Langton Capital – 2019-10-22 – Whitbread, JDW, Vianet, G4M, food-led pubs etc.:
Whitbread, JDW, Vianet, G4M food-led pubs etc.:A DAY IN THE LIFE: Our postman has insisted that he wears short trousers every day to work until at least the first of November. Now he’s clearly a nutcase but it did make me consider just when would be appropriate, in the absence of rain or another obvious reason to wear one, it would be ‘right’ to wear a coat to work. Because there’s little doubt that not wearing one has its advantages. Less chance to lose it on a train or leave it on the back of a chair in a coffee shop for one but, at the point at which you’re nithered outside and can no longer feel your fingers, the disadvantages begin to make themselves apparent. At the present, however, I’m holding out. It may rain and it may blow but it’s not freezing and I’ll make it to the first of November yet. On to the news: LANGTON PREMIUM EMAIL: For the remainder of October, we’d be delighted to send a number of past Premium Emails to those subscribing to the service. 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WHITBREAD – H1 NUMBERS: Whitbread has this morning reported H1 numbers and our comments thereon are set out below: Whitbread has this morning reported H1 numbers to 29 August 2019 and our comments thereon are set out below: Headline numbers: • Whitbread reports that it has made ‘strong strategic progress in challenging market conditions’ • It says it now has 90,000 open + committed rooms in the UK and has been undergoing new format trials. • Adjusted revenue (ex-Costa) is down by 0.1% at £1.078bn. • Adjusted EBIDAR is down 4.8% at £427m with adjusted PBT down 5.6% at £251m • Adjusted EPS (on fewer shares in issue) is up by 5.4% at 113.0p and the H1 dividend is unchanged at 32.7p • WTB says that its return on capital in the UK slipped from 13.3% to 12.1%. Total return on capital (including losses in Germany etc.) slipped from 12.4% to 10.8%. Further detail in Premium Email. GENERAL NEWS – PUBS & RESTAURANTS: • JD Wetherspoon has announced that it is to hold a General Meeting for shareholders on 21 November in order to ‘consider a proposal for approval of Waiver of Rule 9 of the Takeover Code.’ Rule 9 mandates that a bidder must make an offer for the whole company (with a full cash option) at the highest price paid by the bidder or any concert party thereto during the 12 months prior to the announcement of the offer, if it goes through a 30% share holding. • Beer flow measurement and ‘Internet of Things’ company Vianet has updated on H1 trading saying that it is ‘pleased to report that trading for the first half of the current financial year has been strong, with revenue and operating profit growth in line with market expectations.’ • Vianet says its Smart Machines division ‘has delivered a strong year on year increase in the number of connected devices deployed, underpinned by three recent contract wins announced in August 2019.’ • The group’s pub business ‘was also robust in the first half.’ It says ‘this performance was achieved despite delays due to Pubco corporate activity.’ Chairman James Dickson says ‘double digit growth in the period builds on our successful recent track record and further demonstrates that the strategy of leveraging the power of our cutting edge technology to bring game changing business insight to our customers has exciting prospects.’ • Burger & Lobster has reported full year numbers to 30 December 2018 to Companies’ House. The group underwent a restructuring during the year. The company reports revenue down 10% at £38.0m with EBITDA down by 8% at £5.7m and PBT down by 10% at £2.8m. • Burger & Lobster increased its profit margin from 61% to 65% in what it said was a ‘challenging operational environment in London for casual dining’. The group says that, as a result of its restructuring, by April 2019 it ‘has finally been released from the obligations relating to the leases of all its closed properties’. • B&L has accumulated losses since incorporation of £11.0m with shareholders’ funds of £1.5m (up from negative £1.3m last year). • The accountancy firm Gerald Edelman has released a report that has predicted the food-led pub sector will stabilise overall industry performance in the coming years. The company’s Hospitality Industry Q3 2019 update forecasts that pub and bar revenue will increase by 0.7% to £19bn in the next 12 months. • The soft drinks group, Nichols plc has announced that it has appointed David Rattigan as its CFO with effect from 24 February 2020. • Bill’s Restaurant has reported a £9.11m loss during 2018, but has since returned to above-market LfL sales growth across its estate. • Lewis Hamilton is teaming up with hospitality company The Cream Group and Beyond Meat investor Tommaso Chiabra, to open his first vegan burger restaurant in London. • Seaside towns and cities have been named the places with the highest number of people getting into serious difficulties with debt, with Scarborough ranked second out 347 local authorities in England and Wales. • BrewDog (which had been offering £5,000 to customers (or anyone else) who could find it a site to move into in Bath) looks set to open a site on Saw Close (that had been due to become a Byron Burger). • Sterling up at $1.2962 and €1.1625. Oil down at $58.83. UK 10yr gilt yield up 4bps at 0.75%. World markets up yesterday with Far East higher in Tuesday trade. • CEO of Treasury Wine Estates, Michael Clarke, announces his retirement late next year. The unexpected decision sent shares in Treasury down 11.8% to A$16.40. • Research by YouGov commissioned by the Red Tractor Food Assurance Scheme find that 8 out of 10 adults admit to taking food safety for granted. 71% UK adults are confident that the food they buy from a supermarket has been produced to high standards, whereas only half of people who feel confident about standards when eating out at a restaurant or café. HOLIDAYS & LEISURE TRAVEL: • More evidence that capacity is coming back on pretty quickly. • On the Beach Group plc has updated on FY trading saying it ‘has remained in line with management’s revised expectations for the full year.’ • OTB says ‘the compulsory liquidation of Thomas Cook Group on 23 September 2019 has had a significant impact on the package travel industry. For On the Beach, this has created an unprecedented opportunity to take additional market share at an increased rate.’ • OTB says ‘as a result, the Group has started to strategically increase its marketing investment both online and offline to attract new customers.’ • CEO Simon Cooper says the company ‘has an exciting opportunity to significantly increase its market share over the short to medium term by leveraging its strong brand and core capabilities.’ • Property agents Lambert Smith Hampton has produced its second annual review of the UK hotel market saying that it ‘highlights the recent growth of the aparthotel sector, which we see as one of the most exciting parts of the market.’ It says ‘new aparthotel formats are blurring the lines between serviced apartments and traditional hotels, and borrowing new ideas from other emerging sectors such as co-working and co-living.’ • LSH reports that other areas of innovation include more use of rooftop bars and restaurants ‘which are being used by hotels to attract the Instagram generation.’ It says ‘the hotel investment market continues to attract strong demand, albeit transaction volumes have been increasingly restricted by a lack of available product.’ • LSH says ‘Brexit uncertainty remains a constraint on investment activity, but operational markets are proving their ability to weather the political and economic storms.’ • PwC bosses faced questions from MPs about conflicts of interest after it emerged that the accountancy firm advised Thomas Cook executives about their pay and bonuses while it was also the travel company’s external auditor. • Per Lambert Smith, serviced apartments comprise approximately 25,000 units in the UK and Ireland, making it about 3% the size of the conventional hotel market. A pipeline of 6,000 units scheduled to open by 2021 makes the sector one of the fastest-growing parts of the overall accommodation market. • The Home Office will set up a three-year counter-drone ‘seek and destroy’ unit, aimed to counter rogue drones blamed for causing chaos at Gatwick and Heathrow last Christmas. • Senior EY staff will on Tuesday appear before a panel of MPs investigating Thomas Cook’s collapse, after they signed off on Thomas Cook’s financial health before its collapse. Furthermore, a £5m bonus was paid to former boss Manny Fontenla-Novoa following a heavily-criticised 2007 merger with MyTravel. • STR reports US hotel occupancy down 0.1% to 70.9% in Q3, with ADR up 0.8% to $133.25 and RevPAR up 0.7% to $94.42. OTHER LEISURE: • Gear 4 Music has updated on H1 trading saying UK sales rose 3% in the period with total group sales +16%. CEO Andrew Wass says ‘I am very pleased to report that we have achieved our primary objective for the period of materially improving our gross margins.’ • G4M says ‘our re-focused growth strategy is now in place and we are confident that the business is effectively configured to achieve a sustainable level of profitable growth. As such, we continue to trade in line with our full year EBITDA expectations as we head towards our seasonal peak.’ • North American Nintendo Switch sales have surpassed the lifetime worldwide unit sales of the Wii U. The Switch has sold 15 million units in North America and has been the most popular console in the U.S. for 10 months in a row. • Redcar & Cleveland Borough Council’s cabinet is set to consider new proposals to transform Redcar’s Regent Cinema into a new modern cinema facility. FINANCE & ECONOMICS: • Rightmove has reported that house prices are rising at their lowest rate in an October since 2008. It is not seeing an ‘autumn bounce’. Prices are up 0.6% in the month but the agent says that property listing numbers are down 13.5% on levels seen a year ago. • BrewDog (which had been offering £5,000 to customers (or anyone else) who could find it a site to move into in Bath) looks set to open a site on Saw Close (that had been due to become a Byron Burger). • Sterling up at $1.2962 and €1.1625. Oil down at $58.83. UK 10yr gilt yield up 4bps at 0.75%. World markets up yesterday with Far East higher in Tuesday trade. • Brexit & politics: o Speaker John Bercow yesterday refused to allow another House of Commons vote on PM Boris Johnson’s proposed Brexit deal o Debate is likely to begin today on the Withdrawal Agreement Bill. Amendments, including one proposing a confirmatory referendum, are likely to be proposed o Downing St has suggested that it will pull its Bill if amendments that render it ‘meaningless’ are successfully attached o Chancellor Sajid Javid has refused to release economic analysis evaluating how the proposed Brexit deal will impact UK finances. He said it ‘is self-evidently in our economic interest’. o Voting may commence today on parts of the withdrawal bill. MPs claim that they have had insufficient time to study the proposed legislation. Observers suggesting that Mr Johnson has the numbers to push his Brexit deal through if he can get it to a vote. START THE DAY WITH A SONG: Yesterday’s song was A Boy Named Sue by Johnny Cash. Today, who sang: “Everybody’s talking ’bout the stormy weather, And what’s a man to do but work out whether it’s true Looking for a man with a focus and a temper Who can open up a map and see between one and two” RETAIL WITH NICK BUBB:
• Travis Perkins: We noted yesterday that the Q3 update today from the giant builder’s merchant and DIY group Travis Perkins (which has always been a good barometer of the confidence and activity level of “white van man”) would be interesting to read, given the warning last Thursday from the Irish-based builder’s merchant Grafton about a recent trading slowdown. And the new CEO Nick Roberts admits that “trading conditions became incrementally more challenging through the course of the summer as a result of the on-going market uncertainty”, but Travis Perkins still delivered a very solid Q3 overall and it has said that “though the group maintains a cautious outlook for the near-term, full year performance remains in line with our expectations”. Overall Q3 sales were up by 3.4% LFL, with the fast-growing Toolstation (Travis Perkins’ version of Screwfix) up by an impressive 15.4% and Retail
• Iceland Watch: The Sunday Times story that the food chain Iceland has been hit by the withdrawl of credit insurance to its suppliers (“Iceland hit as insurers abandon suppliers”) raised many eyebrows in the industry, as it implied that Iceland was a sort of basket case, like a troubled fashion or department store chain. In fact, the story referred to a reduction in cover made by Euler Hermes, a leading credit insurer, almost six months ago, because of wider concerns about Brexit rather than about Iceland in particular, which seemed to be stretching the definition of “news” somewhat. We are told that Euler Hermes remain a substantial supplier of cover to Iceland suppliers and that other credit insurers have increased the cover available, so that the net effect on Iceland’s creditor levels and supplier relationships has been exactly zero…Back on June 13th, Iceland reported solid results
• The Grocer Watch: The widely followed Grocer “33” weekly supermarket pricing survey in Saturday’s The Grocer magazine saw guest retailer Lidl topple Asda from the top spot. The Lidl basket cost £50.55, c8% cheaper than second placed Asda, on £55.03. Sainsbury was third, on £59.56, Tesco was on £59.66, Morrisons was on £62.34 and Waitrose was well off the pace, on £75.43. The separate Grocer “Mystery Shopper” weekly survey on Store Service and Availability was won by Sainsbury’s, for once, as its 33,000 sq ft store in Lewes Road in Brighton came top, with a very decent 87 points out of 100, including 20 out of 20 for stock availability (the Lidl store in Market Harborough came 4th, ahead of Asda and Waitrose, on 62 points). Elsewhere in the magazine, The Grocer flagged that Lidl is to significantly increase the amount of UK sourced fresh meat and produce that it sells and also • News Flow This Week: There is not much more Retail company news scheduled for this week, but Thursday brings the Shoe Zone pre-close update (plus the Amazon Q3 in the US). TRADING STATEMENTS & EVENTS: Upcoming results are set out below: • 22 Oct 19 Whitbread H1 numbers • 22 Oct 19 G4M H1 update • 22 Oct 19 On the Beach FY update • 23 Oct 19 Texas Roadhouse Q3 numbers • 24 Oct 19 C&C H1 numbers • 31 Oct 19 Carlsberg Q3 update • 5 Nov 19 Marriott Q3 numbers • 6 Nov 19 Sajid Javid’s maiden Budget • Est 7 Nov 19 JD Wetherspoon H1 update • 7 Nov 19 Bank of England MPC interest rate decision • 12 Nov 19 G4M H1 numbers • 13 Nov 19 Coca Cola HBC Q3 update • 14 Nov 19 Young & Co H1 numbers • 20 Nov 19 SSP FY numbers • 21 Nov 19 William Hill Q3 update • 21 Nov 19 DART Group H1 numbers • 21 Nov 19 Hotel Chocolat AGM • 27 Nov 19 Marston’s FY numbers • 27 Nov 19 Britvic FY numbers • 27 Nov 19 On the Beach FY numbers • 28 Nov 19 Greene King H1 numbers • 4 Dec 19 Loungers H1 numbers • 4 Dec 19 Stock Spirits FY numbers • Est 6 Dec 19 EasyHotel FY numbers • 12 Dec 19 TUI Group FY numbers • Est 12 Dec 19 Fulham Shore H1 numbers • 12 Dec 19 Fuller’s H1 numbers • 12 Dec 19 Vianet H1 numbers • 13 Dec 19 Hollywood Bowl FY numbers • 19 Dec 19 Bank of England MPC interest rate decision LANGTON CAPITAL: Made in Hull. Like all the best things. Langton Capital is a financial advisory company providing insightful views on the UK and global leisure industry and the wider consumer sector in general. Subscription to the daily email is free. Unsubscribing is painless. We provide daily off the shelf and bespoke research. We have helped with transactions, fund-raisings, disposals and other corporate issues. We have a good ear, we are impartial, independent and not half bad at what we do. If you think that we could help you or your business, drop us a line. Recent Premium Email articles. • PIZZA EXPRESS REPORTS H1 NUMBERS: Pizza Express has reported H1 numbers and has pointed to tough market conditions as the reason behind a fall in EBITDA. 29 Aug 2019: 257 • BOOK REVIEW: THE HONEST TRUTH ABOUT DISHONESTY – DAN ARIELY: Virtually everyone is capable of being dishonest. But what determines the level of dishonesty that we find acceptable? 30 Aug 2019: 260 • BOOK REVIEW: THE HONEST TRUTH ABOUT DISHONESTY contd – DAN ARIELY: Mr Ariely suggests people will be ‘dishonest’ to the point that they begin to feel negatively about themsleves. 2 Sept 2019: 261 • RESTAURANT GROUP FULL YEAR NUMBERS: More write-downs. Leisure still struggling. Wagamama good & integration on track. Numbers ‘broadly’ in line. No details on IFRS16. 3 Sept 2019: 263 • RESTAURANT GROUP H1 NUMBERS – Analysts’ Meeting: RTN yesterday hosted a meeting for analysts at which it outlined which of its businesses were performing well. And which weren’t. 4 Sept 2019: 266 • LIKE FOR LIKES. DO THEY TELL THE WHOLE STORY? Well clearly there’s more to life than increasing sales from the same unit. You could make more profit, open more units or generate oodles of cash, for example. 5 Sept 2019: 268 • BOOK REVIEW: THINKING FAST & SLOW. DANIEL KAHNEMAN. Daniel Kahneman is a psychologist famous for his work on decision making. He won the Nobel prize for economics in 2002. We’re just scratching the surface here & will run a bit more on Monday. 6 Sept 2019: 269 • AUGUST TRACKER: UK’s pubs & restaurants increase LfL sales by 1.6% in August and ‘maintain summer momentum’. 9 Sept 2019: 272 • BOOK REVIEW: THINKING FAST & SLOW. DANIEL KAHNEMAN. Nobel Prize winning Psychologist Daniel Kahneman is famous for his work on decision making. 10 Sept 2019: 275 • PRIVATE COMPANY RESULTS: Honest Burger has reported full year numbers to Companies’ House. 11 Sept 2019: 277 • BOOK REVIEW: THINKING FAST & SLOW – DANIEL KAHNEMAN: More crumbs from the great man’s table. We’ll make this the last piece on this rather heavy but ground-breaking book. 12 Sept 2019: 279 • JD WETHERSPOON – FULL YEAR NUMBERS: Group reports LfL sales in the year +6.8%. Margins lower. Outlook ‘reasonable’. 13 Sept 2019: 281 • JD WETHERSPOON – ANALYSTS’ MEETING FOLLOWING RELEASE OF FULL YEAR NUMBERS: LfL sales higher, overall revenues up but margin, profits and earnings down. Outlook said to be ‘reasonable’. 16 Sept 2019: 283 • CABANA ADMINISTRATION. ADMINISTRATOR’S PROPOSALS ETC.: KPMG at least touches on what went wrong, what was lost financially, who took which assets & what (if anything) is left over for creditors etc. 17 Sept 2019: 285 • PRIVATE COMPANY ACCOUNTS: CROWD FUNDER SEEDRS REPORTS TO DEC 2018 AS LOSSES CONTINUE: Seedrs is one of the largest crowd-funding platforms. It is disrupting the market but losses are accumulating. 18 Sept 2019: 287 • BOOK REVIEW: BLACK SWAN – Nassim Nicholas Taleb. One of the most influential financial books of the millennium to date, Black Swan has redefined the approach to risk. 19 Sept 2019: 290 • BOOK REVIEW: BLACK SWAN (part II) – Written in 2007, author & investor Nassim Nicholas Taleb shone a new light on risk.20 Sept 2019: 292 • PRIVATE COMPANY ACCOUNTS: Social Entertainment Ventures Ltd trades as Flight Club and Bounce in the UK & the US. It reports here numbers to 30 September. 23 Sept 2019: 294 • ESPORTS – A NEW AREA OF GROWTH OR A LICENSE TO LOSE MONEY? Or, perhaps the one in the short term and the other in the long. 24 Sept 2019: 295 • PRIVATE COMPANY RESULTS – ITSU: Itsu, created by Pret a Manger founder Julian Metcalfe, has reported numbers to 27 Dec 2018. 25 Sept 2019: 297 • MITCHELLS & BUTLERS FULL YEAR TRADING: M&B has updated on full year trading. It will report numbers late November. 26 Sept 2019: 298 • TO SEE OURSELVES AS OTHERS SEE US: A brief look at the casual dining, pubs & bars market from the perspective of the landlord. 26 Sept 2019: 300 • TAKING GIG-ECONOMY WORKERS ONTO THE BOOKS: Moves afoot in California suggest that gig workers could be treated like standard employees, 30 Sept 2019: 302 • BOOK REVIEW: FREAKONOMICS BY STEVEN LEVITT: This quirky book made an impact when it was released in 2005. 1 Oct 2019: 303 • PRIVATE COMPANY RESULTS: Companies need to put their accounts in within 9mths of their year ends. 2 Oct 2019: 305 • QUESTIONS, QUESTIONS: Sometimes it pays to looks at our industry, any industry, with a fresh eye. 3 Oct 2019: 307 • ALTERNATIVE SOURCES OF INCOME: When or if the going gets tough, it’s a good idea to look for other sources of income. 4 Oct 2019: 308 • PRIVATE COMPANY RESULTS. Several companies are reporting figures to end-Dec 2018 to Companies’ House & here we look at Welcome Break. 7 Oct 2019: 310 • PRIVATE COMPANY RESULTS – MOD PIZZA: Pizza company Mod Pizza UK Ltd, which operates the brand in this country, has reported results to end-Dec 2018 to Companies’ House. 8 Oct 2019: 311 • PRIVATE COMPANY RESULTS – PAPA JOHN’S GB LIMITED: Papa John’s GB has reported numbers to 30 Dec. 9 Oct 2019: 313 • PRIVATE COMPANY RESULTS – CHIPOTLE MEXICAN GRILL UK: Chipotle UK has reported numbers to 31 Dec. 10 Oct 2019: 315 • CORPORATE FAILURE: SORTING THE SYMPTOMS FROM DISEASE. NEVER EASY, OFTEN IMPOSSIBLE: It’s never this simple but go at it. 11 Oct 2019: 316 • COFFER PEACH TRACKER: The latest Tracker, for the month of September, suggests that LfL sales grew by 1.2% in the month. 14 Oct 2019: 318 • DELIVEROO – A CLOSER LOOK AT ITS DECEMBER 2018 NUMBERS: Deliveroo issued a Press Release outlining the main points in its FY2018 accounts on 2 October. 15 Oct 2019: 320 • Part I (of II) on MEXICAN RESTAURANTS: 16 Oct 2019: 322 • DELIVERY: The recent boycott of Wagamama outlets in Bristol by Deliveroo riders illustrates that, the more moving parts there are in a process, there more there is that can go wrong. 18 Oct 2019: 327 • ATTEMPTING TO SELL ASSETS: Sky has reported that entrepreneur Luke Johnson is investigating options regarding selling all or part of Bread Holdings, the owner of the Gail’s bakery shops. 21 Oct 2019: 328 |
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