Langton Capital – 2020-01-06 – Confidence, Compass, Chilango, Jamie’s, Veganuary etc.:
Confidence, Compass, Chilango, Jamie’s, Veganuary etc.:A DAY IN THE LIFE: Langton was ‘in trade’ with family in London for a chunk of last week and this has had a predictable impact on its credit card with around 120 debit entries in the month of December alone. This is admittedly 1) a joint card with Mrs Langton and 2) has taken a lot of hammer since TFL and pubs started facilitating contactless purchases but 3) it’s up about 3-fold on the number of transactions just two years ago. So, we may be a financial and technical dinosaur no longer but, with pints ranging from £3.50 (Sam Smiths, we was robbed, it’s only two quid dead in York) to £6.40 (some gastro-hovel on the South Bank), we’re likely to be suffering from wallet-fatigue earlier in the month than had been planned. Indeed, with more than 40 credit card transactions in January to date and the mid-Dec to mid-Jan bill due to arrive in about a fortnight, we might have to take the rest of the month off. From spending, that is, not from the day job so, without further ado, let’s move on to the news. LANGTON PREMIUM EMAIL: Corporate Offer: Premium email just £295 (plus VAT) for a single subscriber or £495 (plus VAT) for multiple subscribers. Drop us a line to get involved. Retail Offer: Easy in, easy out. £30 per month (inclusive of VAT, £25 net) via PayPal. Email us for details or check here. ADVERTISE WITH US: Langton’s free email now carries adverts. See front page of website for today’s copy & contact us for further details. MAIN LATE-DECEMBER EVENTS (AND ON OUR RADAR TO COVER MORE FULLY IN THE MEDIUM TERM: Almost back to normal. But currently sorting the news that might be worthy of further attention. 5 Jan 2020: For detail see Premium Email. Companies reporting numbers at a time when observers attention is focused on panicky Christmas present buying and drinking and eating too much. Other news that may have slipped under the Christmas radar includes the decision to refer the proposed Amazon investment in Deliveroo to a stage II competition enquiry: Lion Capital places more stock in Loungers: Cineworld comments on Netflix: Holiday capacity: PUBS & RESTAURANTS: • The MCA reports that, after 3 years of rising negative sentiments about the market from eating out professionals, ‘it seems that things are starting to turn.’ The MCA says that ‘the majority of the UK eating out market professionals still feel that market conditions are challenging, but the volume [of those feeling the situation is ‘challenging’] has declined since last year, from 76% to 54%. • MCA says ‘currently, a quarter of all professionals in this channel feel that conditions are positive. This might mean that after a number of years, the industry is starting to adapt and is finding new opportunities in the market.’ • Compass Group PLC has announced that its chairman, Paul Walsh, ‘has indicated his intention to step down as Chairman and Director of the Company to focus on his other business interests.’ It says ‘Paul will remain as Chairman until his successor is appointed and so will not seek re-election at the 2021 AGM. John Bason, Senior Independent Director, will lead the search.’ Mr Walsh says ‘we have a strong and well-established Chief Executive in place and I will work to ensure a seamless transition to my successor as Chairman.’ • Unsecured creditors of Jamie Oliver Restaurants are not likely to recoup any of their money with secured creditors likely to ‘suffer a significant shortfall in respect of the funding provided’ per administrators KPMG. The administrator says ‘the purpose of the administration is to preserve any potential Group tax relief claims that may not otherwise be available.’ It says ‘due to the uncertainty of any potential realisations in the estate, JOHL agreed to provide funding of £30,000 to cover the costs of the administration.’ • Re unsecured creditors, KPMG says ‘based on current estimates, it is highly unlikely that there will be a dividend to unsecured creditors.’ • Creditors are to vote on Chilango’s proposed CVA later today. The founders, Dan Houghton and Eric Partaker, are under pressure to resign from the company. Auditors Grant Thornton declined to sign off on the company’s accounts in November. • Figures compiled by the Centre for Retail Research suggest that more than 11,000 workers in UK restaurants lost their jobs last year due to closures, CVAs and restructurings. Jamie Oliver was the biggest casualty after its collapse in May with the loss of 1,000 jobs. • The CRR reports that 922 restaurants were shut in 2019, down slightly on the 1,188 that closed the previous year. • Discounts available. Pizza Express 30% off food until the end of the month. Café Rouge & Bella Italia both 40% off mains until 12 February. • The FT reports that a number of high street restaurant groups are turning to supermarkets in order to bolster sales. It mentions Pizza Express. Starbucks, Costa and Yo! Sushi also have lines for sale in the ‘off’ trade. • Caffe Nero has launched a ‘veganero’ menu – ‘featuring brand new products including flaky vegan croissants and succulent vegan sausage rolls.’ Nero CEO Will Stratton-Morris says ‘we’re committed to continuing to transform high street food and offer our customers more choice and the deliciously good food they deserve, whether that is an indulgent treat that hits the sweet spot or a premium, affordable lunch.’ • Pret is to ‘become the first major high street coffee chain in the UK to sell vegan croissants’ from this week. • The Co-op has launched a new vegan brand, Gro-Co-op. it says this will be its ‘biggest rollout of vegan products’ ever. The company now has a total number of vegan products on offer of around 1,000. • Burger King launches ‘The Rebel Whopper’ made from soy and aimed at ‘flexitarians’. However, it is not suitable for vegetarians because it is cooked on the same grill as the restaurant’s beef burgers. • HMV will close three of its stores by the end of January, with the figure potentially rising to ten. Debenhams announced it will close 19 stores between 11 and 25 January, with a further 28 set to close in 2021. • Amazon is considering opening stores in Germany, its second biggest market after the United States, with the company saying ‘The fact is that we know that customers shop offline and that they like variety’. • Champagne sales in pubs are reported to have dropped by 5% in the past year. The sale of sparkling wine as a whole is up by 61% over the last 5yrs per the WSTA. Prosecco has been an undoubted success. • Sales of liqueurs in the UK rose by 4% lats year. Some £1.3bn in total was spent by consumers on the product. • Andy Bassadone has been appointed a director of Various Eateries from 2 January. HOLIDAYS & LEISURE TRAVEL: • Research by NATS reports that 81% of the British public have a positive view of aviation, with 67% saying the pros outweigh the cons. • EasyJet Holidays is hoping to launch around ‘February or March time’ following the collapse of Thomas Cook. • EasyJet Holidays’ move to bring capacity to the market more rapidly than previously planned may be 1) good business or 2) a sign that it believes the opportunity to grab market share could be fleeting or 3) both of the above. • HNN’s Sean McCracken predicts weak growth in Q1 for US hotels, impacted by the usual uncertainty of an impending presidential election and industry wide increasing costs and flat-lining revenues. • U.S. hotel occupancy fell 4.9% to 48.5% during the week of 22-28 December as ADR was down 2.6% to $127.92 and RevPAR fell 7.4% to $62. • Pent-up demand is being released in the travel industry with Premier Travel director Paul Waters saying ‘December finished strongly. Our first trading day of January was encouraging and we are off to a positive start. We had people waiting for us to open [on January 2].’ • HS2 costs are ‘out of control’ according to the deputy chair of its review panel, Lord Berkeley. The Labour peer said there was ‘overwhelming evidence’ and that the high speed rail line was likely to cost over £108bn compared to £55bn touted in 2015. OTHER LEISURE: • The Guardian has reported on a study that has shown the UK gambling industry is more dependent on high-spending VIP customers, customers who are disproportionately likely to be addicts, is greater than had been previously believed. It says that one firm took 83% of all deposits from 2% of its customers. The Guardian says ‘the award of VIP status has been cited as a factor in seven out of 10 regulatory penalties issued to companies by the commission for failures to prevent problem gambling.’ • SuperData reports the combined game industry grew 3% to $120.1bn in 2019, including mobile, PC, and console games, as well as augmented reality, esports, and virtual reality revenues. The 2019 revenue included $64.4bn for mobile games, $29.6bn for PC, and $15.4bn for consoles. • Russian billionaire Alisher Usmanov is reportedly eyeing a stake in Everton football club, saying he is open to various forms of investment into the Premier League club • Tesla shares reached record highs on Friday as the company reported it beat expectations for vehicle deliveries in Q4. Tesla said it delivered 112,000 vehicles in Q4, above expectations of 104,960 vehicles. • More than £1bn was spent on music streaming services by British customers in 2019, up 24% on 2018. Spending on downloads fell 27% to £90m, and physical purchases dropped by 17% to £318m. FINANCE & ECONOMICS: • The Nationwide has reported that house prices rose by 1.4% during 2019. It says that the year was slow but relatively stable. Strong employment levels and low interest rates have been pulling one way, but political uncertainty has been pulling the other. • Sterling lower at $1.3081 and €1.1717. Oil up at $70.18, UK 10yr gilt yield down 5bps at 0.74%. UK market up on Friday but world markets lower with Far East down in Monday trade. • Politics: o Iranian crisis, oil price higher, UK in a balancing act & PM Johnson back from holiday on the private island of Mustique. France & the US in a spat over taxation of online companies. o Sir Keir Starmer, who is standing for the leadership of the Labour Party, has said that the UK will leave the EU next month. He told Andrew Marr ‘we will have left the EU and this election blew away the argument for a second referendum, rightly or wrongly, and we have to adjust to that situation, the argument has to move on.’ o Candidate Jess Phillips told Andrew Marr that she also accepts the UK will leave – but says that the success or otherwise of the move should be judged in a couple of years. She said ‘if our country is safer, if it is more economically viable to be in the European Union, then I will fight for that regardless of how difficult that argument is to make.’ START THE DAY WITH A SONG: Last Friday’s song was Get Your Rocks Off by Primal Scream. Today, who sang: “Though I’m past one hundred thousand miles, I’m feeling very still And I think my spaceship knows what I must do And I think my life on Earth is nearly through” RETAIL WITH NICK BUBB: • Saturday’s Press and News (1): The Business pages of the Saturday papers were dominated by the better than expected Next trading news on Friday (“Brisk Online business at Next offsets falling store sales” was the FT headline), with CEO Simon Wolfson widely quoted as saying that the Election hadn’t affected Christmas spending or confidence. And the Editorial comments praised the management skills of Simon Wolfson: the Business editorial in the Times highlighted that “Next boss lords it over retail rivals”, whilst the Business editorial in the Telegraph thundered that “Wolfson’s leadership is Next’s best thing”.
• Saturday’s Press and News (2): In other news, there were a few snippets about the news that Marks & Spencer has appointed an obscure former Tesco finance executive, David Surdeau, as its interim CFO (to replace Humphrey Singer) and the Business editorial in the Times mocked the fact that M&S “couldn’t even be bothered to say who he is” in the very short statement. The Guardian had a feature on the problems of Debenhams, listing the 19 stores it will close this month (including Wandsworth and Wimbledon). The Times had a feature on the problems of John Lewis Partnership, ahead of the appointment of Sharon White as Chairman (“Surprise choice takes over at a turbulent time”), focusing on the pressure to unwind the “Never Knowingly Undersold” price pledge. By contrast, the FT had a feature on the benefits that Primark is bringing as a new anchor for shopping centres,
• Sunday’s Press and News: There were some gloomy vibes about Christmas trading for the big supermarket chains in the Sunday papers, with the Sunday Times story headlined “Christmas fails to light up for supermarkets” (flagging that Morrisons is expected to be the biggest loser), whilst the Mail on Sunday went with “Tesco leads way as Christmas chill hits retail sector” and the Observer preview of the week was headlined “Black Friday steals retailer’s Christmas joy”, quoting our view that the John Lewis trading update on Thursday will not make happy reading. On a cheerier note, the Sunday Times noted that Homebase is on track to return to profit (under the ownership of the vulture fund Hilco) and its “Inside the City” column tipped the shares of the struggling toy chain The Works. And the Sunday Telegraph had a feature interview with the boss of Ikea, Jesper Brodin (“Ikea can only • News Flow This Week: The Christmas trading updates will come thick and fast this week, with the main focus on the struggling Food Retailers, kicking off tomorrow with the Morrisons update. We also expect the latest monthly Kantar/Nielsen grocery sales figures to be released tomorrow morning. Wednesday then brings the Sainsbury Q3 update, as well as the Shoe Zone finals, the Greggs Q4 and the Topps Tiles Q1. The BRC-KPMG Retail Sales figures for December will be out first thing on Thursday, shortly before the Tesco Q3 update, the Marks & Spencer Q3, the Card Factory update, the John Lewis/Waitrose update and the Dunelm Q2. Friday then brings the B&M Q3 and the JD Sports update. TRADING STATEMENTS & EVENTS: Upcoming results are set out below: • 16 Dec 19 Fulham Shore H1 numbers • 16 Dec 19 Fuller’s H1 numbers • 19 Dec 19 Bank of England MPC interest rate decision • 8 Jan 20 Gregg’s FY & Xmas update • 9 Jan 20 Nichols full year update • Early Jan 20 Xmas statements (in the order presented last year) – Stonegate, Morrison’s, Naked Wines, Sainsbury, Constellation Brands, C&C, Brighton Pier, Everyman, M&B, M&S, Tesco. • 14 Jan 20 Games Workshop H1 numbers • 15 Jan 20 Ten Entertainment trading update • 15 Jan 20 Revolution Bars H1 & Xmas update • 17 Jan 20 Gym Group FY update • Mid Jan 20 Xmas statements (in the order presented last year) – Games Workshop, Cineworld, City Pub Group, Saga, DP Eurasia, Whitbread, Premier Foods, SSP, EasyHotel, William Hill. • Late Jan 20 Xmas statements (in the order presented last year) – JD Wetherspoon, Hotel Chocolat, Restaurant Group, Starbucks, Fevertree, AG Barr, Fullers, DPP, Domino’s, Hollywood Bowl, Britvic, Rank, Diageo. • 23 Jan 20 G4M Q3 update • 24 Jan 20 Marston’s Q1 trading update • 29-31 Jan 20 – Springboard charity Snow White pantomime at Leicester Sq. Theatre • 26 Feb 20 Revolution Bar Group H1 numbers 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. |
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