Langton Capital – 2023-03-27 – MEX (FY), JDW (H1 meeting), Wells, inflation, labour, Oakman etc.:
MEX (FY), JDW (H1 meeting), Wells, inflation, labour, Oakman etc.:A DAY IN THE LIFE: Lost an hour’s sleep at the weekend and still sulking about it. On to the news: LANGTON EMAIL: The Free Email is now written in short form. Extended versions of many stories (after the ellipses) are in the Premium Email. Reply to this email if you would like to upgrade. Prices for the Premium are £395 for one subscription, £695 for multiple, £995 for very large subscribers, all plus VAT. Or sign up for easy in, easy out monthly option per subscriber HERE https://www.paypal.com/cgi-bin/webscr?cmd=_s-xclick&hosted_button_id=87YUG2Z5W7PSN TORTILLA – FULL YEAR NUMBERS: Tortilla this morning reported maiden full year numbers and our comments are set out below: Key Financials: As at the H1, sales are up but profitability is down such that the company reports a loss of £928k. Revenue was up 20% at £57.7m with LfL sales up 16.4% vs 2019. EBITDA was down from £8.7m to £4.0m. The group points out that FY21 included £3.9p of lower VAT benefits. Gross margin was lower at 76.4% vs 79.6% Current trading: MEX comments that current ‘trading [is] in line with expectations.’ It says ‘LFL sales growth for the eight weeks to 26 February 2023 remained strong, up 4% vs FY22 (up 11% vs FY22 when adjusted for VAT).’ The company adds re costs and supply that ‘action taken by management across supply chain to manage costs and aid profitability, including utilities hedge (Apr-Sep 2023), providing certainty for the majority of FY23….’ • See premium. Reply for sample or to upgrade. Single £395, multiple £695. Limited time offer: PayPal alternative monthly £25 + VAT per sub. Easy in, easy out. JD WETHERSPOON – H1 NUMBERS – ANALYSTS’ MEETING: JD Wetherspoon on Friday held its H1 analyst meeting, and our comments thereon are set out below: Headline numbers: JDW reports LfL sales up 5.0% in the half year with revenues of £916m vs £890m in FY19. LfL sales were -0.6% vs FY20 & +13% vs FY22. The company reports PBT of £4.6m against H1 profits of £50.3m in the pre-Covid FY19. Free cash flow per share is 132.4p (FY19: 69.4p), EPS is 1.0p (FY19, when there were fewer shares in issue: 38.3p) and there is no first half dividend (FY19: 4.0p)… • See premium. Reply for sample or to upgrade. Single £395, multiple £695. Limited time offer: PayPal alternative monthly £25 + VAT per sub. Easy in, easy out. PUBS & RESTAURANTS: Inflation: UKH has reacted to Bank of England governor Andrew Bailey’s suggestion that businesses should not raise prices saying that they have little choice. She says ‘we fully support the objective of reducing inflation – it is in all of our interests. However, hospitality businesses are under immense pressure from ever-rising bills, particularly energy, and we have already seen thousands of good businesses go bust as a result….’ • See premium. Reply for sample or to upgrade. Single £395, multiple £695. Limited time offer: PayPal alternative monthly £25 + VAT per sub. Easy in, easy out. JDW’s Tim Martin says while businesses may ‘want to follow his [Andrew Bailey’s] advice, many won’t be able to.’ He says creditors, not least banks that have lent to companies, ‘will be breathing down the neck of business owners.’ Lynx Purchasing has said that higher prices are the trade-off for sustainable food supply. Despite Bank of England governor Andrew Bailey’s suggestion that inflation is transient, this is not likely to abate in the short term… Labour availability: The CBI has launched an ‘ambitious taskforce to tackle economic inactivity and improve both the health and wealth of the nation.’ It says ‘economic inactivity due to long term sickness is historically high and ill-health is costing the UK economy £180bn in lost output.’ Consumer spending: Nationwide Building Society reports that consumers spent less on subscription services fell in February, down 3% by value and 6% by volume… • See premium. Reply for sample or to upgrade. Single £395, multiple £695. Limited time offer: PayPal alternative monthly £25 + VAT per sub. Easy in, easy out. CGA has said that ‘nine in ten people have been affected by the cost of living crisis in some way, and 45% are reducing their spend when they eat and drink out.’ It says ‘a core group of 17% of consumers are spending more despite mounting costs…’ Energy costs: The BII has written an open letter to Ofgem demanding urgent action to tackle energy suppliers which are taking advantage of the pub industry… • See premium. Reply for sample or to upgrade. Single £395, multiple £695. Limited time offer: PayPal alternative monthly £25 + VAT per sub. Easy in, easy out. UKHospitality reports that energy bills are set to increase by more than 80% next month, with it being ‘inevitable that price rises will follow’… Other news: US restaurant traffic numbers and LfL sales are reported to have started to moderate in February as soft (Omicron-impacted) comps fall away… COMPANY NEWS: The Sunday Times reports that ‘Wetherspoons’ relationship with its biggest beer supplier, AB InBev, is in jeopardy in an extraordinary legal row that lifts the lid on a pricing dispute between one the UK’s largest pub chains and the world’s biggest brewer.’ BrewDog has closed down two more London venues, units in Clapham and Brixton. Founder James Watt says six pubs in total will shut as there is ‘no prospect of any help from a clueless government.’ Mr Watt says it would ‘be simply impossible to get these bars even close to financial viability’ in the near term. Wells & Co reports turnover up to £55.2m for the year ended 2 October 2022, up from £30.5m the year prior. Operating profit increased to £3.3m from a loss of £1.6m. The pub operator and brewer further reported EBITDA of £8.7m, up on £5.1m… The Oakman Group has announced the appointment of Tarquin Williams as Chief Financial Officer. The company reports that ‘the former CFO of The City Pub Group managed CPG’s listing on the AIM market through an IPO and helped guide the PLC through the pandemic, reducing cash burn, strengthening the company’s balance sheet, and securing their refinancing options…’ • See premium. Reply for sample or to upgrade. Single £395, multiple £695. Limited time offer: PayPal alternative monthly £25 + VAT per sub. Easy in, easy out. Hawksmoor plans to open its second US restaurant next year, to be located in Chicago. The steakhouse group plans to restore The LaSalle Street Cable Car Powerhouse, a 16,500sq ft three-story space on LaSalle Street. Leon has opened its first restaurant in the South West of England, in Bath. Coffee#1 has announced the opening of a brand-new coffee house in the centre of Cheltenham. Red Oak Taverns has completed a further pub acquisition, The Crown in Romeland, Waltham Abbey from brewer, McMullen’s. This is the fourth single site acquisition this year for Red Oak. Press reports that the Issa brothers and TDR Capital aim to merge Asda with EG Group’s UK division by the end of next month. The Wolseley Hospitality Group will open a sister restaurant in London this autumn, located on King William Street. HOLIDAYS & LEISURE TRAVEL: American Express Travel’s 2023 global travel trends report expects Gen Z and Millennials to be most likely to travel this year, with travel expectations of 54% and 43% against an average of 41%. Gen Z are also the most likely late bookers, being almost twice as likely as any other generation to plan their trip with a month or less to go (14% compared to an average of 8%). TUI AG shares ended Friday down 2.4% on its latest fund-raising rights issue. Nationwide Building Society’s Spending Report shows expenditure on holidays rose 19% year on year, while airline travel spend was 34% higher than in February 2022. Overall, non-essential spending was up 9% on last year, slightly behind the national rate of inflation. OTHER LEISURE: Oxygen has acquired Romford-based regional trampoline operator, Jump Evolution. Coinciding with the acquisition, Oxygen has committed to investing in its portfolio with over £1.23m being spent. Sky News reports that activist investor Elliott Management is ‘plotting a takeover of large chunks of Cineworld, the stricken London-listed cinema operator.’ FINANCE & MARKETS: Bank shares across Europe fell on Friday with Germany’s Deutsche Bank down by around 14% at one point on Friday. Deutsche and other banks reduced losses by day’s end. Government stats show that average UK house prices have fallen 1.2% since December 2022. On the year, prices were up 6.9%. Writing in The Telegraph, Matthew Lynn says that ‘Andrew Bailey has nobody to blame for this inflation mess but himself.’ He says the Bank Governor is wrong to blame businesses. Head of the International Monetary Fund Kristalina Georgieva has warned that the stability of the global economy has been put at risk by the current turbulence in the banking sector…. Sterling mixed at $1.2241 and €1.1365. Oil lower at $75.08. UK 10yr gilt yield down 8bps at 3.29%. World markets lower but heading better on Friday & Far East up in Monday trade. London set to open around 53pts higher as at 6.30am. RETAIL WITH NICK BUBB: • See premium. Reply for sample or to upgrade. Single £395, multiple £695. Limited time offer: PayPal alternative monthly £25 + VAT per sub. Easy in, easy out. |
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