Langton Capital – 2019-12-23 – PREMIUM – Just Eat, Nichols, EI Group, Glendola etc.:
Just Eat, Nichols, EI Group, Glendola etc.:
PREMIUM EMAIL – PLEASE DO NOT FORWARD:
A DAY IN THE LIFE:
Came across another boarded-up Sam Smith’s pub in York over the weekend. Not sure what the company’s master plan is. Nonetheless, we found another selling Old Brewery Bitter at £2.00 per pint. Not half bad and many thing will be forgiven at prices like that.
This is a shortened email. Happy Christmas to all and on to the news:
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PUBS & RESTAURANTS:
• Prosus has published its final increased offer for JustEat. CEO Bob van Dijk says ‘we maintain our belief that in the UK and other European markets, Just Eat will require significant investments in own-delivery and technology as competitive dynamics and customer preferences continue to evolve. We have always stated that we would remain disciplined with respect to price on acquiring Just Eat, balancing our desire to own an attractive business with the need for significant investment in that business while maintaining acceptable returns for Prosus shareholders.’
• Nichols has updated on trading saying ‘group sales in 2019 are expected to be c.4.0% ahead of the prior year. We are pleased with this performance given the slowdown in the UK soft drinks market and the challenging broader consumer environment.’
• Nichols says ‘across the Group, sales in both the UK and International businesses are ahead of 2018. In the UK, the Vimto brand continues to deliver growth against strong prior year comparatives and increase market share. Within our international markets, Ramadan 2019 has been one of the brand’s most successful campaigns across the Middle East region.’
• Nichols concludes ‘we currently anticipate full year Profit Before Tax to be in line with market expectations.’
• Brakspear has announced that an alcohol-free version of Henley Ale Trail is to run during the month of January. CEO Tom Davies said ‘dry January has been no friend to the pub sector, but with millions of consumers set to give up alcohol next month, we’ve decided to embrace the trend this year rather than rail against it.’
• The FT takes a look at crowd-funding quoting one user as saying that the whole area could be the subject of closer scrutiny going forward. Burrito Bond investors in Chilango face the choice of either converting their bonds into equity or cashing them out at 10% of their face value.
• China is to cut tariffs on a number of pork products.
• EI Group on Friday announced that it noted the announcement by the Competition and Markets Authority on the same day saying that the latter ‘might accept the remedies proposed by Stonegate in order to address the CMA’s competition concerns.’
• EIG says ‘Stonegate’s proposed remedies will be subject to a period of third party consultation. Once the consultation is complete, the CMA may then decide to accept the proposed remedies, meaning that the CMA will not refer the Acquisition for an in-depth Phase 2 investigation.’
• EI Group concludes ‘our expectation remains that the Acquisition will complete in the first quarter of 2020.’ It says ‘further announcements will be made in due course.’
• Bar owner Glendola Leisure Holdings has reported full year numbers to 30 March to Companies’ House saying that ‘the group has traded well in a very challenging economic environment.’ The group operates a number of venues, largely in London but also in the provinces, including brands such as Waxy O’Connor’s, silk & Grain and Alston Bar & Beef. Turnover is up by 3.0% at £38.9m with PBT some 10.3% lower at £2.2m. The group has accumulated profits of £23.4m with positive shareholders’ funds of £25.5m.
• Cider makers H Westoon & Sons has reported full year numbers to end0-March to Companies’ House saying that revenue rose by 4.6% to £67.6m with operating profits some 4.0% and PBT some 6.9% higher at £1.26m.
• Weston’s has accumulated profits since incorporation (in 1960) of some £27.1m with positive shareholders’ funds of £27.4m. The group says ‘the directors are pleased to report another strong year’ with volumes up by 4.2%. The company says that it has around 6.6% of the UK cider market. Weston’s concludes ‘the company has established a strong position in key markets and with key customers.’ It says ‘the directors believe that the company is positioned for further growth, even in these uncertain economic times.’
• KAM Media reports that 19% of UK consumers are planning to eat out on Christmas Day. It says 24% will visit their local pub. It says 21% will visit a chain pub with gastro pubs accounting for 11% of visits and fine dining restaurants 10%.
• Mintel has listed what it views as the most innovative food & drink products launched globally in the last year. Hoptea in the US, which ‘is brewed like craft beer’ makes the list. A few vegan & vegetarian food products are also listed along with Funkin Nitro Passionfruit Martini in the UK, an RTD cocktail. Pratinha Magic Booze (in Brazil) is also listed. It comes in concentrated form and is ready to drink when mixed with sparkling water.
• The MCA has found that the food to go market has continued to outperform the wider market, with visit numbers up 4.8%, versus the 1.3% growth in the wider market during Q3 2019.
• The global caterer Centerplate has made an investment into pizza-making robots with artificial intelligence. CEO of Centerplate, Steve Pangburn commented: ‘Picnic’s automated food assembly platform has shown an ability to enhance quality and speed of service for our kitchen operations. Our initial pilot with Picnic was very positive and their differentiated capabilities are proving beneficial. We look forward to introducing Picnic to the Las Vegas Convention Center in January and helping them scale their technology in an effective way’.
• Alcoholic drinks & snacks retailer Bestway has signed a distribution agreement with Uber Eats.
• Fleurets has reported that Young’s has acquired the Greenwich based Enderby House.
• The Savoy’s Melba cafe has announced its plans to relaunch a Caravan Coffee Roasters outlet.
• Ei Publican Partnerships has invested £380k into revitalising The Bay Horse, Goldsborough.
HOLIDAYS & LEISURE TRAVEL:
• EasyJet is adding 400,000 seats with extra flights from London-area airports next summer, with Turkey and the Canary Islands set to receive the largest increases in capacity.
• The Global Sustainable Tourism Council has said that there is much that tourism can do to cut down on plastic waste. The GSTC says ‘Mediterranean countries are the fourth-largest producer of plastics, and all of it becomes waste in under a year.’
• STR reports that occupancy across European hotels rose by 1.5% in November compared with a year ago. Daily rates were up by 1.9% with REVPAR up 3.4%.
• The One Too Many campaign is urging passengers to drink responsibly when they travel over the festive period. The campaign is back by 20 airports and warns that disruptive passengers could face ’serious consequences’, such as an £80,000 fine or a criminal conviction.
• American Express Global Business Travel claims that fierce competition indicates that airlines will have minimal scope to raise fares despite rising costs for oil, labour and infrastructure in 2020.
• Google has acquired Typhoon Studios, a Montreal-based game studio. Typhoon is set to release uts first game ‘Journey to the Savage Planet’ in late January.
FINANCE & ECONOMICS:
• The ONS has increased its estimate for economic growth in Q3 from 0.3% to 0.4%. It says ‘services remained the strongest contributor to growth in the output approach to GDP in Quarter 3 2019; construction and production also contributed positively to growth.’ It says ‘household consumption and net trade contributed positively, while gross capital formation and government expenditure contributed negatively.’
• The government borrowed £5.6bn in November, in line with estimates and some £0.2bn up on last year.
• UK government debt stands at £1.81 trillion before including majority owned banks.
• Sterling a little better at $1.1747 and €1.1747. Oil lower at $65.89. UK 10yr gilt yield down 2bps at 0.78%. World markets better on Friday with Far East mixed in today’s trade.
• Brexit & politics:
o The SMMT has blamed renewed Brexit shutdowns around the supposed date of 31 October for reduced output in November. Production was down 16.5% on the same month in the prior year. UK car production has fallen in 17 of the last 18 months.
START THE DAY WITH A SONG:
Last Friday’s song was The Miracle of Love by the Eurythmics. Today, perhaps not the most challenging song that we’ve ever thrown out there, who sang:
And in our world of plenty we can spread a smile of joy,
Throw your arms around the world at Christmastime
RETAIL WITH NICK BUBB:
• Saturday’s Press and News (1): The Business pages of the Saturday papers were dominated by the news that the new Governor of the Bank of England will be the low-profile Andrew Bailey, the head of the much-feared City regulator, the FCA. The Business editorial in the Times noted that in an era of globalisation, the replacement for Mark Carney as Bank of England boss will be a Leicester-born West Brom supporter who now lives in Beckenham, a point also flagged by Lex column in the FT, which highlighted that he “should be a safe pair of hands” and that “he beat flashier candidates less exposed to public criticism”.
• Saturday’s Press and News (2): In other news, there were several “Christmas fillers”, with the Daily Mail, for example, interviewing the ubiquitous Ewan Venters, who claimed that the much-hyped Fortnum & Mason store is heading for a record Christmas, “as shoppers turn back to traditional festive fare”. The Guardian had a feature on the slightly obscure news that adult Lego fans are nervous about the news that the much-loved BrickLink website for second-hand Lego parts has been quietly bought by Lego itself. More conventionally, the Times had an interesting profile of the highly religious boss of the family-owned and highly successful toy chain The Entertainer, Gary Grant (“In the season of goodwill, meet the man who has faith in the High Street”), who revealed that the person he most admires is the 18th century evangelist John Wesley. As for tawdry stockmarket matters…a couple of
• Sunday’s Press and News: The Christmas theme continued, in a rather sombre fashion, in the Sunday papers, with the Sunday Times running a front page story headlined “Tesco charity cards “packed by China’s prison slaves””, whilst the main Business story in the Mail on Sunday was headlined “Supermarkets savaged by Christmas price war” and noted that Food retailers are slashing fresh food prices to clear stocks, with Christmas spending remaining subdued after the Election. The Mail on Sunday also flagged that sales at the Online greeting card business Moonpig (now chaired by former WH Smith boss Kate Swann) have hit £100m. The Sunday Telegraph highlighted the latest bizarre twist in the bitter legal fight between Ocado and their rival TDP, with a top City lawyer claiming in a High Court hearing that he only destroyed evidence to protect the reputation of his wife, a Brexit Party
WH Smith: We flagged on Thursday, following the WH Smith EGM for shareholders to approve the big US deal, that, due to legal complications, the Marshall Retail acquisition would not complete in a hurry, with “sometime in Q1 2020” the best guess for the eventual completion date, with a “backstop” date of March 31st…Well, WH Smith’s lawyers have been working hard, because late on Friday afternoon the company announced that the exciting deal (which was only announced on Oct 17th) had actually just been completed, so that was a nice early Christmas present for the new CEO Carl Cowling.
DFS Furniture: Although Sports Direct/Frasers and Watches of Switzerland hit the headlines last week, one of the best performing share prices over the last 2 weeks has been little old DFS Furniture (up 23%). Now, that may reflect optimism about the much-hyped “Boris bounce” in consumer spending after the General Election, ahead of the pre-close trading update on Jan 14th, but the share price surge can also be linked to the surprise announcement at lunchtime on Dec 10th that DFS was starting a 400,000 share buyback programme, with immediate effect. Its initial attempts to buy met a notable absence of sellers, so on Dec 18th DFS announced that “Given recent share price volatility and sustained periods of low liquidity which have restricted the amount of shares purchased due to regulatory restrictions, the term of the buyback programme has been extended from 10 Jan 2020 to 9 March 2020, the
News Flow This Week/Next Week: The John Lewis/Waitrose sales figures for last week will be very interesting when they are announced tomorrow, but there is otherwise no company news expected this week, as retailers will be far too busy dealing with the last-minute Christmas spending rush and preparing for the New Year Sales, with the first update scheduled to be Next on Friday Jan 3rd.