Langton Capital – 2019-01-28 – Vouchers, consumer confidence, High Street rents, holidays etc.:
Vouchers, consumer confidence, High Street rents, holidays etc.:
A DAY IN THE LIFE:
Using the Cloud (Google Drive, One Drive or Dropbox or whatever) does make sense these days & it means that, provided a laptop has Office loaded, you can work on documents from any PC, pretty much anywhere.
However, having spent a few hundred quid on a laptop, it does mean that there is very little by way of a wow factor as your new machine will look and feel pretty much identical to your old one except that it doesn’t have all of those dents, scratches and coffee stains.
Anyway, we seem to have jinxed the Mighty Hull City so, without further comment on that subject, let’s move on to the news:
PUBS & RESTAURANTS:
• Discounts still hard to shift. Prezzo 50% off, Giraffe 2-4-1, Carluccio second meal for a quid. Frankie & Benny’s 40% off, Chiquito’s 30% off.
• The latest Deloitte Consumer Confidence Tracker (Q4 2018) has revealed that overall consumer confidence has declined from -7% to -9%
• Deloitte says ‘this fall in overall confidence was primarily due to a decline in sentiment around general health and wellbeing, which fell by 4 percentage points, and lower confidence in levels of disposable income, job security and job opportunities, which each fell by 2 percentage points.’
• Deloitte says ‘confidence had been recovering since Q2 2017, reaching its highest ever level in Q2 2018, the quarter that had it all: a royal wedding, England’s performance at the World Cup and some of the hottest weather on record…However, with the uncertainty surrounding Brexit reaching new highs, even positive economic news has not been enough to restore their confidence.’ GfK’s confidence numbers come out on Thursday.
• Whitbread bought back £6.7m of its own shares on Friday for cancellation at £49.29 per share.
• FT reports Patisserie Holdings may have fabricated invoices and run dummy ledgers. It says the PwC enquiry is focussing on ‘certain staff & suppliers’.
• Per CGA, the three crucial areas of focus in foodservice in 2019 will be health, sustainability and technology. BrandTrack’s survey concluded that 65% of consumers now try to lead a healthy lifestyle, with 77% saying sustainability is now a top priority.
• The Mail on Sunday claims that Tesco may close in-store meat, fish and delicatessen counters, replacing the staff with vending machines. A Tesco spokesman declined to comment but said ‘We’re always looking at ways to run our business more simply and efficiently.’
• According to the Telegraph, Marks & Spencers is in talks to takeover Ocado’s supermarket operations. The discussions could supposedly range from using Ocado’s distribution centres to an acquisition of large parts of its logistics network.
• Sky News has reported that Mike Ashley is demanding certain landlords cut or forego their rents as he negotiates a deal to help save the music retailer.
• Chief Executive of SIBA, Mike Benner has commented on the sale of Fuller’s brewing business to Asahi: ‘Small breweries relief is responsible for the British craft beer revolution and directly aims to help small brewers compete with larger competitors like Fullers, compensate for lack of access to market and ensure diversity and choice for the consumer. It is an essential element in today’s world-leading craft beer market with thousands of beers from hundreds of local breweries available to discerning consumers’.
• Research from the NPD Group has shown that the quick service restaurant sector is showing no signs of slowing in growth, with the group expecting QSRs to attract £1.53bn more in spending by 2020 to reach £24.6bn.
• Chief Executive of UKHospitality, Kat Nicholls has welcomed the Government’s launching of a consultation on the changing of food allergen laws: ‘Protection of our customers and promotion of transparency is of the utmost importance for UKHospitality, its members and the hospitality sector’.
• Research from the Plunkett Foundation has found that pubs owned or run by members of the community or on behalf of the community increased by 30% in 2017. The report however made for bleak reading for the pub sector as a whole, finding that 18 pubs a week were closing in the UK.
• Starbuck’s shares bounced 2% after the group reported better than anticipated sales and earnings growth. CEO of the group Kevin Johnson commented: ‘We are particularly pleased with the sequential improvement in quarterly comparable store transactions in the U.S., underpinned by our digital initiatives and improved execution of our in-store experience’.
• Wine production in China has fallen 37.16% to 6.29m hectolitres in 2018. Wine production in China has been declining for the last five years, however, this is the sharpest fall in a single year.
HOLIDAYS & LEISURE TRAVEL:
• Which? Reports around 3.5m British passport holders could be prevented from travelling to some EU countries in the event of a no-deal Brexit. The FCO has said ‘Some passports with up to 15 months validity remaining may not be valid for travel.’
• Chinese New Year on 5 February is expected to boost UK tourism numbers from China. Forward flight booking data showed bookings from China to the UK up 24% between 30 January and 12 February.
• A Business Travel Show survey shows Brexit has become the top concern for travel buyers for the next 12 months. Despite their fears, 65% of those polled don’t have a post-Brexit plan in place.
• The BBC reports some EU countries are calling for UK airlines to be able to fly in and out of the EU until 31 December, in the event of a no-deal Brexit.
• A study by Airplus reveals travel managers believe the number and cost of business trips will increase in 2019.
• STR reports US hotel occupancy up 5% to 58.4%, ADR up 3.4% to $124.32 and RevPAR up 8.5% to $72.54 for the week ending 19 January.
• M&G invests £203 in a London hotel project in Paddington. The 620-room hotel will open in 2021 and will reportedly be occupied by Premier Inn and Staycity.
FINANCE & ECONOMICS:
• Sterling up vs dollar at $1.3191 but down vs Euro at €1.1557. Oil down at $60.96. UK 10yr gilt yield up 5bps at 1.31. World markets mixed with Far East lower in Monday trade.
• Brexit, politics:
o Philip Hammond has said that business leaders need to accept the result of Britain’s EU referendum to leave the EU
o Mr Hammond warned ‘even from the narrowest interpretation of business interests, it would be a pyrrhic victory to meet the needs of the economy, but by shattering the broad economic consensus behind our country’s political and economic system.’
o Social cohesion has taken a knock as it is meaning that the choice may be between a fractured society with a functioning economy and one without.
o Mr Hammond says a no deal Brexit would cause “very significant disruption” for the UK in the short term.
o Various think tanks worried about the economy. Ensuring equal billing, voter tells BBC Look North in Hull ‘my nan told me it was better before Europe, so it’s a risk worth taking’.
o Chairman & CEO of Unipart, John Neill, has said that International Trade Secretary Liam Fox has “extremely low credibility” when it comes to talking about trade.
PRIOR DAY LATER TWEETS:
• Later tweets: Fuller, Smith & Turner is to sell its beer business to Asahi for £250m. Return some cash to shareholders, spend some on new units etc.
• Chiswick site v valuable but Fuller’s beer valuation does say something about the worth of the 5x bigger Marston’s brewing business
• FT reports Patisserie Holdings is pushing for the repayment of VAT on overstated sales. It’s an ill wind that blows nobody any good…
• Brexit warnings from Airbus, Ford, Tony Blair, P&O, Jaguar Landrover etc. Dutch said to be poaching businesses, advises to move to NL
START THE DAY WITH A SONG:
Last Friday’s song was Love My Way by Psychedelic Furs. Today, who sang:
Ah Deborah do you recall?
Oh, your house was very small
With wood chip on the wall
When I came around to call
You didn’t notice me at all
RETAIL NEWS WITH NICK BUBB:
Saturday Press and News (1): The main Business story in most of the Saturday papers was the news that the Chiswick-based brewer Fullers, of “London Pride” fame, has been sold to the Japanese brewing giant Asahi. The Daily Mail, however, went big with another story about Marks & Spencer, flagging that it has teamed up with a group of “influencers” on social media, to promote its clothing ranges to younger customers, “in a desperate bid to arrest declining sales”. The Daily Mail also noted the Sky News story that Mike Ashley is demanding six-month rent holidays from landlords, in his pursuit of HMV, whilst on its News pages it highlighted that Amazon is looking for sites across the South-East for its Amazon Go convenience stores.
Saturday Press and News (2): In terms of other Retail stories, the Bonmarche update got the most coverage in the Times (“Bleak mid-winter at Bonmarche”). There were a few snippets about the Findel update, while the Guardian slipped Friday’s dull CBI Distributive Trades survey for “January” into a story about Brexit stockpiling. The Times flagged that the former Tesco UK MD Chris Bush is now suing Tesco for unfair dismissal and that Terry Duddy has had to stand down as a non-exec at Hammerson because of his elevation to be Chairman at Debenhams. The Times also had a big feature interview with Brian Duffy, the boss of the private equity owned Watches of Switzerland jewellery chain, concluding that an IPO is “only a matter of time”. And the FT Small Cap column reviewed the “Middle-class favourites cushioned from High Street woe”, ie Joules and Hotel Chocolat, with Fevertree thrown in as
Sunday Press and News (1): There were 3 main scoops in the Sunday papers: the main Business story in the Sunday Times was headlined “Besieged B&Q boss faces axe”, flagging that Kingfisher is mulling the sacking of CEO Veronique Laury, after the failure of her ambitious strategy (with Kate Swann mentioned as a potential successor). And the main Business story in the Mail on Sunday was that Tesco UK is planning to slash up to 15,000 in-store jobs by doing away with most of their deli, meat and fish counters and scaling back the in-store bakeries. The other Mail on Sunday scoop came too late to get onto its Business pages, given print deadlines, but the story that M&S is in secret talks with Ocado about setting up an Online grocery delivery service was on page 8 of the News pages.
Sunday Press and News (2): Apart from Kingfisher, M&S and Tesco, there were plenty of other interesting stories, however: the Sunday Telegraph flagged that Carpetright’s struggling rival, the Tapi chain, is having to ask its investors to stump up even more money to keep the loss-making business going and the Sunday Telegraph also highlighted that credit insurers have cut back their support for suppliers to the struggling Furniture Village chain. And the Sunday Times noted that the struggling Peacocks fashion chain (owned by Philip Day of the EWM Group) is extending supplier payment terms and forcing suppliers to use a finance company called Tradewinds. The Sunday Times also flagged that Office Outlet (the former Staples chain) and the furniture chain Feather & Black are still struggling, despite being rescued from administration last year; the Boohoo Chairman Peter Williams is
Sunday Press and News (3): In terms of features and Editorial comment, the Observer looked in depth at the way in which local authorities have invested in property to boost their income, highlighting that an Asda superstore near Swansea is owned by the Mole Valley district council in Surrey…And Oliver Shah of the Sunday Times looked at the Tesco accounting scandal in his column, thundering that “A toxic culture was the real villain at Tesco”, suggesting that former CEO Phil Clarke was ultimately to blame for the drive to hit short-term profit targets by pulling forward commercial income…
Today’s Press and News: Most of today’s papers follow up on the Tesco job cuts story in the Mail on Sunday, which has not been confirmed by the company, but the Telegraph goes big on the M&S/Ocado story in the Mail on Sunday (“M&S in talks with Ocado to enter Online food fight”), quoting our view that M&S CEO Steve Rowe has always been against an Online food offer as so much M&S food is bought to be consumed on the same day. The rumoured M&S/Ocado talks have not been confirmed by the companies either yet…
News Flow This Week: This week is quiet in terms of UK company news, but there is an update from ScS on Thursday (Carpetright is now expected to announce its update early next week). Otherwise, with the end of the month coming up quickly now, we get the GFK Consumer Confidence survey for January first thing on Thursday. And in the US, the Apple Q1 update comes out tomorrow night.