Langton Capital – 2019-07-05 – CVAs, pubs & brewers, Wm Hill & High Street etc.: (copy)
CVAs, pubs & brewers, Wm Hill & High Street etc.:
A DAY IN THE LIFE:
Watching the TV debates and the like, don’t you ever get the feeling that you’re on the Titanic in the period between it having hit the iceberg and it beginning to list noticeably?
Because, whilst I don’t want to be the man who spotted ten of the last two recessions, it does seem a bit that way to me.
I mean the band’s playing, but the grins are a bit fixed.
And, if Jeremy Hunt’s eyebrows were to get any higher, they’d be free of his head suggesting that he’s either aware that what he’s saying is patent nonsense, or his self-medication is now at truly heroic levels.
Or perhaps we’ve fallen down the rabbit hole and I’m the one that’s got it all wrong. I mean we’ve got Ms Widdecombe (surely a darling woman but mad as a box of frogs), childless and in her 70s telling my kids how they’re going to have to spend their next 50yrs building her Brexit whilst Boris, true to form, couldn’t seem to give a monkey’s.
Anyway, it’s all well above my pay grade. All I really know for sure is that the sun’s shining, the grass is growing and, if I don’t get the mower out, nobody else is going to, that’s for sure. On to the news:
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CVAs – A FEW FURTHER THOUGHTS: We hear rumours that another two chains are preparing CVAs. Smoke and fire and all that but, admittedly, such stories sometimes come to nought. Here a few unstructured thoughts. 4 July 2019:
• CVAs are either a mechanism via which jobs and businesses are saved or a process steeped in moral hazard whereby poor companies are put on life support to the detriment of their peers and often not much to their own advantage either.
• Or maybe they’re being perpetuated by advisors who know a gravy train when they clamber aboard. Perhaps a mixture of all of the above. See Premium Email
GENERAL NEWS – PUBS & RESTAURANTS:
• Research from the MCA has predicted that the UK pub industry will reach a valuation of £23bn this year, an increase of 1.9% on 2018. MCA Insight’s insight director Gareth Nash said: ‘The UK pub sector has continued from a strong 2018, as it outperforms the overall eating-out market for a second successive year’.
• The Society of Independent Brewers has written to the two Conservative leadership contenders, calling on them to back independent British brewers. James Calder, SIBA Chief Executive said wrote: ‘SIBA is resolute that no small brewer should lose any duty relief as the result of reform, as any reductions threaten jobs, investment and consumer choice, which is why SIBA will continue to defend SBR at current levels whilst lobbying for positive reform’.
• William Hill’s decision (see Other Leisure below) to shutter c700 betting shops will do little to keep High Streets alive.
• Whilst the departure of bookies’ shops is greeted with mixed emotions (they may help footfall but they take, net-net, money out of consumers’ pockets), the move is likely to be followed by the other major High Street betting chains and finding an alternative use for the premises could be challenging.
• The sites will generally be too small to transition to bars (thank goodness) but some could potentially reopen as grab-n-go food shops. If Ladbrokes, Coral, Bet Fred and the others follow suit, however, the UK may arguably not need another c4,000 sandwich or coffee shops.
• Patisserie Valerie has reportedly overturned a ‘ban’ on using butter in its puff pastry. The prior management was apparently cutting ingredients in order to save money. The new management would appear to be making good use of what publicity it can generate re the launch of its new summer menu.
• Pat Val MD Paolo Perretti says ‘we’re really excited to be able to share some of the hard work that’s gone on behind the scenes over the past few months at Patisserie Valerie. We’ve not just put the butter back in our pastry, we’ve upgraded the quality of the ingredients our menu from Italian Amerena cherries on our black forest gateaux to Mediterranean figs in our new vegan super wholefood salad.’
• BrewDog has extended its latest Equity for Punks fundraising, saying that investors will now have until June next year to take part. The brewer will allow investment via cash or Cryptocurrency.
• BrewDog’s James Watt says ‘our Equity Punks are our community, our shareholders and our friends and the driving force behind our business. The growth BrewDog has shown over the last decade could only have been achieved with their encouragement and support and together we have shown the city slickers what can be achieved with taking charge of something you believe in. Cryptocurrency is exactly the same. If you embrace change to subvert the mainstream we are in your corner; whether your weapons of choice are malt, hops, yeast and water or blockchain.
• BrewDog adds ‘investments can go down as well as up and invested capital is at risk. Investors should only invest on the basis of information contained in the prospectus.’
• The Lagg Distillery on the Isle of Arran has opened its doors to the general public to welcome visitors to its site.
• Propel reports that MeatLiquor has completed a fund-raising of £240k in order to fund further expansion. CEO Scott Collins says that LfL sales are up over 5%. Collins says ‘meanwhile, MeatLiquor Queensway has now ended its second year of trading and has smashed our expectations.’
• Coca Cola is reportedly looking to acquire Pernod Ricard’s wine brands in a deal that analysts estimate could be worth $500m. The move would be Coca Cola’s first foray into the wine business.
• Chinese vice-agriculture minister Yu Kangzhen has said ‘Overall, the incidence of African swine fever has slowed markedly, and the production and distribution of live pigs is gradually returning to normal’.
• Deliveroo is slashing prices across its app by 25% for every Friday in July. The move will be Deliveroo’s ‘biggest customer offer ever’.
• Greggs has joined forces with Just Eat to enable delivery across London, Newcastle and Glasgow.
• PepsiCo is locking horns with Coca-Cola in the ready-to-drink iced coffee space, via a team-up with Lavazza.
• Monty’s Deli is to close its Hoxton site. The company says ‘we will continue to trade in Spitalfields and Victoria.’
HOLIDAYS & LEISURE TRAVEL:
• Merlin Entertainments has been warned by Moody’s that its take private deal could see the company’s credit rating be downgraded. Moody’s said ‘Today’s action was prompted by the expectation of an increase in leverage if the acquisition is completed’.
• Several of London’s top attractions are working with the city’s tourist board on marketing campaigns directed at domestic audiences, as the capital city sees a downturn in British visitors. Research has indicated that London visits by Brits fell 38% year-on-year in 2018.
• MAG, owner of Manchester, Stansted and East Midlands airports claims Brexit uncertainty will act as a drag on the economy, damaging consumer confidence. The group reported annual profits up by 5.9% yoy to almost £380 million, with passenger numbers up 4.9% to 61.8m.
• Universal Orlando Resort opens its first value category hotel called the Endless Summer Resort – Surfside Inn and Suites.
• LNER has been given an operating extension of up to five years by the Department for Transport, keeping the train line in public hands after Stagecoach and Virgin racked up almost £200m in losses last year.
• William Hill announces it is taking advice on plans to close around 700 shops, putting 4,500 employees at risk. The firm added that the move followed the government’s decision in April to reduce the maximum stake on fixed-odds betting terminals to £2. William Hill currently has 2,300 shops and 12,500 employees.
• Copenhagen-based Podimo, dubbed Europe’s ‘Netflix for podcasts’, raises €6m in seed funding co-led by Germany’s E.ventures and Denmark’s Heartcore.
• The CMA launches an investigation into the way Google and Facebook collect and exploit personal data and how they dominate digital advertising. The investigation will focus on whether ‘consumers are able and willing to control how data about them is used and collected’.
• Viagogo faces further legal action from the CMA, claiming the ticket resale website has not done enough to inform customers that resold tickets may see them turned away from venues. The CMA said that Viagogo has made ‘many positive changes’ to its site and acknowledged that the business had paid £400,000 in refund claims which it had previously rejected.
FINANCE & ECONOMICS:
• Trade tensions. Several major US tech companies are reportedly set to move some or all of their production out of China.
• Telegraph reports ‘embattled fund manager Neil Woodford has told staff at his eponymous investment firm that their jobs are in jeopardy a month after blocking access to his flagship equity income fund.’
• Sales of low-emission cars in the UK have reportedly fallen for the first time in 2yrs.
• Sterling little changed at $1.2582 and €1.1152. Oil down a shade at $63.33. UK 10yr gilt yield down 2bps at 0.68%. World markets better yesterday (except the UK) & Far East up in Friday trade.
• Brexit, politics etc.:
o Philip Hammond has said that a no-deal Brexit could cost the UK’s public finances £90bn a year. Presumably the base from which this £90bn of tax would be lost would fall by a multiple thereof.
o Spending plans aplenty from Messrs Johnson and Hunt.
o Jeremy Hunt says he could ‘do a Trump’ and snatch the Tory leadership from Boris Johnson’s grasp. How did we get here?
o FT reports Conservative MPs are preparing for a snap general election in the Autumn. The paper quotes one Tory MP as saying ‘he could say to the electorate that he will take Britain out of the EU with or without a deal and that they don’t need to vote for Farage.’
o Savills has said that the value of London’s housing stock has fallen by £40bn since the Brexit vote in 2016.
START THE DAY WITH A SONG:
Yesterday’s song was Wires by Athlete. Today, who sang:
I tried to get to my taxi,
The man in a tracksuit attacks me
He said that he saw it before me
And wants to get things a bit gory
RETAIL WITH NICK BUBB:
• News Flow Next Week: First thing on Tuesday we get the BRC-KPMG Retail Sales survey for June, closely followed by the Ocado interims and then the Marks & Spencer AGM. Wednesday brings the Dunelm Q4 update and the delayed Superdry finals. Then on Thursday we get the Pets at Home AGM and the Game Digital/Sports Direct offer acceptance date.
• BDO High Street Sales Tracker: We flagged on Wednesday that sales at John Lewis were not held back last week by the warmer weather at the weekend, given “Clearance” Sale and price-matching activity, and today’s BDO High Street Sales Tracker for medium-sized Non-Food chains also looks OK for last week, w/e Sunday June 30th. BDO Fashion sales were up by 1.6% LFL (including Online), despite tough comps and total BDO LFL sales (including Homewares and Lifestyle sales) were up by 2.1% last week (down by 2.7% in Store sales, but up by 18.1% in Online sales).
• Trade Press (1): The front cover of Retail Week magazine today is a graphic design, to flag up the main feature on “The new route to CEO” (“In the rapidly changing world of retail, what are the skills that a future chief executive needs?”). RW also have features on “Beauty Rebooted” (Boots’ boss Seb James shows off his new-look London flagship), “Snap-Happy Shoppers” (Will Instagram become your biggest sales channel?) and “Tesco on top in Retail 100” (Dave Lewis topples Jeff Bezos in RW’s annual ranking). And the Editor looks in his column at the gloomy outlook for the sector, in the light of the obsessions of the 2 prospective Tory party leaders and thunders that “Retail must help itself on Brexit if new PM won’t”.
• Trade Press (2): The main News story in Drapers magazine today is that fears are mounting for the future of Bonmarche, after Philip Day got cold feet about increasing his stake in the business any further, given the gloomy noises from the company about trading and the balance sheet. Drapers also flag that the Office footwear chain has called in restructuring experts and that the industry hopes that a trade buyer can revive the Karen Millen chain. In terms of features, there is an interview with Helen Brocklebank, the head of the British luxury organisation Walpole (who warns that a no-deal Brexit will cost the sector billions) and Drapers ask the industry whether Jeremy Hunt or Boris Johnson should be the next Prime Minister…