Monthly Archives: September 2016

Employing Casual Staff, be careful?

Employing Casual Staff, be careful?

Some employers will be considering taking on extra staff on a ‘casual’ basis. There are a few issues which employers should think about when taking on people on a temporary basis.

Firstly, the employment status of the worker needs to be carefully considered. The term ‘casual worker’ is not precisely defined in statute. It is often used to refer to individuals who are engaged on an ‘as and when required’ basis, and often, the intention is that the individual will not have employment status and all the legal rights which permeant employees enjoy.

Although the term ‘casual worker’ suggests an informal relationship between two parties, the law in this area is complex and employers need to be aware that a casual worker can be an employee with all the full legal rights which this entails, such as written particulars of employment, a broad range of ‘family-friendly’ rights, protection against unfair dismissal, and entitlement to statutory redundancy payment.

Essentially, for a contract of employment, three key elements must be present, namely:

– the employee must be under an obligation to perform the work personally;
– there must be ‘mutuality of obligation’ between the parties; and
– the employer must have sufficient rights of control over the employee.

The Tribunals are well aware that employers often try to avoid the existence of these key elements and so contract terms (written or verbal) are only the starting point. A wholes range of facts and circumstances need to be considered to determine the true employment status of a worker.

Casual workers can establish employment status via ‘umbrella contracts’. This generally happens where an individual is engaged on a series of individual contracts, with breaks in between, but in reality there is an overarching contract (which may be implied) that continues even when the worker is not working (for example, during seasonal contracts).

However, at the end of the day, many workers are in fact casual workers, not employees. Nonetheless such workers still have important statutory rights. These include rights to paid annual leave, to the national minimum wage (see below), and protection against deductions from wages, whistleblowing and discrimination.

Casual worker contracts and working arrangements should be reviewed regularly. The employment status of a casual worker can change over time, as the working relationship evolves. The longer the working relationship, the greater the scope for contract terms no longer to reflect the reality of the situation, meaning they should be updated.

The entitlement of casual workers to paid annual leave should be monitored carefully. Misunderstandings and disputes around paid annual leave rights are a common source of disputes between employers and casual workers.

In addition, it is important to remember that casual workers will always have important legal rights, irrespective of their employment status. Although unfair dismissal protection only applies to employees, the status of casual workers may not be entirely clear, and with discrimination protection applying in any event, employers should always take care in termination situations.

HMRC provide a useful Employment Status Indicator, which employers can use to check the status of individuals, or groups of workers to see how they should be treated for tax and NICs.

If in doubt refer to your Accountant for a definitive statement

Langton Capital Daily News and others

If you would like to read the latest Industry News and Corporate Activity, please click on the following link     http://www.propelinfonews.com/selecttemp.php, before 9.00 am for yesterdays News, click on the link after 9.00 am for latest Weekday’s News

Merlin, SAB Miller, Air Partner, easy Hotel & other:

A DAY IN THE LIFE:

Is anyone else out there a little worried about London?

It’s still busy, it’s hard to get into some restaurants and you have to queue at others and the like but, with teachers, bus drivers and police officers increasingly forced to live further and further from their place of work, is there a point at which it booms ‘too much’ or is that just a fallacy?

Because it’s hard to judge London with reference to the rest of the UK. The South Wales valleys, Scunthorpe, Rotheram, Rochdale and the like have very little in common with our nation’s capital which, it has to be said, only really has one peer city globally.

Hence it may be possible for London to continue on its merry way for some time but, if high rents force out casual diners and the authorities have to ship in a few hundred thousand caravans for the ‘staff’ to live in, I’m not sure that it will keep its appeal. On to the news:

PUB, RESTAURANT & DRINKS PRODUCERS:

• SABMiller’s shareholders have voted overwhelmingly in favour of its £79bn takeover by AB InBev.

• New data from Nielsen suggests that the value of the ‘free from’ category could be as high as mineral water within two years. More people now actively avoid certain ingredients in their diet, with ‘free from’ sales up 19% in the UK over the last year to £754m.

• Mike Watkins, Nielsen’s UK head of retailer insight, commented: ‘If this growth continues, ‘free from’ would be a £1bn market within two years – the same size as today’s mineral water market. People are adopting a more back-to-basics mind-set, focusing on simple ingredients and fewer processed foods; they’re also taking a more active role in their own health care, which includes better nutrition, itself a reflection of the rising trend in chronic-disease rates.’

• Dark Star’s managing director of sixteen years, Paul Reed, has left the brewer to join Sussex brewer Bedlam. Reed told the MA: ‘It’s been on the cards for some while. It’s been very much my style at Dark Star to give people a lot of freedom and autonomy in the way they manage the business. Over the past year or so I’ve been rather superfluous – we’ve got excellent operations guys, on the marketing side, excellent head brewing team and I felt it was overdue for another challenge.’

• US fast-casual restaurant chain operator Cosi Inc has filed for protection and is now pursuing a sale of the business. The company reportedly has assets of $31.24m and debt of c$20m.

• German pizza chain L’Osteria is introducing itself in the UK with a first site in Bristol to be owned and operated by ex-Mcdonalds franchisee Pru Naik in a joint venture. Naik previously had 25 restaurants in central and west London turning over £55m in 2013, according to Propel.

• BBPA stats show the on-trade sold less beer than supermarkets and c-stores for the first time on record (dating back to 1980) last year. In 1980, the on-trade was responsible for 87.7% of all beer consumed, compared to 49% in 2015 and the BBPA has attributed most of this to the beer duty escalator.

• Almost nine in 10 students prefer to pay with debit and credit cards through contactless or chip and pin, according to a survey by Vista Retail Support. ‘Our survey shows a significant shift in how students are choosing to pay for their goods and how they’re willing to avoid retailers who don’t allow room for choice.’ Said James Pepper, technical services director at Vista. ‘For canny retailers who have put the right solutions in place, however, the potential gains could be huge as local students become loyal customers.’

• William Grant & Sons has posted a record profit after tax of £147.4m, up 8.9% year-on-year, on the back of a 6.1% rise in turnover to £882.5m. The spirits producer said that increased volatility across Eastern Europe, the Middle East and Africa was offset by strong demand for super premium spirits in the US and Asia.

• William Grant & Sons’ chief executive, Simon Hunt (pictured) said: ‘This success was driven by our constant focus on building brands and investing in them for the long term. We have also continued to invest in our operational capabilities and our route to market infrastructure. It has been a challenging market place but we are well positioned to continue our growth in 2016 and beyond.’

• The ALMR has welcomed Sadiq Khan’s commitment to the agent of change principle, which puts the onus on new residential buildings near clubs to pay for their own soundproofing. ALMR Chief Executive Kate Nicholls said: ‘The Mayor’s commitment to the agent of change principle is a very welcome step towards the protection of nightclubs and venues that are both integral economically and cherished socially. The ALMR has been pushing hard for this and have long argued that nightclubs, bars and other late-night music venues are an absolutely essential element of the UK’s wider music scene as well as fantastic drivers of growth in town and city centres.’

• The ALMR has also welcomed the appointment of Graham Evans MP as Chairman of the All-Party Parliamentary Beer Group.

LEISURE TRAVEL & HOTELS:

• EasyHotel yesterday reported that it had succeeded in placing 38m new shares at 100p. it says Placing remains conditional on the passing of the Resolutions which are to be proposed at a General Meeting of the Company to be held on 14 October 2016 and Admission taking place by no later than 17 October 2016.

• Air Partner reports H1 numbers, says results are ‘strong’ with ‘Broking and Consulting divisions both performing well.’

• Air Partner says H1 revenues +2.4% with PBT +35% to £3m. EPS 22.3p (2015: 17.1p) and H1 dividend 8.06p (2015: 7.33p). Group CEO Mark Briffa reports ‘the Group has performed well in our first six months and I am very pleased to have seen strong performances across both Broking and Consulting. Our customer focused approach is delivering results and this is evidenced by significant contract wins from both new and existing customers. We have entered the second half of the year with confidence and look forward to continuing to develop and grow our services and capabilities across the world.’

MERLIN UPDATES ON CURRENT TRADING (38 WEEKS):

• Merlin has today updated on current trading saying that it is achieving ‘further growth despite difficult trading conditions in certain key markets’

• Merlin reassures that, post its ‘key summer trading period of July & August’, its 2020 milestones remain on track

• Merlin says LfL constant currency growth was negative 0.4% at Midway, +2.2% at Legoland and +3.0% at Resorts. Group is +1.3%

• Merlin y-t-d revenue growth of 10.6% ‘reflects the continued strong contribution from new accommodation and attractions’

• LfL revenue growth 1.3%

• Merlin says seeing ‘evidence of recovery in Resort Theme Parks Operating Group’ & continued growth in LEGOLAND Parks, despite tough comps

• Merlin’s Midway attractions are still seeing ‘ongoing difficult trading in certain key markets’. Here the group has announced a potential new brand Little Big City.

• Merlin CEO Nick Varney reports ‘Merlin continues to deliver overall revenue growth despite challenging trading conditions in certain key markets, testament to a diversified portfolio and a strong new business development strategy across all three Operating Groups.’

• Mr Varney continues ‘trading across the existing estate has been mixed. Our Resort Theme Parks Operating Group is now showing year on year revenue growth, reflecting the ongoing recovery in trading at Alton Towers. In Midway Attractions, London in particular continues to suppress overall trading performance as we are yet to see any significant benefit from the depreciation of Sterling, while the growth in LEGOLAND Parks reflects a tough comparative period in 2015 and a more challenging market in Florida.’

• Midway sees tougher trading. Merlin says ‘many of our city centre attractions have experienced volatile trading patterns as a result of wider security concerns that have affected both domestic and international visitation. This continues to have a significant impact on Midway London, the largest Division within the Operating Group, where visitor volumes have also yet to see any material benefit of Sterling weakening to current levels.’

• Merlin says ‘the financial position of the business remains strong, with a significant reduction in net debt since the end of June, reflecting the seasonality of cash flows.’

• Merlin concludes ‘we remain pleased with progress in LEGOLAND Parks and Resort Theme Parks and expect continued growth in these two Operating Groups, reflecting strong product momentum and the ongoing recovery at Alton Towers.’ It says ‘despite specific headwinds in the Midway Attractions Operating Group, we remain positive on the medium term outlook, reflecting the strength of the brands, diversity of the portfolio and confidence in the strategy.’

OTHER LEISURE:

• Nielsen has reported that Virtual Reality is close at hand, that Pavers (early adopters) will soon be getting stuck in. Converts will follow. A study, conducted by Nielsen’s Media Lab team, found that adult consumers 18-54 feel about as knowledgeable about VR as they do about other popular tech trends, including wearables, 3D printing and the internet of things.

• Nielsen says that Pavers make up around 24% of the US adult population below the age of 55 & Converts make up c20%. Nielsen says ‘advertisers will be pleased to find that Pavers are ‘triple-A’ consumers: they adopt new products and service, they advocate for the brands they love and they appreciate premium quality—and are willing to pay a premium price.’

FINANCE & MARKETS:

• The IMF has said once again that it believes low inflation and sluggish trade growth remain a threat to the global economy. The body may be right, but what does it suggest other than more government spending? It says urgent action is needed to reverse a slowdown in trade and stop low inflation from triggering a downward spiral of weak growth, job cuts and higher debt. It says the slowdown in trade growth since 2012 has been ‘remarkable’.

• Aberdeen Asset Management’s Martin Gilbert has warned that a bond bubble may be inflating. He told Bloomberg that rates will not remain low forever and bond prices may at some point come under downward pressure.

• SMMT has said that the success of the UK motor industry could be “jeopardised” if the UK leaves the single. Mike Hawes told the BBC ‘don’t be blinded by the good news that you’re seeing not just around our sector but around business in general. We’re very concerned that the future state of the automotive industry and the success could be jeopardised if we’re not in the single market.’

• Sacked former Greek finance minister Yanis Varoufakis has told the BBC that George Osborne will be remembered as a “particularly inept” chancellor

• World markets: UK & Europe up yesterday, US also higher. Far East markets mostly better in Thursday trading

• Oil price sharply better as OPEC agrees to limit production. Brent Crude changing hands at around $48.65 per barrel

• OPEC agreement to small production cuts is the first such deal since 2008.

• The ECB boss Mario Draghi has been defending his bank’s ultra-low interest rate policy at a meeting of the German Bundestag. M Draghi has rejected German criticism that sub-zero interest rates were dissuading saving and were doing more harm than good

YESTERDAY IN A NUTSHELL – SELECTION OF TWEETS, LIVE TWEETS ON WEBSITE:

• Easyhotel announces placing of 38m shares at £1 to raise £36.7m net. Group will use cash primarily to fund owned hotel roll-out strategy.

• Easyhotel sees opportunity to become ‘a leader in the super budget market in Europe and the Middle East.’

• TUI says ‘the Summer 2016 season is almost fully sold, with a continued strong performance by the UK, Riu and Cruises’

• TUI sees ‘sustained strong performance by the UK, with revenue and bookings up 5%.’

• Re consumer confidence, NPD suggests it has ‘experienced the biggest drop seen in a month in the U.K. for decades’ post Brexit vote

• NPD says consumer confidence dropped by 8pts in July, the biggest drop in over 20yrs

• NPD cautions ‘it is still uncertain whether the positive performance in Q2 16 will continue over the next quarters’

• Snoozebox reports H1 numbers to end-June, revenue down to £2.2m from £2.4m, loss before tax £2.1m (2015: loss £3.1m)

• Hotel in Europe reported mostly negative year-on-year results in Aug 2016, RevPAR down 1.5% to €87.88.

• The World Trade Organisation has cut its estimate for global trade growth this year from 2.8% to 1.7%.

• Other tweets: Sterling flirting with post-Brexit vote lows. Will impact costs. Sainsbury: ‘The effect of the devaluation of Sterling remains unclear…’

• Sainsbury says ‘we expect the market to remain competitive’. Looks as though it is lagging Wm Morrison. And Waitrose.

• Deutsche Bank casts bad spell (& smell) over banking sector. RBS cops to $1.1bn mis-selling claims. Some say $70tn of derivatives out there

• Sainsbury (-1.1% LfL) makes Argos (+2.3%) look good. Also MRW LfL gain looks good in context, Waitrose still >>0%

• TUI says ‘we do not hedge the impact of foreign exchange translation of results in non-Euro currencies.’ Sterling fall to cost c€100m

• Price of dishcloths said to have risen 17%. These ones were made in India & importer passed cost increase on. Sign of things to come…

RETAIL NEWS WITH NICK BUBB:

• SuperGroup: SuperGroup is hosting a Capital Markets Day for analysts and investors today up in sunny Manchester that will include a tour of its next generation Superdry store located in the Arndale Centre. The presentations will focus on “the group’s global growth opportunities, multi-channel development and the opportunities across the business created through the next generation store”, but, in that deathless phrase, “no new material information or update on trading will be provided”, although we would expect a bit of moaning about the difficulty of selling autumn/winter coats and jackets with the weather so warm…

• Essex Watch: Meanwhile, the first ever John Lewis store in Essex opens this morning, in sunny Chelmsford, and, as we were in the area (after visiting McColl’s in nearby Brentwood: more on this tomorrow), we popped in for a sneak preview yesterday afternoon. Anchoring the new upscale 300,000 sq ft Bond Street leisure and shopping development by the river, behind the High Street, the 90,000 sq ft John Lewis is the third in the new generation of smaller, full-line department stores (after Exeter and York). Spread over 3 floors and with some distinctive new visual merchandising, the attractive new store seems to have everything you would expect, apart from kidswear, although some departments (eg white goods) are downsized somewhat, with relatively more space given to upmarket Beauty brands. The MD Andy Street won’t be able to be there today, as he will be up in Birmingham to hear the result of the Tory candidate selection for the West Midlands Mayor election next year…

• News Flow This Week: The widely followed GFK Consumer Confidence survey for September is out first thing tomorrow.

ALMR Latest News. New rates proposals may still penalise businesses

ALMR

 

New rates proposals may still penalise businesses

The ALMR has responded to the Government’s consultation welcoming a long-overdue revaluation but voicing concerns that businesses will still face unafordable and unreasonable increases to their bills.

ALMR Chief Executive Kate Nicholls said: “We are pleased to see the Government pushing ahead with a revaluation that is long overdue, a reduction in the multiplier and recognising that there is a need for fairness that is currently missing from business rates.

“We are concerned though that the proposals will still result in increased rates bills for businesses with eating and drinking-out venues still bearing a disproportionate burden. Our chief concern is that the cap on increases of 5% applies only to the smallest businesses, with larger companies facing either a 35% of 45% increase cap paid for by a cap on the reduction for those businesses that see their rates fall. In addition, there is only a 6 month period for businesses to prepare for these increases.

“It is still likely that 1 in 4 businesses will see their rates increase. At such a politically and economically unstable time, such a move could be potentially disastrous for businesses. With businesses relying on transitional relief, we are urging the Government to reconsider introducing high street rate relief to ensure that bills are equitable and affordable.”

Agent of change is vital for late-night sector

The ALMR has welcomed the Mayor of London Sadiq Khan’s commitment to introducing the agent of change principle in London.

In a statement on Facebook, the Mayor confirmed he would introduce the principle in the next London Plan.

ALMR Chief Executive Kate Nicholls said: “The Mayor’s commitment to the agent of change principle is a very welcome step towards the protection of nightclubs and venues that are both integral economically and cherished socially.

“The ALMR has been pushing hard for this and have long argued that nightclubs, bars and other late-night music venues are an absolutely essential element of the UK’s wider music scene as well as fantastic drivers of growth in town and city centres.

“The ALMR will be liaising with the Mayor’s office to continue to push for protection for the capital’s late-night venues to allow late-night bars and venues to flourish.”

ALMR welcomes Beer Group appointment

The ALMR has welcomed the appointment of Graham Evans MP as Chairman of the All-Party Parliamentary Beer Group.

ALMR Chief Executive Kate Nicholls said: “We would like to congratulate Graham on his appointment and we look forward to working with him to promote the UK’s pubs and bars.

“Graham has extensive knowledge of the sector and a good understanding of the challenges and opportunities we currently face. We know that Graham will be a great supporter of this vital sector and we are keen to hit the ground running and push for a fairer deal for licensed hospitality.”

Langton Capital Industry News

Langton Capital

TUI update, EasyHotel fund-raise, Snoozebox & other:

A DAY IN THE LIFE:

Bit busy this morning so straight on to the news:

PUB, RESTAURANT & DRINKS PRODUCERS:

• Analysts NPD have identified the ‘top 3 trends’ impacting UK food service as consumer confidence, full service growth & delivery growth.

• NPD says ‘the foodservice market performed very strongly in the second quarter. Indeed, consumer spend grew by 3.2 percent. This means we saw an additional £385 million in consumer spend compared to the same quarter last year.’

• NPD says overall growth was impacted ‘by both traffic gain (+1.5 percent) and average spend per eater increase (+1.7 percent).’

• Re consumer confidence, NPD suggests it has ‘experienced the biggest drop seen in a month in the U.K. for decades’ post Brexit vote. It adds ‘the run-up to the vote already started to raise the level of uncertainty, which was then borne out in May and June with negative consumer confidence levels. However the decision of the British population to quit the European Union was extremely unexpected, and this had a great impact on consumer confidence.’

• NPD says consumer confidence dropped by 8pts in July, the biggest drop in over 20yrs. It says ‘consumer confidence is one of the factors that tend to relate the most to foodservice market performance. It remains to be seen if those results will drop further and what impact it will have on the performance of the out-of-home market in the coming years.’

• On a positive note, NPD points out that full service experienced a particularly strong performance in Q2 16. It goes on to say that delivery is also in growth.

• NPD cautions on possible Q3 slowdown saying ‘it is still uncertain whether the positive performance in Q2 16 will continue over the next quarters, as consumer confidence is likely to hurt the market.’

• The BBPA is ‘delighted’ that ‘longstanding champion of beer and pubs’, Graham Evans MP, has been elected as chairman of the All-Party Parliamentary Beer Group.

• Low and zero-alcohol beers (0-3% ABV) are becoming more popular in West Europe, growing by 1% and 7% respectively in 2015, according to a report from Canadean.

• Marston’s put £10m into the launch of its new Wolverhampton headquarters last week, having ‘completely out-grown’ its old offices.

• Glastonbury, Netflix and Spotify have been named in the top ten coolest brands of the annual CoolBrands list as consumers turn to experiences over material possessions. This marks a pronounced shift away from established ‘elite’ fashion labels that previously dominated the list, such as Chanel, to digital media like Instagram. Apple retains its number one spot.

• Stephen Cheliotis, chairman of the CoolBrands Council, said: ‘People are now less likely to aspire to a flashy car, preferring something more relevant to them and their lifestyle… we have moved away from a society based on what you own or can afford. That is why some of these brands have fallen from grace.’

• Sainsbury’s will revive its delivery-by-bicycle service – not seen in 130 years – in a trial starting from today in central London on an iOS app called Chop Chop.

TUI GROUP – FULL YEAR TRADING UPDATE:

• TUI Group has this morning updated on trading for its full year to end September saying ‘we are continuing to deliver our strategy as a content centric, vertically integrated tourism group.’

• The group says ‘the Summer 2016 season is almost fully sold, with a continued strong performance by the UK, Riu and Cruises, the launch this Summer of two additional cruise ships and the opening of five additional hotels in our core brands.’

• TUI says ‘winter 2016/17 is trading in line with our expectations, with further growth driven by long haul.’

• Strategically, TUI reports ‘we are pleased to have announced the completion of the Hotelbeds Group disposal on 12 September and marketing of Travelopia (formerly part of Specialist Group) has commenced.’

• TUI concludes ‘as we approach our 2015/16 year end, we are therefore confident of delivering between 12% and 13% growth in underlying EBITA. This demonstrates the strength of our integrated business model and the success of our content centric strategy, as well as the continued delivery of our merger synergies.’

• Trading highlights included ‘continuing to deliver our strategy as a content centric, vertically integrated tourism group’ and delivering on strategy.

• TUI reports ‘source market trading remains robust’. It says ‘summer 2016 closing out as we expected, 97% sold to date with revenue and bookings up 1%.’

• Group has seen ‘sustained strong performance by the UK, with revenue and bookings up 5%.’

• TUI is ‘continuing to build on our direct relationship with our customers, with controlled mix up one percentage point to 72% and online mix up two percentage points to 43%.’

• Re winter, this is trading ‘in line with our expectations’. Group sees overall revenue up 11% and bookings are up 5% ‘driven in particular by UK long haul growth which in turn drives an earlier booking profile.’

• TUI is seeing ‘strong growth in Cruises’ and is undertaking a further modernisation of its fleet

• TUI concludes that it will hit numbers & says this ‘demonstrates the strength of our integrated business model and the success of our content centric strategy, as well as the delivery of our merger synergies.’

• Re summer 2017, TUI says ‘trading for the Source Markets is at a very early stage. In line with the usual Summer season launch dates for each Source Market, only the UK is more than 10% sold.’ Here it says ‘UK revenue is up 14% and bookings are up 7%, with growth again driven by long haul and cruise.’

EASYHOTEL TO RAISE £36.7M TO FUND FURTHER GROWTH:

• Easyhotel announces placing of 38m shares at £1 to raise £36.7m net. Group will use cash primarily to fund its owned hotel roll-out strategy.

• Easyhotel sees opportunity to become ‘a leader in the super budget market in Europe and the Middle East.’

• Group says it ‘expects the investment of new capital in the hotel pipeline to be materially earnings per share enhancing in the medium term.’

• Easyhotel CEO Guy Parsons comments ‘since IPO easyHotel has made significant progress in line with its strategy to speed up owned hotel development and accelerate the roll-out of franchise hotels to drive high EBITDA returns on investment.’

• CEO Guy Parsons continues ‘with more opportunities available than had been expected, and over 4,500 rooms committed or identified in the owned and franchise development pipeline, the proceeds of the Placing will primarily be used to fund the continuation of our owned hotel roll-out to deliver enhanced financial returns, whilst consolidating easyHotel’s position as a leader in the super budget hotel market in Europe and the Middle East.’

LEISURE TRAVEL & HOTELS:

• Snoozebox reports H1 numbers to end-June, revenue down to £2.2m from £2.4m, loss before tax £2.1m (2015: loss £3.1m)

• Snoozebox reports H1 loss per share of 0.73p (2015: loss 1.44p). Chairman Chris Errington reports ‘the Group has made some good progress in the period towards financial, operational and cost base stabilisation. The key focus for H2 16 and into 2017 is on securing new customers for longer term Semi-Permanent deployments set alongside a significantly more efficient cost base.’

• Gatwick has submitted a summary of ‘substantial new analysis’ to the government in the long-running campaign for a second runway. The Airport Commission originally said Gatwick would not serve 42 million passengers a year until 2030, or fly to 50 long haul destinations until 2050, whereas both were achieved this year.

• A study by the CEBR consultancy for Saga indicates the over-50s are spending more on holidays, while younger people are travelling less. The older age group has increased spending on travel by 23% over the past five years, meaning its total 2015 spend of £39bn represented more than half the UK’s total spending on holidays.

• Hotel in Europe reported mostly negative year-on-year results in August 2016, with occupancy down 1.5% to 75.8%, ADR flat at €115.94, and RevPAR down 1.5% to €87.88.

• Data from ContentSquare shows that travellers spent 38% more in the UK, and online searches for UK destinations rose by 10%, following the EU referendum.

• The sharing economy of disruptive businesses including Airbnb and Uber is being used by less than one in three UK business travellers, according to Egencia.

• Accorhotels has launched a new brand named Jo and Joe, which appeals to the younger traveller by blending ‘the best of private-rental, hostel and hotel formats.’ The brand aims to have 50 properties by 2020, with locations ‘including Paris and Bordeaux (2018) as well as Warsaw, Budapest, Rio and São Paulo.’

• Senior figures at a Travel Weekly debate have said that terrorism is a bigger concern to travel industry mergers and acquisitions than Britain’s decision to leave the EU.

OTHER LEISURE:

• Merlin has been fined £5m for the crash on the Smiler rollercoaster after Judge Michael Chambers QC accepted the defendant had taken full and extensive steps to remedy its issues. However, the judge added that the crash was a ‘catastrophic failure’ and a ‘needless and avoidable accident’ brought about by human error.

• Pinewood has announced that the High Court of Justice in England and Wales has sanctioned the scheme of arrangement by which the recommended cash offer made by Picture Holdco Limited for the entire issued share capital of Pinewood is being implemented.

FINANCE & MARKETS:

• The North South divide is getting worse per stats on workless households produced by the ONS. Data shows that all top ten workless areas are north of a line from the Severn to the Wash. The ten areas with the fewest workless households are all south of Oxfordshire.

• Former chancellor George Osborne has told Bloomberg TV that monetary policy was making ‘life difficult for ordinary savers’. Rates have not actually risen for almost 10yrs. Osborne said ‘we need to offset the very necessary loose monetary policy, and the distributional consequences that is having. Essentially it makes the rich richer and makes life difficult for ordinary savers.’

• The World Trade Organisation has cut its estimate for global trade growth this year from 2.8% to 1.7%. It is the first time in 15yrs that trade has grown more slowly than the global economy as a whole.

• World markets: UK & Europe down yesterday but US markets higher. Asian markets mostly down in Weds trade

• Oil price rising but down over last 24hrs. Brent Crude changing hands at around $46.15 per barrel

• CBI distributive trade survey’s retail sales balance registered a drop to 8.00% in the UK in September

YESTERDAY IN A NUTSHELL – SELECTION OF TWEETS, LIVE TWEETS ON WEBSITE:

• AG Barr cautious saying ‘market conditions remain volatile and somewhat unpredictable’

• Franco Manca operator Fulham Shore has announced the appointment of D&D London co-founder Des Gunewardena as NED

• TCG FY update, says ‘summer 2016 closing out as expected, with strong demand for most destinations apart from Turkey’.

• TCG says ‘winter 2016/17 bookings are in line with last year’. It adds ‘full year underlying EBIT guidance unchanged’

• TCG CEO Fankhauser: ‘Customers’ desire to go abroad on holiday has remained strong with the exception of Turkey’.

• EasyHotel has confirmed that the acquisition of the freehold of 3-5 Northgate Street in Ipswich has completed

• Carnival reports Q3 numbers, net revenue yields +2.7% (guidance 2% to 3%) & costs +5.5%, better than guidance of around 6.5%.

• Carnival outlook: Says ‘cumulative advance bookings for H1 next year are ahead of the prior year at considerably higher prices’.

• Monarch has denied it is in financial trouble but admits it needs a ‘significant investment’ to be made within days

• Merlin is to blame for the Smiler rollercoaster crash at Alton Towers that resulted in life-changing injuries to 5 passengers

• Number of mortgages granted in August at lowest level for 19mths reports BBA. Some 37k loans approved.

• Other Tweets: So the Mexican Peso is now the bellwether for the state of the US electoral race, is it? Hillary deemed have ‘won’ & Peso rises

• Monarch not in trouble but wants cash quick. Brinkmanship in request for cash from Greybull? Possibly but ‘troubled’ moniker not helpful

• Confidence & the consumer. Is labelling Monarch troubled & in need of cash more or less likely to entice customers? Hint: It’s not ‘more’

• Capacity & tour operators. Monarch collapse unlikely, Greybull ‘too much to lose’ per Telegraph. If happened, would help other operators

• Boohoo doing well, main takeaway? Is it ‘buy Boohoo’ or ‘do not buy MKS, NXT etc. till online buying trends become more clear?

• T Cook update. No profit warning: check. Sales ex-Turkey good: check. China still on track: check. PER <7x: check. What’s not to like?

• T Cook survived 2 W Wars, recessions, dismantling of B Empire, terrorism, oil price spikes etc. Says we have good B Sheet. Shares cheap?

RETAIL NEWS WITH NICK BUBB:

• Sainsbury: Today’s Q2 update from Sainsbury covers the 16 weeks to Sept 24th, so it is “bang up to date, as ex-CEO Justin King used to say, and although LFL sales are down, by 1.1% (ex-fuel) that is not quite as bad as expected and the news about the recently acquired Argos is reasonably good with LFL sales up by 2.3% (in the 13 weeks to Aug 27th). Focusing on the growth in customer transactions and volume, CEO Mike Coupe says: “We expect the market to remain competitive and the effect of the devaluation of sterling remains unclear. However, Sainsbury’s is well positioned to navigate the changing marketplace and we are confident that our strategy will enable us to continue to outperform our major peers”. There is an 8.30am conf call with analysts.

• Moss Bros: The interims from Moss Bros today (for the 6 months to end July) are headlined “Continued Strong Progress” and this is borne out by the results, with profits up by 30% on the back of decent 5.3% LFL Retail sales growth and gross margin growth. And trading in the 8 weeks to 24 September has been “encouraging”, given the Indian Summer, with overall LFL sales up by 3.7%, as early responses to the recently launched Autumn/Winter 2016 ranges have been positive. So the company says “The Group’s trading performance continues positively, in line with the Board’s expectations and the business is well placed to make further good progress during the second half”.

• John Lewis Partnership Sales Watch: The impact of the continued hot weather on John Lewis last week was again striking, with Fashion sales as much as 9.1% down gross (over 10% down LFL), not helped by a lower level of price promotions via the Debenhams Sale. And this time Electricals couldn’t make up for it, with gross sales 5.5% down year-on-year. Fortunately , the other Home category was up, by 2.1% gross, so overall sales were only down by 4.7% gross in w/e Sept 24th (down over 5.5% down LFL). Over the last 8 weeks, gross sales at John Lewis are cumulatively now up by 0.9% (flat LFL), with Fashion sales running down by 2.5% gross. Over at Waitrose, ice cream sales were again boosted by the balmy weather, but tough comps (the later fall of the Half-Price Sale event last year) worked against the business and so gross sales were down by 0.2% (nearly 4% down LFL) in w/e Sept 24th. Over the last 8 weeks, gross sales at Waitrose are cumulatively now up by 4.1% (about 0.5% up LFL).

• Essex Watch: The first ever John Lewis store in Essex opens tomorrow morning, in sunny Chelmsford, and, as we are going to be in the area, we hope to pop in for a sneak preview this afternoon. Before then, this morning we are heading off to McColl’s HQ in nearby Brentwood, to hear more about the transformational Co-op convenience store deal.

JG & Partners, New Home Office Guidance on Identity Documents

JG & Partners

New Home Office Guidance on Identity Documents

The obligations upon employers to check the immigration status of their staff have increased in recent times but operators have often struggled to understand and recognise the many different forms of identity. The Home Office have now released a Guidance&nbsp; which should help operators to check papers produced to them and identify common fraud. A link to the Home Office’s new Guidance can be…

Cumulative Impact Policy and the Late Night Levy – changes afoot?

The Government have tabled proposed changes to the Policing and Crime Bill which impact further on licensing, particularly in terms of Cumulative Impact Policies and the Late Night Levy, if adopted. These include: Putting the possible adoption of Cumulative Impact Policies on a statutory footing; at the moment, it derives only as a concept from the statutory guidance to the Licensing Act 20…

LGA calls for new powers to suspend licences.

On 20th September 2016, the Local Government Association (LGA) published a media release urging the government to issue new powers to their members regarding business rate debts.The release reads; Millions of pounds in unpaid business rates are having to be written off by cash-strapped councils due to a loophole in licensing and business laws being exploited; The L…

Drinking trends, role of alcohol and other points of interest

Langton Capital

If you would like to read the latest Industry News and Corporate Activity, please click on the following link     http://www.propelinfonews.com/selecttemp.php, before 9.00 am for yesterdays News, click on the link after 9.00 am for latest Weekday’s News

26 Sep 16 – Drinking trends, role of alcohol, Marriott & other:

Drinking trends, role of alcohol, Marriott & other:

A DAY IN THE LIFE:

Well the Mighty Hull City managed to score a goal against Liverpool on Saturday – and that with only 10 men. However, that’s maybe enough said about that match.

Anyway, I could have waxed on this morning but, as my computer told me at stupid o’clock that it was ‘configuring updates’ and ‘this could take some time’, I’m running somewhat behind.

That’s 20 minutes of my life I’ll never get back. On to the news:

PUB, RESTAURANT & DRINKS PRODUCERS:

• The BBPA has reported that alcohol consumption in the UK remained stable last year but is still 18% below its 2004 peak

• BBPA handbook shows alcohol consumption across the EU is also ‘broadly flat’. Estonia, Luxembourg and the Czech Republic consume the most alcohol per head of population.

• BBPA says UK beer consumption is below the EU average, of around 72 litres per head, per year.

• BBPA points out UK beer duty is ‘54% higher than it was in 2000, despite recent cuts to the duty rate.’ It says ‘much more work needs to be done to cut beer duty in the UK, with the UK rate still a staggering 14 times that of Germany.’

• BBPA points out the number of breweries in the UK rose by 1,380 between 2000 and 2015. Cask ale +8.2%. BBPA CEO Brigid Simmonds comments ‘many of the figures detailed in our updated Stats Handbook are encouraging for our industry, but the UK’s high duty rate on beer is still a cause for concern. We will continue to work with the Government to bring our rate more in line with other European nations and help better support our industry.’ She concludes ‘our new Handbook again underlines that with the right policies for the beer and pub sector, there is huge scope for us to help grow the economy, creating new jobs and careers, with great venues and beers.’

• Delancey is suing the UK division of China’s largest property developer, Greenland Group, over claims that is has reneged on an agreement as part of a deal in London. The action is centred around a disputed final payment of £3.7m in the state-owned Chinese group’s £135.7m purchase of the Ram Brewery site in Wandsworth two years ago.

• Annual admissions to nightclubs in the UK has tumbled by nearly a quarter in the last five years as customers turn away from high admissions and drinks prices. Mintel research shows that overcrowding is also another key issue for would-be clubbers and revenue has declined by 21% since 2010 to £1.18bn as a result. This figure is expected to drop by another 16% over the next four years to £982m.

• Former UK government official Prof. David Nutt has suggested that a synthetic alcohol, which cuts the risk of a hangover, could replace fermented and distilled alcohol by 2050. That’s a long way in the future.

• A report from Demos has suggested that over 40% of young people believe that a drink after work helps them to fit in. Demos says, however, that ‘tackling excessive drinking cultures where they exist head-on, as well as encouraging more responsible norms and precedents at different life stages, is vital to building a more responsible drinking culture.’

• Morrison’s is launching a 10% student discount off beers this month, presumably to target freshers’ week.

• Loungers has appointed CGA Altium to look into a potential sale of the business, which is on track to have 100 sites by spring 2017.

• The news that Wetherspoons will not be serving its traditional dinner of turkey and trimmings over the Christmas period has sparked social media ‘outrage’. Speaking to The Daily Mail, a spokesperson for the pub group said it will instead be offering a range of festive meals including turkey pie, yuletide beef burger, and vegetarian Wellington.

• Deliveroo is aiming to have 20 sites operating in London under its off-site delivery kitchen initiative RooBox by the end of the year, writes MCA.

• Thwaites is bringing subsidiaries Shire Hotels & Spas and Inns of Character under the Thwaites brand to ‘reflect its changing business better’. The group pointed out that brewing and running pubs now only account for about half of its business.

• Rick Bailey, Chief Executive Officer, commented: ‘It’s the ideal way for us to bring clarity and simplicity. Our customers won’t notice any difference when they visit our hotels, inns or lodges as we are not changing the guest experience or our products. However, we are creating a stronger platform to sell our services… We now have a growing collection of pubs, inns, hotels and spas and we think that our continuing success is as a result of staying true to his principles.’

LEISURE TRAVEL & HOTELS:

• The Telegraph’s Questor column has suggested that Thomas Cook is a hold ahead of its FY trading update tomorrow. It points to terrorism as a visible negative but says ‘Thomas Cook has sought to improve its offer elsewhere.’ Here the paper highlights its JV with Fosun. Costs are being cut.

• German hotel group Pentahotels has secured its first site in London and recently opened its sixth UK site in Ipswich.

• Vertical Group’s homeworking agency Your Holiday Booking is to open a collection of pop-up travel shops in Tesco stores following successful trials. The shops will be backed by Efteling, Funway and Jet2holiday.

• Marriott International believes it can realise $250m of annual cost savings through its $13bn merger with Starwood Hotels & Resorts. The resulting company, which is now the world’s largest hotel groups with more than 5,700 properties and 1.1 million rooms, has promised to retain its 30 brands across 110 countries and link their respective loyalty programmes.

• EasyJet says last Friday was most likely the budget airline’s busiest day of the year, with more than 147,000 passengers flying to or from UK airports.

• Airbnb has raised $555m in new funding, taking its total outside funding to $4bn so far and making for a valuation of some $30bn. The money will reportedly be used as insurance in case of new capital requirements.

• The UK’s highest property court has ruled that thousands of apartment owners who rent out their homes on sites such as Airbnb are likely to be breaking the law. The leasehold ruling was made after a Slovakian interior designer and property developer fell out with neighbours at a riverside housing development in Enfield, north London, according to The Times.

• Google is working on a new package holiday product that will help users aggregate their options into one place, per Travolution.

• The Business Advisory Group, which met with ex-PM David Cameron on a quarterly basis and included the bosses of EasyJet and Whitbread, has been disbanded.

OTHER LEISURE:

• A number of tech giants including reportedly Google are said to be lining up to buy social media site Twitter. The latter’s shares rose by c20% on takeover talk.

FINANCE & MARKETS:

• CEO of Blackrock Laurence Fink has warned that markets could fall by 15% unless politicians provide a boost to GDP growth. He says ‘in many countries, we have this divide. Brexit was voted for by only 52% of the country, and the polls here [in the US] are divided. Countries across the board are very emotional right now, I have never seen this level of emotion.’

• Civitas has pointed out that the EU has more to lose if trade talks stall than does the UK. This because the UK runs a chronic trade deficit with the rest of Europe.

• Times quotes former Chancellor George Osborne as warning PM Theresa May not to trigger Art 50 until late next year

• World markets: UK & Europe down on Friday. US also lower and Far East mostly down in Monday trade

• Oil trading around $46.25 per barrel

• Eurozone manufacturing PMI rose in September to 52.6 from 51.7 a month earlier. Markets had been looking for a fall

YESTERDAY IN A NUTSHELL – SELECTION OF TWEETS, LIVE TWEETS ON WEBSITE:

• Current trading. Do we have the ‘wrong kind’ of inflation? Wages rising but no way of passing costs on? See full email www.langtoncapital.co.uk

• Ed’s Easy Diner is looking for new financing with the help of KPMG after efforts to put in place a mezz. package fell through

• Red Hot World Buffet slid into administration costing Risk Capital around £10m writes Propel.

• PwC reports that regional hotels in the UK could see record growth in 2017 but it says London properties will continue to struggle.

• PwC reports occupancy in London could fall by 0.8% to a 5yr low of 80% as demand fails to keep pace with increased supply

• Marriott boss Arne Sorenson has said that the ‘rise of nationalism and parochialism’ could be a threat to international hotels

• Summer holiday to-date bookings are up 4% year-on-year, winter up 14% y-o-y in August, according to figures from GfK

• Tui has reportedly asked Citigroup to start the sale of specialist holiday arm Travelopia in a deal that could be worth €600m

• Bank of England says ‘the United Kingdom faces a challenging period of uncertainty and adjustment.’

• Other tweets: Don’t want to be a commodities bore but have you seen some of these 12mth moves? OJ +91%, Sugar +64%. Both in dollars so worse in Sterling

• Commodities bore bores on. Wheat down 21%, feeder cattle -22%, hogs down 26%. Bacon sandwich anyone?

• Whitbread shares weaker yesterday (and today) perhaps on concerns London hotel market due for another bad year, Costa maxing out?

• Flatter yield curves spur search for yield as current generation steals the future. Could be a transition problem when rates finally rise?!

• BDO Retail Sales Tracker has fashion down 8.4% LfL in week to 18 Sept. Is down to weather but more worryingly, online sales down 1%

• Retail Week highlights ‘race for space’. That’s what happens when money is free. When it’s not, it might be tumbleweedsville Arizona…

• White elephant construction kit. No1 access free money, no2 splurge it on increased capacity, no3 blame all & sundry when demand falls

• Thomas Cook updates Tuesday, GfK says bookings for summer OK, others a little more nervous. China link up good news longer term

RETAIL NEWS WITH NICK BUBB:

• Grocer Watch: The widely followed Grocer “33” weekly supermarket pricing survey in Saturday’s Grocer magazine saw Sainsbury claim a rare but timely win, ahead of next week’s Q2 trading update, as the latest Asda price cuts again failed to make much impact. The Sainsbury basket of £61.65 was 50p cheaper than Asda and Asda’s failure to be 10% cheaper than its rivals forced it to dole out a sizeable £3.10 price guarantee voucher. Morrison’s was 3rd, with a basket costing £2.96 more than Sainsbury and Tesco was well off the pace, on £66.34. Poor old Waitrose was over £10 more expensive than Sainsbury, with a basket costing £72.16. There was more good news for Sainsbury in the separate Grocer “Mystery Shopper” weekly survey on Store Service and Availability, as their hypermarket at Longwater in Norwich topped the rankings, with a decent score of 83 out of 100.

• Saturday Press: The main focus in the Saturday papers was on the demise of Dave Forsey as CEO of Sports Direct and our comment that he had been “a human shield” for Mike Ashley was picked up by both the Guardian and the Business editorial in the Times. The latter also suggested that Dave Forsey could soon be back as a consultant and the Times separately profiled the tough Karen Byers, “the real brains” behind the Sports Direct operation. The Daily Mail played up Dave Forsey’s appearance with his wife on the reality TV show “The Real Housewives of Cheshire” as the reason for his recent falling out with Mike Ashley, although he had already been made to be “the fall guy” for Sports Direct’s troubles. The City Editor of the Daily Mail penned a sympathetic piece about Mike Ashley, opining that if he sorts out the corporate governance issues then there is “no reason why his cheeky-chappie reputation cannot be restored”, whilst Lex column in the FT thundered that institutional investors should have made their voice heard earlier about the corporate governance failures at Sports Direct. In other news, the sharp fall in interim profits at the Co-op got plenty of coverage (although CEO Richard Pennycook was quoted as saying that the group is “firmly on track”) and the news that the Icelandic Government is considering bringing a lawsuit against frozen foods supermarket Iceland over their name was widely reported. And the Daily Mail market report flagged a rumour that a Chinese group is interested in buying the Qatari stake in Sainsbury. Finally, the FT had a big feature on its News pages on why “Clothes buying starts to fall out of fashion”, with “the weather, heavy discounting, the lure of eating out and full wardrobes” blamed for the fall in the clothing market.

• Sunday Press: The Sports Direct management situation continued to be a focus in the Sunday papers, with the Sunday Times reporting one investor as saying that the embattled Dave Forsey had been close to having “a nervous breakdown” and noting that many analysts were scratching their heads over the 5% rise in the share price on Friday, whilst the Mail on Sunday flagged the industry concern over the “growing void” at the top of Sports Direct now that the over-stretched Mike Ashley is in charge of everything…The Observer joked that the much-criticised employment agency Transline could help recruit some new management for Sports Direct and it also had a separate article about the success of the campaign against Sports Direct by the Unite union. The Sunday Times also revealed that Sports Direct’s head of property, Allawee Albaghdadi, left the group in July after Mike Ashley appointed Michael Murray, his daughter’s boyfriend, to run the company’s property portfolio. In other news, the main Business story in the Sunday Telegraph was that Tesco’s pension deficit has doubled in the past year to more than £5bn, whilst the main Business story in the Mail on Sunday was that BHS is to be relaunched Online this week, just five months after the chain collapsed, by the brand’s new owners, the Qatar-based Al Mana Group. The Mail on Sunday also flagged that Malcolm Walker, the boss of Iceland, has escalated his company’s row with the nation of Iceland over the use of the name by suggesting: “We’ve got more of a claim than they have”. The Observer had a detailed article about how Burberry is planning to reinvent retailing with instant shopping, noting that fans of the brand’s recent LFW catwalk show were able to buy items Online straightaway and had a separate piece on how the weather is bringing more challenges for fashion retailers. Finally, the Sunday Express flagged that growing competition will impact Sainsbury’s Q2 sales this week, despite the boost from the fine late summer weather.

• News Flow This Week: As September draws to a close, Aldi UK have announced their 2015 results today, whilst tomorrow brings us the interims from mighty Boohoo, as well as Card Factory, plus the MySale finals and the monthly CBI Distributive Trades survey. On Wednesday, we get the Sainsbury Q2 update, as well as the Moss Bros interims. Then the GFK Consumer Confidence survey for September is out first thing on Friday.

THOMAS COOK FULL YEAR TRADING UPDATE:

• Group Updates on Full Year Trading:

• Thomas Cook has this morning updated on full year trading saying ‘summer 2016 [is] closing out as expected, with strong demand for most destinations apart from Turkey’.

• Trading update:

• Group says ‘winter 2016/17 bookings are in line with last year’

• It adds ‘full year underlying EBIT guidance unchanged’

• Group says it is ‘focused on continuing to improve the customer experience, and delivering substantial progress in our New Operating Model, including a new hotel sourcing partnership with Webjet and the launch of Thomas Cook China’

• CEO Peter Fankhauser comments ‘the Summer season has progressed largely as expected.’

• Fankhauser adds ‘customers’ desire to go abroad on holiday has remained strong with the exception of Turkey where demand continues to be volatile.’ He says ‘to date, sales for the Winter season are in line with last year while sales so far for Summer 2017 suggest that customers are booking early in an effort to secure their first-choice destination and hotel.’

• Mr Fankhauser goes on to say ‘we remain focused on ensuring that we have the right holidays available in the most popular destinations in order to meet changes in customer demand. At the same time, we continue to transform our business for profitable growth.’

• Overall positive tone as the group says ‘we’ve taken big steps forward in recent months with the agreement of a new hotel sourcing partnership with Webjet and the launch of Thomas Cook China. However, we’re particularly proud of the improvements we’ve delivered in customer satisfaction thanks to the work we’ve done to strengthen the quality of our offering. We know that the increased loyalty we get from happier customers is key to driving the future success of our business.’

• Further detail:

• Thomas Cook says ‘overall [summer 2016] Group bookings remain in line with our expectations. Excluding Turkey, bookings are up by 8% across the Group as a whole, while including Turkey, bookings are down by 4%.’

• TCG says ‘sales have been driven by demand for high-volume destinations including the Balearic and Canary Islands and the USA, alongside smaller destinations like Bulgaria and Cuba.’

• Re summer, the group concludes ‘our Summer 2016 programme is 89% sold for the Group, 3% below the same period last year.’ It adds ‘in the UK, bookings are slightly higher than the prior year.’

• Northern Europe bookings are 6% lower ‘in line with capacity cuts made as part of our destination strategy, and against a very strong performance in the comparative period last year.’ Here ‘pricing is up 3% compared to last year, reflecting strong demand for our differentiated holidays.’

• TCG says ‘in Continental Europe, bookings are 9% lower than at this time last year reflecting continued weak consumer confidence, including in Belgium where demand is significantly down as a result of the Brussels terror attacks.’

• Re Continental Europe, the group adds ‘overall pricing is 3% below last year’s levels. In Germany, bookings are 6% lower than this time last year, but we continue to outperform the wider tour operating industry.’

• Outlook:

• TCG says ‘we continue to experience good demand for our holidays in the UK and Northern Europe, offset by weaker demand in Germany, particularly for Turkish destinations.’

• It adds ‘our expectations for full year underlying operating profit remain in line with previous guidance’ and says ‘the Group is well positioned for future growth.’

• TCG says ‘we have a strong balance sheet, a resilient business model and a strategic focus on strengthening our holiday offering for the benefit of our customers.’

• Langton Comment: Thomas Cook’s shares have recovered a little from oversold levels but the market remains nervous.

• That said, today’s update should reassure.

• Trading is in line with earlier expectations and, if the group is to deliver on previous forecasts, then its shares are trading on less than 7x next year’s earnings.

• There is no mention of a dividend. Opinion is divided but a payment is expected for the full year, which will be reported on 23 November.

• As we mentioned before, the group flirted with death in 2012. It then righted its balance sheet and its shares moved up from sub-20p to a high of a shade under 190p.

• The group has shifted capacity to the Western Med, the Canaries & the USA.

• This has not been achieved without great effort but, as the group moved quickly, it has been at minimal marginal cost.

• Margins are therefore being protected and, as bookings normalise, the group should deliver on estimates.

• Consensus numbers have the group trading on a next year PER of around 7x earnings. This is rather lower than one would expect for a company whose recovery is not complete.

• TCG’s China JV is potentially very exciting and we believe that its shares offer good value.

LEISURE TRAVEL & HOTELS:

• EasyHotel has confirmed that the acquisition of the freehold of 3-5 Northgate Street in Ipswich has completed. It adds ‘as previously announced, easyHotel was granted planning permission for a 94-room hotel in August 2016.  The hotel is expected to open by July 2017.’

• Carnival reports Q3 numbers, net revenue yields +2.7% (guidance 2% to 3%) & costs +5.5%, better than guidance of around 6.5%.

• Carnival Q3: Adjusted net income $1.4bn, EPS 192c.

• Carnival outlook: Says ‘cumulative advance bookings for H1 next year are ahead of the prior year at considerably higher prices’.

• Carnival expects net revenue yields to rise around 3.5% this year versus last. EPS should be around 335p (2015: 270c). President and Chief Executive Officer Arnold Donald comments ‘we delivered the strongest quarterly earnings in our company’s history affirming our ongoing efforts to expand consumer demand in excess of measured capacity increases and leverage our industry leading scale. Revenues during the peak summer season were bolstered by strong performances from both our North American and European brands and across all major deployments including the Caribbean, Alaska and Europe.’

• Carnival says ‘we are well on track to deliver nearly 25 percent earnings growth in 2016. With cash from operations expected to reach a record $5 billion this year, we continue to fund our growth and return cash to shareholders. During the third quarter we repurchased $700 million of Carnival Corporation shares bringing the cumulative total to $2.5 billion in share repurchases over the past year.’ The group’s CEO Arnold Donald comments ‘looking forward, we are well positioned for continued earnings growth given the current strength of our booking and pricing trends in 2017.’

• Monarch has denied it is in financial trouble but admits it needs a ‘significant investment’ to be made within days in order to weather ‘tougher market conditions’. Travel Weekly reports that the group is still on track to generate c£40m in pre-tax profit for the financial year to October, but has been forced to respond on social media to persistent rumours of financial ill health and admits to launching a refinancing deal.

• EasyJet has put off a strike over pilot fatigue after talks on Friday that concluded with a set of proposals to be put to pilots in a consultative ballot.

• Bourne Leisure posted profits of £111.2m last year, up from £102m, and has paid out more than £100m in dividends since the start of last year.

• Record numbers of foreign tourists visited the UK in July, which was the highest month ever for inbound tourism to the UK with 3.8 million visits, up 2% year-on-year. Visits from EU countries reached 2.3 million, a rise of 3%, according to new Office for National Statistics data. Growth of 5% to 580,000 was recorded from North America and arrivals from the ‘rest of the world’, which includes Australia, China, the Gulf markets and India, increased by 6% to 790,000.

• Pragma Consulting writes that global cruise passenger numbers are experiencing growth across the board and could reach 24 million passengers this year. This compares to just 15 million passengers registered a decade ago. Cruises are increasingly appealing to younger consumer groups, bringing down the average age for a North American cruiser to 49, and driving a shift in the quality of F&B concepts and entertainment brands.

• Workers on Virgin Trains East Coast are ready to stage a 24-hour strike next Monday over threatened job cuts, according to the RMT union. Virgin Trains said it would be running a full timetable during the strike.

OTHER LEISURE:

• Merlin is to blame for the Smiler rollercoaster crash at Alton Towers that resulted in life-changing injuries to five passengers, Stafford crown court has been told. Engineers apparently lacked a ‘structured system of working’ and frequently overrode the Smiler’s alarm warnings as they distrusted them. Merlin Entertainments, which has more than 100 attractions worldwide, could be fined £10m or more, if Judge Michael Chambers, QC, assesses that it is in the public interest.

• Walt Disney and Microsoft have reportedly joined the list of potential suitors for Twitter, which also includes Alphabet, and may soon receive a formal bid. Salesforce is also working with Bank of America on a potential bid, according to Bloomberg, while CNBC added that a sale could happen over the next 30 or 45 days.

FINANCE & MARKETS:

• Observers’ assessment of the first of three television debates between Hillary Clinton and Donald Trump seems to suggest an inconclusive Clinton victory. Financial markets and traders have bet on a rising peso, among other plays, although ultimately there may have been enough from both candidates for both sides to spin a win.

• Number of mortgages granted in August at lowest level for 19mths reports BBA. Some 37k loans approved. The BBA reports ‘mortgage borrowing is growing at a slower pace than it has for the last few months reflecting both the slowdown in housing market growth after the April spike and broader trends in the sector.’

• BBA points to higher loan and overdraft borrowing, says ‘given the low interest rate environment and high levels of confidence during the summer, the strong credit growth can be interpreted as strong consumer sentiment.’

• The impact of the ECB’s programme of QE may have been diminished by external shocks reports ECB board member Benoit Coeure. Re the Brexit vote, M Coeure says ‘the longer term effect is unknown.’

• London is still rated the top global financial centre by Z/Yen. It says any Brexit is not yet reflected in the ranking

• World markets: UK down sharply yesterday & Europe also lower. US markets down but Far East up in Tuesday trade

• Oil price up to around $47.20 per barrel for Brent Crude

YESTERDAY IN A NUTSHELL – SELECTION OF TWEETS, LIVE TWEETS ON WEBSITE:

• The BBPA has reported that alcohol consumption in the UK remained stable last year but is still 18% below its 2004 peak

• BBPA points out UK beer duty is ‘54% higher than it was in 2000, despite recent cuts to the duty rate.’

• BBPA points out the number of breweries in the UK rose by 1,380 between 2000 and 2015.

• Annual admissions to nightclubs in the UK has tumbled by nearly a quarter in the last five years

• Morrison’s is launching a 10% student discount off beers this month, presumably to target freshers’ week.

• Marriott International believes it can realise $250m of annual cost savings through its $13bn merger with Starwood

• Times quotes former Chancellor George Osborne as warning PM Theresa May not to trigger Art 50 until late next year

• Other tweets: Eurozone PMIs a little behind estimates. The real world failing to live up to stock market expectation?

• Grocer 33 suggests ASDA’s price cuts don’t amount to much. Sainsbury basked cheaper last week – see email

• ASDA price cuts perhaps not putting as much cash into people’s pockets as hoped/expected. Not therefore as helpful to pubs, restaurants etc.

• FT highlights clothes buying disappointing in Sept. Blames ‘weather, the lure of eating out and full wardrobes’

• BBPA stats (see full email) belie ‘boozed up Britain’ headlines. Drinking down 18% over last 11yrs

• Nightclub admissions down 25% over 5yrs. Need to evolve offer. Easier said than done if you have 25yr lease on a big box unit

RETAIL NEWS WITH NICK BUBB:

• Boohoo: Today’s interims from mighty Boohoo are notably strong and will drive further full-year profit upgrades, so it is not beyond the realms of possibility that the share price of our shrewd “Tip of the Year” could top 100p today, notwithstanding the incredibly good run they’ve had over the last couple of months! Sales growth was as much as 40% in H1, so Q2 (to end August) was barely any slower than the heady 41% growth seen in Q1 and it is not surprising that management has increased its full-year sales growth guidance again, to +30%/35%,  although this still looks conservative, notwithstanding the importance of Xmas trading and tougher H2 comps. UK sales growth of 38% is particularly impressive, given how difficult the UK clothing market has been, but International is now 36% of total sales and the US segment has been broken out for the first time. Encouragingly, despite significantly lower gross margins as result of more promotional pricing, Boohoo has achieved a good degree of operational leverage, so the EBITDA margin increased to a healthy 13% in H1 and EPS soared by 124%. And the statement also notes that management are considering exercising the lucrative option to buy the associated Online fashion business Pretty Little Thing. That will no doubt be discussed at the 9am analysts meeting…

• Card Factory: Given declining High Street footfall, Card Factory did well to grind out 0.2% LFL sales growth and 5% EBITDA growth in the first half (to end July), but shareholders will be pleased to hear about another special dividend of 15p. The new CEO Karen Hubbard says “Trading in recent weeks has been similar to the trends seen in the first half, with encouraging continued growth in average spend. We approach the important final quarter with confidence in the quality and value of our offer, including our new Christmas ranges, and remain confident of delivering full year underlying profit before tax within the range of expectations”. There is a 9.30am analysts meeting, but we suspect that the Boohoo meeting will be better attended (albeit both companies now have a market cap of just over £1bn)…

• Today’s Press and News: We haven’t had time to read all the papers, as we have to wend our way to the Boohoo analysts meeting, but the Aldi UK 2015 results dominate the coverage, with the Daily Mail headline “Aldi’s £300m bid to topple Waitrose” (“It’s going posh and wants a store on every High Street”). The Business editorial in the Guardian thunders that Aldi is not going away as a threat to the big supermarket chains, despite its slightly falling profits, and the Times highlights its plan to refresh its stores. The Times and the Guardian both flag that Sainsbury’s is testing a bicycle delivery service in south-west London, promising to get groceries to customers within one hour. And the FT market report notes broker downgrades on N Brown and Kingfisher yesterday.

• News Flow This Week: The monthly CBI Distributive Trades survey for “September” is out later this morning. Tomorrow brings us the Sainsbury Q2 update, as well as the Moss Bros interims and the MySale finals. Then the GFK Consumer Confidence survey for September is out first thing on Friday.

ALMR Christie & Co Benchmarking Report – additional costs could undermine sector growth

ALMR

If you would like to read the latest Industry News and Corporate Activity, please click on the following link     http://www.propelinfonews.com/selecttemp.php, before 9.00 am for yesterdays News, click on the link after 9.00 am for latest Weekday’s News

ALMR Christie & Co Benchmarking Report – additional costs could undermine sector growth 

Rising operating costs, particularly payroll costs threaten to undermine the growth of an evolving and innovative sector, according to the ALMR Christie & Co Benchmarking Report 2016.

The ALMR Christie & Co Benchmarking Report benchmarks operating costs, market trends and sector performance and is the most comprehensive study of its kind in licensed hospitality. The tenth edition of the report shows the average costs associated with running a pub at a seven-year high, with payroll costs accounting for almost 30% of turnover.

The report also underlines the continued evolution of the licensed hospitality sector with food sales now accounting for 32% of revenue.

ALMR Chief Executive Kate Nicholls said: “The 2016 ALMR Christie& Co Benchmarking Report has been the largest, most comprehensive edition to date giving incomparable insight into the costs of doing businesses in the licensed hospitality sector.

“In terms of revenue, we are seeing results that back-up the ALMR’s recent Future Shock Report showing that customers are increasingly moving towards food options and away from drinks. Food sales now account for 32% of turnover with wet sales making up 61%, the lowest in the history of the Report.

“These are encouraging results for the sector, but evidence of rising costs coupled with uncertainty following the EU referendum, threaten to undermine the good work businesses are carrying out and could potentially derail investment in venues and staff. Operating costs now stand, on average, at 49.3% of turnover up from 47.7% in last year’s survey. Payroll costs now stand at 27.8% of turnover, a substantial amount with payroll costs set to rise over the short and medium term. Our recent employment survey showed tight profit margins of around 8-12%; a 1.5% increase in costs could reduce them by 11%.

“With the Government looking to introduce an Apprenticeship Levy and increases to the rates of National Living and Minimum Wages, clearly some pubs and bars are going to absorb these additional payroll costs. Businesses need confidence and certainty in order to plan and invest, but uncertainty over the UK’s exit of the European Union could undermine confidence in the sector and threaten investment. Sector recession in 2008 had a two year drag on growth and investment and turbulence following the triggering of Article 50 could have a similarly negative effect.

“The Government will need to take this onboard as it considers placing additional financial burdens on businesses which could undermine investment in venues and staff members.”

Gross profit margins on food sales were down from last year’s record levels to 61.5%, as operators were unable to fully pass on cost inflation to customers. This casts doubt over their ability to pass on increasing labour and legislative costs, which could threaten future profitability.

Neil Morgan, Managing Director – Pubs & Restaurants at Christie & Co said, “In all sectors, operators who can adapt will be the winners going forward. High Street venues are evolving, and their unique presence in the centre of the UK’s towns and cities allows savvy operators to promote daytime trade, whilst simultaneously positioning themselves to benefit from the vibrant evening economies on the circuits in which they are located. However, as these segments become increasingly competitive, we may see operators having to fight harder to maintain their market share, which in turn could reduce margins and profitability.

“In the short term, costs are expected to rise due to currency fluctuations and more expensive imports, and changes in consumer confidence could also impact on levels of discretionary spend.

“Christie & Co is delighted to not only sponsor the ALMR Benchmarking report but also add our insight and observations making this one of the most informative industry reports of the year.

“As a company we value, appraise or transact on over 9,000 licensed businesses a year, therefore the ALMR and its members can be assured our insight is based on the reality of the market and our direct involvement with the industry.”

ALMR, Unfair legislative amendments will restrict growth

ALMR

If you would like to read the latest Industry News and Corporate Activity, please click on the following link     http://www.propelinfonews.com/selecttemp.php, before 9.00 am for yesterdays News, click on the link after 9.00 am for latest Weekday’s News

Unfair legislative amendments will restrict growth

Responding to proposed changes to the Policing and Crime Bill, the ALMR has reiterated its call for the Government to rethink its approach to the late-night levy and to promote partnership schemes to avoid increased costs for businesses.

Amendments, due to be debated by the House of Lords at Committee stage, would allow for the late- night levy to be restricted geographically, enable Police and Crime Commissioners to request a levy consultation and require local authorities to publish information on how levy-raised funds are spent.

ALMR Chief Executive Kate Nicholls said: “These amendments shift the legislation further away from the Government’s stance in its original guidance; that the late-night levy should only be a last-resort, when other options have been exhausted. These new measures would introduce a degree of transparency, but this sort of punitive measure could quickly become the first port of call for local authorities.

“Allowing the levy to be restricted geographically and giving PCCs the power to request a consultation could potentially make it much easier for a council to introduce a levy. The ALMR has consistently opposed the introduction of a blanket tax on businesses and we continue to urge councils to explore partnership schemes before considering the levy. Currently, Cheltenham Council is looking at scrapping its levy in favour of a Business Improvement District. The levy may not have the intended effect of addressing any alcohol-related concerns but will impose a significant financial burden on pubs and bars and restrict investment and growth.

“These amendments – like the CIPs in 2004 – have been introduced at the 11th hour, with no detailed public consultation. They could significantly extend the tax on businesses, and ignore the principle that regulators should have regard to economic growth.

“CIPs have succeeded only in adulterating the planning process and ignore the context of licence applications. All CIPs over a decade old need to be reviewed to ensure they are still valid. The Government has missed an opportunity to amend legislation of CIPs to ensure they remain suitable and relevant.

“We need a clear legal commitment that the levy will only be pursued as a matter of last resort and that councils will support local businesses, have regard to growth and act impartially and fairly. We are disappointed that the Government has missed an opportunity to make the legislation fit for purpose by introducing evidence and hearing requirements that will support growth in their areas.”

Pub trading surveys, costs, hotel spending & other

Langton Capital

If you would like to read the latest Industry News and Corporate Activity, please click on the following link     http://www.propelinfonews.com/selecttemp.php, before 9.00 am for yesterdays News, click on the link after 9.00 am for Weekday’s News

 20 Sep 16 – Pub trading surveys, costs, hotel spending & other:

 

A DAY IN THE LIFE:

Bar bells feature in many areas.

That’s the idea that there’s a lot of stuff at one end of the spectrum and a lot at the other – but very little in the middle – and here I’m thinking about business books.

Because there are a lot of books about success – How I Made it Happen (or the like) by Richard Branson, Warren Buffett, Sam Walton, Ray Kroc etc. – and there are a lot about mega-failures (Enron, Worldcom, LTCM, Madoff etc.) but there’s very little about modest success and there’s even less about what steps to miss out if you want to avoid failure.

And this is perhaps important because few of us (hopefully) are afflicted by the X-Factor illness whereby we think we’re the next Elvis (or Sam Walton, Ray Kroc etc.) but most of us could do with a few tips on how best to succeed and how to prevent ourselves from pancaking straight onto the pavement.

This, of course, suggests that there’s a gap in the market for books about the dark side of business and Langton can feel its literary horizons opening up. The short version might simply feature the advice not to be a short-sighted, blinkered, arrogant, entitled bum-hole but we’re sure we could pad that out. And as for a title, whilst ‘You Too Could Be A Failure Like Us’ does present itself, we’d be open to other suggestions. On to the news:

RECENT WEBSITE ARTICLES:

• August Tracker could/should have been better – here

• The weather in August – here  

• Over-expansion issues – here

• Email, tweets etc. – here

PUB, RESTAURANT & DRINKS PRODUCERS:

• ALMR / Christie Benchmarking Reports concludes ‘additional costs could undermine sector growth’. Survey suggests ‘rising operating costs, particularly payroll costs threaten to undermine the growth of an evolving and innovative sector.’

• Benchmarking Report suggests food now accounts for 32% of sector turnover. ALMR’s Kate Nicholls says ‘the 2016 ALMR Christie& Co Benchmarking Report has been the largest, most comprehensive edition to date giving incomparable insight into the costs of doing businesses in the licensed hospitality sector.’ She adds ‘in terms of revenue, we are seeing results that back-up the ALMR’s recent Future Shock Report showing that customers are increasingly moving towards food options and away from drinks. Food sales now account for 32% of turnover with wet sales making up 61%, the lowest in the history of the Report.’

• Benchmarking Report suggests ‘evidence of rising costs coupled with uncertainty following the EU referendum, threaten to undermine the good work businesses are carrying out and could potentially derail investment in venues and staff. Operating costs now stand, on average, at 49.3% of turnover up from 47.7% in last year’s survey. Payroll costs now stand at 27.8% of turnover, a substantial amount with payroll costs set to rise over the short and medium term. Our recent employment survey showed tight profit margins of around 8-12%; a 1.5% increase in costs could reduce them by 11%.’

• ALMR on costs: The ALMR’s CEO Kate Nicholls continues ‘with the Government looking to introduce an Apprenticeship Levy and increases to the rates of National Living and Minimum Wages, clearly some pubs and bars are going to absorb these additional payroll costs. Businesses need confidence and certainty in order to plan and invest, but uncertainty over the UK’s exit of the European Union could undermine confidence in the sector and threaten investment. Sector recession in 2008 had a two year drag on growth and investment and turbulence following the triggering of Article 50 could have a similarly negative effect.’

• Ongoing evolution. Christie & Co reports ‘in all sectors, operators who can adapt will be the winners going forward. High Street venues are evolving, and their unique presence in the centre of the UK’s towns and cities allows savvy operators to promote daytime trade, whilst simultaneously positioning themselves to benefit from the vibrant evening economies on the circuits in which they are located. However, as these segments become increasingly competitive, we may see operators having to fight harder to maintain their market share, which in turn could reduce margins and profitability.’

• Christie says costs will ‘rise due to currency fluctuations and more expensive imports, and changes in consumer confidence could also impact on levels of discretionary spend.’

• Small brewer tells Langton input cost of materials has risen 35%.

• A new report from the Local Data Company points to a ‘dramatic’ 15% fall in the number of shop openings in the first half of the year. The LDC attributed said the fall was most likely due to uncertainty in the run-up to the EU referendum during what is usually a busy period for openings.

• JDW yesterday bought back 31,500 of its own shares for cancellation at an average price of 913.5p

• IPOs coming thick & fast, Krispy Kreme UK, Hollywood Bowl, City Pub Co on top of recent joiners Eclectic (now pier co), Revs etc.

• Payday lender CFO Lending has been ordered to repay £35m to its borrowers following a FCA investigation. The firm was found to have ‘serious failings’. It took money from some clients’ bank accounts without permission and charged some borrowers more than they owed. The FCA said ‘we discovered that CFO Lending was treating its customers unfairly and we made sure that they immediately stopped their unfair practices. Since then we have worked closely with CFO Lending, and are now satisfied with their progress and the way that they have addressed their previous mistakes.’

• The Co-op will now sell only British own-label bacon and lamb.

• Costa Coffee has installed its 6,000th self-service machine. It has been adding machines at around 70 per month for 5yrs

• Loungers will open its 14th site of the year tomorrow, kicking off a spate of new openings that will take its total for 2016 to 20.

• Chipotle Mexican Grill has appointed Jim Slater (ex-Costa Coffee, Bombay Sapphire Club) as the company’s managing director in Europe. Steve Ells, Chipotle founder, chairman, and co-CEO commented: ‘Jim not only believes in our commitment to change the way people think about and eat fast food, but he also celebrates our vision of building teams of top performers empowered to achieve high standards. We have great confidence in his abilities and expertise, and believe his leadership will help us enhance and grow our business in Europe.’

• Krispy Kreme’s London IPO next month will value the firm at around £200m.

• Marks & Spencer is trialling in-store click-and-collect lockers at its Teddington Simply Food store until the end of the year.

LEISURE TRAVEL & HOTELS:

• The mayor of New York City has promised a ‘very substantial’ police presence following Saturday night’s bomb blasts, which left 29 injured. Mayor di Blasio said: ‘New Yorkers are very smart and very practical. They’re going to see a very substantial police presence – a well-armed, well-trained Critical Response group, Strategic Response Group – Critical Response Command, Strategic Response Group.’ The FCO has not changed its travel advice.

• UK hotels have ramped up their refurbishment spending by 57% in the past year, from £1.03bn to £1.62bn, as competition increases. Business financiers Funding Options suggest online, low-cost competitors such as Airbnb are driving the shift alongside increasingly demanding customers looking for extra services and infrastructure such as free and constant Wi-Fi, spa treatments, and a wider selection of dining options.

• The British Hospitality Association has backed BIS committee chairman Iain Wright MP’s letter drawing attention to unscrupulous landlords taking advantage of sites like Airbnb. In his letter to Sadiq Kahn, Wright pointed out that home sharing platforms such as Airbnb ‘unfair competitive advantage over other providers of accommodation.’

• Profit projections in HotStats’ latest Hotel Market Profitability Forecast Report shows that some key markets are becoming less optimistic.

• Uber is rolling out scheduled rides to eight UK cities following its launch in London last month.

• Lyft expects self-driving cars to make up the majority of rides within five years.

• UK travellers may lose healthcare reciprocity if UK fails to stay in EEA post EU exit. EEA insists on freedom of movement

OTHER LEISURE:

• Pinewood Group has announced that the scheme by which it will be taken over passed a shareholder vote yesterday.

• Electra Partners to IPO Hollywood Bowl, price set at 160p. Electra to hold 18% of the company post flotation

• Online gaming operator Stride Gaming has guided to full year revenue of £47m (FY 15: £27.8m) and EBITDA of £12.3m (FY 15: £7.3m). Eitan Boyd, Chief Executive of Stride Gaming, commented: ‘We are delighted with the organic growth from our underlying business which remains robust. This, coupled with the completion of our recent acquisitions, means we have significant scale, increased market share and are now the fourth largest online bingo operator in the UK. With these positive developments in mind the Company looks forward to the future with confidence.’

FINANCE & MARKETS:

• Business confidence fell in July post Brexit vote per Lloyds survey. Says index reflecting short term expectations of sales, orders and profits fell to 12% from 38% in January, its lowest level for four years.

• Lloyds reports small business owners in areas that voted Remain were more nervous than in areas that voted Leave, such as Wales

• Commercial property stabilising. Kames Capital has cut the value of its fair value adjustment from 10% to 5% on its property fund. Henderson reported to be set to reopen its property fund

• BBC reports UK financial institutions could lose their passporting rights if UK leaves EEA. The latter insists on freedom of movement. German central bank head Jens Weidmann has said some institutions may be obliged to re-locate from London. Passporting rights are ‘tied to the single market and would automatically cease to apply if Great Britain is no longer at least part of the European Economic Area’ says Mr Weidmann. He continued ‘Frankfurt is attractive and will welcome newcomers.’

• Mitie shares down yesterday as Brexcuse featured in its trading update.

• Oil around $45.80 per barrel for Brent Crude.

• World markets: UK and Europe higher yesterday but US down. Far East mostly higher in Tuesday trade

YESTERDAY IN A NUTSHELL – SELECTION OF TWEETS, LIVE TWEETS ON WEBSITE:

• DP Poland has this morning reported H1 numbers saying ‘store opening momentum continues to build’ and 69% is online

• DPP now seen ‘15 consecutive quarters of double digit like-for-like System Sales growth, Q4 2012 – Q2 2016’.

• DPP H1 LfL system sales +28%. Current trading (July & Aug) +24%. Total H1 sales +57% on H1 last year

• DPP re outlook and current trading: Says ‘growth over the last two months has continued in the same vein as the first half’

• Telegraph reports bars & restaurants ‘came to the rescue of Britain’s beleaguered high streets last month’

• Small brewer tells Langton ‘our costs [grain etc., not labour] have risen by 35% and prices will have to rise’.

• City Pub Company has announced plans to float on AIM late next year after posting a 36% increase in first half sales to £12.1m

• McDonald’s might have to pay nearly $500m in back taxes to Luxembourg as a result of the ongoing European Commission’s tax probe

• Hollywood Bowl has priced its initial public offering at 160p per share, giving it a market capitalisation of £240m

• ICAEW reports ‘the post-vote period of complete confusion shows little sign of abating

• Sunday Times reports EU may take legal action to prevent UK negotiating trade deals with other countries until it has left the EU.

• Other tweets: Interest rates. Chance of a Fed rate hike this week said to be 12%. Chance of one before year-end still in the mid-50s

• Grocer 33 shows Tesco still cheaper than ASDA. So much for the latter’s price cuts. See Nick Bubb retail section http://www.langtoncapital.co.uk/

• Athleisure is new big trend. Pretty young things probably look OK in London but Lycra may face more of a challenge in Scunthorpe, Barnsley

• Next says can’t read retail trends as ‘nobody is buying our winter ranges’. Clearly weather influenced, things should change this week

• BRC says High St > Retail Parks. Former helped by pubs & bars but restaurants on the latter, e.g. RTN, not doing so well?

• DPP stats look stellar. But still a hockey stick, needs degree of faith. However, Poland is first world, pizza is pizza, outlook is good

• DPP & Brexit. Poland secure in EU and if Poles return to homeland, could be good for DPP.

• Bar bell politics. More at the left, more at the right. Crazy 70s Labour nutters or 50s Little Britain fictionistas. What a choice…

• Optimism vs pessimism. So you move to the Gherkin. Does that mean you all have a corner office, or will none of you?

RETAIL NEWS WITH NICK BUBB:

• Kingfisher: Ahead of today’s interims (for the 6 months to end July), the consensus forecast for underlying PBT was £430m, but Kingfisher have beaten that with an outcome of 436m, up 13.5%, helped by £17m of favourable FX translation movements. This is before lower than expected £18m of “transformation costs”, although the group is not changing its five year total transformation cost guidance of a hefty £800m. Véronique Laury, the CEO, says: “It has been a productive first half. We have delivered a good ‘business as usual’ result with both sales and profit growth. Performance has been driven by Poland and the UK, especially Screwfix, and a stable profit performance in France. This has been achieved alongside managing the start of our ambitious transformation plan, based on creating a unified company where customer needs come first. In the UK, the EU referendum has created uncertainty for the economic outlook, even though there has been no clear evidence of an impact on demand so far on our businesses. In France we remain cautious on the short term outlook”.

• French Connection: There is, needless to say, no reference whatsoever to any pressure from activist investors in today’s interim results statement from the struggling French Connection, but the embattled Stephen Marks has some good news to point to, even though the loss before taxation of £7.9m was only flat on last year (with an improved Retail performance offset by tougher trading in Wholesale and Licensing), given a continued strong sales performance in the first six weeks of the second half: “There is still much work to do in the rest of the year to move the business forward significantly but we believe the team we have in place and momentum we are seeing will help us to achieve this. As ever, the overall result will be dependent on the Christmas trading period but the second half of the year has started well”.

• McColl’s: At yesterday’s EGM McColl’s shareholders gave their overwhelming backing to the proposed Co-op deal, but the £117m acquisition is still subject to CMA approval and, although that shouldn’t be a problem, as it stands the first of the 298 Co-op convenience stores won’t be transferred to McColl’s until the end of January.

Understanding wine consumers by Paul Waller

Propel

If you would like to read the latest Industry News and Corporate Activity, please click on the following link     http://www.propelinfonews.com/selecttemp.php, before 9.00 am for yesterdays News, click on the link after 9.00 am for Weekday’s News

Understanding wine consumers by Paul Waller

Wine remains an incredibly important category for bars, pubs and restaurants in the UK. In fact, it’s worth £4.2bn a year and it’s in growth. At Crown Cellars, the specialist wine and spirits division of Carlsberg UK, we continually investigate key trends to ensure we provide the best range and advice to our on-trade customers. For our most recent project, we partnered with drinks and licensed trade research experts Cardinal to conduct a wine mirror study with more than 1,000 wine consumers and 500 outlets representing a broad cross-section of the on-trade, to discover whether there is any disconnect between them.

Overwhelmingly, the research revealed that there are two groups of customers who have very different attitudes towards wine. These two groups are differentiated by generations: millennials – or those born between the 1980s and 2000s – and those over 30.

Give me choice

One thing both groups have in common is that they would like more choice. However what they want to see on a menu can differ. Millennials want a style they recognise as they enter the category, after which they’re more likely to explore and won’t have the same misconceptions as older drinkers, for example they are much more likely to try German wine. Older wine consumers are more experienced and know what they like – this group wants to see a tiered range of their favourites.

When choosing the “right” wines, there is a need to cater for these differing preferences. More than one in four millennials wanted to see more Chardonnay while almost one in five over 30s wanted to see more Cabernet Sauvignon. Our research showed that multiple retailers are particularly in tune with what consumers want and have a strong appetite to list varietals that are more reflective of current consumer trends. For example almost three times as many multiple operators were considering listing more Chardonnay and the same number for Cabernet Sauvignon. A key challenge for operators is to offer more choice without adding further complexity. This means carefully selecting a range, rather than providing a vast list that could be perceived as intimidating.

On average, customers wanted to see about 13 wines on a restaurant list, and as few as seven on a wet-led menu. In trade however, a significant number of outlets are listing many more. 49% of multi-site operators and 39% of independent free trade retailers list between 20 and 49 wines. In addition, 25% of independent free trade and 20% of multi-site operators stock more than 50 wines!

Navigation

Wine is a rich and diverse category, but with this comes complexity, and the consistent message from customers of all ages was “help me navigate”. In this area, when it comes to getting the basics right, the multiple retailers stood head and shoulders above the majority of the trade with almost 100% having a wine list in place compared with wet-led independent and leased outlets where less than 60% had one.

In addition, more multiple retailers listed their wine by style, which was the number one factor for millennials when choosing a wine. By contrast there was a disconnect between multiple retailers in terms of the importance of regionality, with more than 30% placing this as their top factor for customer choice, but just 11% of millennials said this was the most important factor for them.

Consumers are more likely to try a new wine if they are offered a small taster before they buy and this can work particularly well for the over 50s who trust their own palate – 40% said this was an important factor in choosing wine. However the trade significantly underestimates the importance of tasters and, one could argue, could take some learnings from other categories such as craft beer. Less than 20% of multi-site operators saw this as an important factor.

We also questioned the trade about training and while 90% of the multi-site operators offer at least a basic level of training, less than 30% of the rest of the trade did. Interestingly, our research also showed that consumers don’t tend to ask pub staff for advice on wine. We suspect this is because, although the multiple retailers are investing time and money in training, the majority of the trade is not, so consumers are unaware that some pubs will have this knowledge. Surely there are some easy wins for multiple operators here to differentiate themselves by shouting about their wine expertise?

There were some interesting learnings from the research but the key outtakes were:

Be focused – make sure your list offers the choice your customers demand without overwhelming them
Be clear – focus on flavour and style rather than region
Be proud – make sure you highlight the fact your staff have undergone wine training and are confident and correct in their advice
Paul Waller is director of Third Party Brands at Carlsberg