million pounds per week to the EU, which in the event of Brexit would be invested in the health system instead. No part of this sentence was true.’

• The Tory party’s handling of Brixit ‘will be taught as a case study for political failure.’

• NBC – ‘this could end very badly…’

Let’s not get too heavy…

• We’ll put to one side the suggestion that the EU has helped to keep the peace in Europe for 70yrs, that there will be only two countries in 100yrs, China and not-China and that the UK will be in neither, that we’re playing into the hands of those that bear us ill etc. etc.

Random Brexit noise:

• UK politics have been frozen for 30months. Maybe stopping politicians from doing anything is a good thing but there is little business as normal.

• Mrs May painting herself into a corner? No delay to vote on 11th, no second referendum, must be a backstop but need the DUP’s vote etc. How’s that lot going to work?

• Is the May semi-Brexit a) good for Britain or b) unavoidable if you take ‘the will of the people’ as permanent and never changing? McBeth thought it was bloodier to turn back than go on – and look where that got him.

• The books say, if you’re going to fail, fail fast. Don’t stumble on for 30mths and then fall flat on your face.

• Perhaps there’s some sort of masterplan that we have yet to identify. Or perhaps the current situation is simply what it seems to be; a mess.

• EU to opine on whether UK has the ability to call the whole thing off unilaterally on 10 December.

• Morgan Stanley ups chance of no Brexit at all from 20% to 40%.

• M Barnier has said that the outcome of the vote will determine the UK’s future.

• A head-to-head debate between Mrs May and Mr Corbyn will now not happen as both the BBC and ITV have pulled out.

• Hotelier sir Rocco Forte has said that the semi-Brexit deal is ‘a disaster’. RBS is reported set to move billions of pounds of assets to the Netherlands in the event of no deal.

• If Mrs May’s deal is rejected, MPs seem to be moving to prevent no-deal. In which case, a Norway plus (still allowing freedom of movement etc.) or a second referendum appear to be the only remaining options.

• Philip Hammond has reported that the port of Dover would require significant new physical infrastructure in the event of a hard Brexit. Planning permission alone could take at least two years.

PRIOR DAY LATER TWEETS:

• Later tweets: CGA & Alix Partners say total restaurant number in UK down 2.0% in year to Sept. Indies down but chain restaurant numbers still up

• Weak composite PMI number suggests 0.1% growth Q4. Total year growth could miss forecasts. Markets lower on cocktail of concerns

• EasyHotel results. Group preparing the ground for further growth. Brand, management & balance sheet will provide solid support

START THE DAY WITH A SONG:

Yesterday’s song was Miracle Aligner by The Last Shadow Puppets. Today, who sang:

Don’t know if it’s day or night,

You got me blowin’, blowin’ my mind

Is it tomorrow, or just the end of time?

RETAIL NEWS WITH NICK BUBB:

Games Workshop: Today’s first half trading update (for the six months to 2 December) from the highly profitable gaming chain Games Workshop (which has a market cap of nearly £1bn) doesn’t contain any year-on-year percentage growth figures, merely stating that sales were c£124m and operating profits were £41m and that these were in line with expectations. But, despite very strong comps, the point is that these are up, from c£109m and c£39m respectively a year ago. The company says “These results show the Warhammer Hobby is in great shape in our core markets.  We have built on the progress we made last year and the results are considerable given the backdrop of major projects; increasing factory capacity and ERP system implementation”. 

Signet: The UK operations of the American jewellery chain Signet are pretty small beer these days, but they still release detailed quarterly sales etc for the 2 chains of Ernest Jones and H Samuel and yesterday’s Q3 results (for the 13 weeks to Nov 3rd) for the UK were weak, with LFL sales down by 3.1%, reflecting “unfavourable traffic trends and a difficult consumer environment”. 

ABF (Primark): Ahead of today’s AGM, the conglomerate ABF has issued a brief trading update that will strike fear into Fashion retailers, as it has warned that, although the first 8 weeks of trading for the group were in line with expectations, “during November Primark trading was challenging, in a tough retail market, but with careful inventory management and improved margins, our expectation for the increase in Primark profit is unchanged”.

BDO High Street Sales Tracker: We flagged on Wednesday that sales at John Lewis slumped badly again last week, despite continuing price-matching of extended Black Friday deals and promotions, but today’s BDO High Street Sales Tracker for medium-sized Non-Food chains for last week, w/e Sunday Dec 2nd, is pretty solid, with BDO Fashion sales up 3.2% LFL last week (including Online). Total BDO sales (including Homewares and Lifestyle sales) were up by 1.8% (-4.4% in terms of Store LFL sales and up by 20.1% Online).

News Flow Next Week: The big focus next week will be on the Brexit Vote in the House of Commons on Tuesday evening, but there is plenty of company news to keep us busy, kicking off on Tuesday morning with the Carpetright interims and the latest Kantar/Nielsen grocery sales data for the big supermarkets. Then Wednesday brings the Dixons Carphone interims/Strategy Review and the Superdry interims, followed by the much-awaited Sports Direct interims and the Ocado Q4 update on Thursday.