A Day in the Life:

It’s hard to believe that we have more than a month to go before the referendum on the UK’s membership of the EU.

Because the debate, if the argument can be credited with so polite a term, seems to have been going on for months and there are surely only so many words that we can have made up prefixed by the letters ‘Bre’ before this thing is over.

I mean we’ve had ‘Brexit’ and ‘Bremain’ and now we’ve had the IMF warning rather tortuously about ‘Brexocalypse’ and it can be only a matter of time before we have one side or other threatening ‘Brarmageddon’ (OK that’s not ‘Bre’) and some other such nonsense.

And watching the talking heads from the depths of my arm chair from time to time am I the only one for whom the images of Boris Johnson and Donald Trump are gently morphing into one, that of a weirdly coiffured, vaguely blond nutter spouting somewhat repellent gibberish at every turn?

Anyway, on to more important things and what about the Mighty Hull City, heh? Three goals up going into the home leg and, disasters notwithstanding, another Wembley trip in the offing. And the City of Culture next year, what could go wrong? On to the news:

The News:

RECENT WEBSITE ARTICLES:

• Main features London hotels, slowing markets, Restaurant Group etc. Link to index page – here

PUB, RESTAURANT & DRINKS PRODUCER NEWS:

• Greene King Friday announced that it will seek to tap its secured financing vehicle. The group may be looking for as much as £280m

• GNK. More debt will increase fire power but hit debt/EBITDA ratios. Unless, of course, group buys more EBITDA

• Catching up on RNS reading brought it back to mind that Sainsbury said the move to big ticket spending would have worked its way through before end-2015. It said that in spring last year and, at the time, it seemed sensible. But it’s not proven to be correct and, as recently as last week, SBRY said that it still believed consumers were catching up on spending on large items, furniture, carpets, holidays etc. that they have deferred during the downturn. Worryingly the latter actually began some eight years ago.

• Patisserie Valerie. Group reports H1 numbers on Wednesday. Group’s shares down by 25% since Jan peak as growth euphoria has dissipated. Fan club largely intact even if it’s not quite our market. Trying to look at it from all angles and not to be blinkered on this one but, with the group’s shares trading at c26x this year’s numbers, it still looks expensive.

• Pat Val. Where are the freeholds, where’s the dividend (0.8%)? Would rather have our money in an asset backed pub operator.

• Joel Kissin, who built a multi-million pound restaurant business with Sir Terence Conran in the 1980s and 1990s, has said that plans to make service charges mandatory will raise the cost of restaurant meals.

• Talking of which, ETI, MARS & MAB all report numbers this week. Single or near single digit multiples & asset backing look good to us.

• Premier Foods, which earlier this year chased off potential bidder McCormick, reports full year numbers tomorrow

• Crowdcube has said that it will hold back from launching the world’s first crowdfunded IPO. Luke Lang told Business Insider: “I guess we continue to monitor that but the more that we look at it, the more you see how difficult it is. I know some of our competitors are starting to make noises about it — it’s a really difficult play.”

• RICS says projected turnover of pubs with new leases has risen 10% this year versus last according to the latest Pub Benchmarking survey.

• Deltic, formerly Luminar, has reported sales for the year to end-Feb up 8% at £101m with PBT up to £4.3m from £3.7m.

• Chartered Institute of Personnel & Development has said that wage growth is likely to be “stuck in the slow lane” until end of decade. It adds that Brexit uncertainty is impacting spending plans.

• Enterprise Inns Friday bought back 100k of its own shares. JDW bought back 125k at 701.75p

• The Restaurant Group is launching a trial with Deliveroo next month at 12 Chiquito sites and has ‘every intention’ of introducing the partnership to other brands. The Restaurant Group has recently launched a review into why 26.8% of shareholders at its AGM voted against the directors’ remuneration report. The Frankie & Benny’s operator has had a bruising 2016, with successive profit warnings taking a toll on its share price.

• Patty & Bun is to open an 805 sq ft split level site at 36 Redchurch Street in June, bringing the burger chain’s number of sites in London up to five. Speaking to MCA, Joe Grossman said the new site will have a 2am late license, while a sixth has already been signed for with the help of a private investor.

• Shake Shack’s stronger-than-expected trading update on Thursday was well-received by investors, with sales up 9.9% for stores open for at least 24 months. Analysts had pencilled in just a 5.3% increase. Total revenues jumped 43.3% YoY to $54.2m, beating expectations of $52.2m, helping the company swing to a net profit of $3.4m, from a loss of $11.3m in the same quarter in 2015. Full year sales forecasts have been bumped up from $237m to between $245m and $249m.

• Greg Mulholland has said his legal advice suggests there was no need to delay the introduction of the pubs code due to ‘drafting errors’. Mulholland commented: ‘This is BIS’s mistake, and it is their responsibility to support the tenants they have once again let down. The British Pub Confederation is now calling on BIS to compensate those tenants who are missing out on the Market Rent Only option. BIS should also join the British Pub Confederation in calling on the six large pub owning companies the Code will regulate to honour the original date of the Code, offering tenants the Market Rent Only option set out in the SBEE Act from 26 May.’

• The Casual Dining Group is preparing to open the first regional high street site for its Oriel brasserie chain – a 130-cover restaurant in Chislehurst, Kent, writes MCA. The menu, created by CDG executive chef Martin Caws, will place an emphasis on classic French dishes.

• Pernod Ricard is reorganising its US structure and teams, with a renewed focus on premiumisation, as it looks to generate sustainable market share growth. The drinks giant plans to reorganise its marketing around four ‘key moments of conviviality’, represented by the ‘Let Loose’ (Abolut, Beefeater), ‘High-End Drinks’ (Redbreast, Midleton, Powers, The Glenlivet), ‘Hanging Out’ (Malibu, Kahlua, Seagram’s), and ‘Out to Impress’ (Avion, Martell, Chivas, Royal Salute) units.

• Aldi is launching a ‘Store of the Future’ concept in South Germany, which will include coolboxes, coffee machines, and improved display areas.

LEISURE TRAVEL:

• Sunday Times reports that caravan operator Parkdean is ‘laying plans for a £1bn sale or stock market float’. The operator, which has 73 camps across the country, has grown recently via the acquisition of Park Resorts. The group is chaired by former Whitbread CEO Alan Parker. John Waterworth, CEO, was with the company when it was last listed and CFO Ian Bull filled the same role at Ladbrokes and Greene King.

• In a full and frank interview with the Sunday Times, Thomas Cook boss Peter Fankhauser says the co should have apologised earlier for the accident that left two children dead after a family holiday to Corfu in 2006.

• Thomas Cook CEO tells Sunday Times market is difficult but the ‘summer exodus’ is looking ‘stronger than it has in recent years’. Says recent terrorism incidents & other disruption have reinforced the benefits for the consumer of having the support structure of a packaged holiday.

• All Leisure to go private. The group has said that 76% of the register, basically the directors, has agreed to delist the company. ALLG says ‘on 15 February 2016, the Board of All Leisure announced that it was actively considering delisting from the AIM market. As a result of a review of the benefits and drawbacks of being a quoted company, the Board has concluded that the cancellation of admission of its Ordinary Shares to trading on AIM…is in the best interests of the Company.’ It says it will hold an EGM on 8 June and says ‘the Company has received irrevocable undertakings from certain Directors and certain Shareholders…representing approximately 76.1 per cent. of the Ordinary Shares at the time of this announcement, to vote in favour, or procure that their Ordinary Shares are voted in favour, of the Cancellation.’ It says trading in the group’s
shares will cease at close of business on 15 June 2016.

• STR’s April 201 Pipeline Report shows 145,707 rooms in 964 projects Under Contract in Europe, representing a 5.5% increase in rooms Under Contract year-on-year. The region reported 63,323 rooms in 440 projects In Construction for the month, with London, Istanbul, Moscow, and Berlin proving to be some of the region’s key markets.

• Some 506,000 rooms in 4,125 projects were Under Contract in the United States during April, up 14.6% compared with April 2015.

• Berlin’s city government has banned most holiday flats in a measure that has proven popular with Berliners but less so with flat-sharing sites such as AirBnB. Critics call the law an anti-business infringement of property rights.

OTHER LEISURE:

• The head of Fifa’s independent audit committee has resigned in protest at what he calls leadership-led attacks on proposed reforms. Domenico Scalaleft his post after moves by the Fifa Council to control the nomination of members of independent oversight bodies.

• Sportech has announced that HMRC is seeking leave to appeal the latest VAT judgement in order to take it to the Supreme Court. Sportech says it should hear whether permission to appeal has been granted within the next two weeks. It will ‘provide shareholders with any further updates in due course.’

• The CMA is due to rule this week on the proposed merger between Ladbrokes and Coral. It is thought likely that it will demand the sale of 100s of shops.

• Disney has invested over $14bn in its theme parks over the last 5yrs (The Economist).

FINANCE & MARKETS:

• Oil price pushing on. Trading at around $48.50 per barrel.

• Eurozone growth has been revised down to 0.5% in Q1. Germany performed well but most economies reported slower (or negative) growth

• IMF boss Christine Lagarde reported Friday that there was no economic upside to a Brexit. She said the impact would range from “pretty bad to very, very bad”.

• European car sales rose by 9% in April compared with a year ago.

• US retail sales jumped by their largest amount in a year in April. Car sales were particularly buoyant

• The Economist quotes Hedge Fund Research as saying HFs lost 0.8% in Q1 2016 after fees following on from a 1.1% loss in FY 2015

• Loan problems brewing. Some 86% of new car buyers in US take a loan. Only 55% buying a second hand car (from a dealer) do. Virtually nobody buying a car from another individual takes a loan but various P2P operators are trying to create a niche in this part of the market. Might they not be loading debt upon debt upon debt?

• Landlords, who rushed to buy properties in order to let them out pre the 5 April Stamp Duty hike, are said to be scrambling to rent them out

• Bank Governor Mark Carney has told the Andrew Marr Show that he was right to refer to Brexit risks. Mr Carney denies that he or the Bank are trying to influence the way that people vote on 23 June.

Retail Roundup from Nick Bubb:

Saturday Press:
For the first time in ages, there was nothing about BHS and Philip Green in the Saturday papers, with the front pages focusing on the new legal uncertainty about whether parents can take their kids out of skool during term time…The main Retail story was the £3m bonus for Dave Lewis at Tesco, with the Guardian querying whether it was justified in view of the weakness in the Tesco share price, whilst the Business editorial in the Times (which noted separately that Tesco staff will also share a big bonus) bemoaned the fact that Tesco shareholders are still not getting a dividend. In other news, the Daily Mail flagged that Monsoon paid out a huge dividend last year despite losing money and highlighted, a little bizarrely, that Next’s dividend yield is as high as 26% based on its share price 10 years ago (?), whilst the Guardian noted that Mike Ashley is tipped to win the
bidding for Austin Reed and the Times had a profile of former Sainsbury CEO Justin King (and his new role in charge of the business portfolio of the private equity fund Terra Firma). And the Fashion correspondent of the FT Weekend Supplement said that M&S may have found a winning formula, with its “see now buy now” approach and plans for merchandising by “look” not sub-brand. Finally, the success of the Motorpoint IPO was a big talking point in the stockmarket reports, notably the Daily Mail, and also got the attention of Lex column in the FT, which concluded that “Compared to Pendragon and Vertu…Motorpoint shares look dear. But with better prospects for growth there’s no reason for that gap to close”.

Sunday Press:
BHS and Philip Green returned to centre stage in the Sunday papers, with the Sunday Times highlighting that Goldmans has been ordered to appear before the Select Committee inquiry on May 23rd to account for its role in the disastrous sale of BHS to Retail Acquisitions, whilst the Mail on Sunday noted that the advisers to the ill-fated deal earned £8m in fees, the Sunday Telegraph flagged that there are still 4 bids left on the table (including Sports Direct and Edinburgh Woollen Mill) to save BHS from the scrapheap and the City Editor of the Sunday Express thundered that Dominic Chappell was “never a suitable owner of BHS”, despite his appearance on BBC Newsnight on Friday. In other news, the Sunday Telegraph highlighted that Monsoon owner Peter Simon paid himself a £27m dividend last year and its Questor column looked in detail at Marks & Spencer and concluded
that the shares are a Hold, whilst Midas column in the Mail on Sunday pushed the bullish outlook for Conviviality Retail. There were also several previews in the papers of the weak results expected to be announced by Burberry next week. Finally, the Observer had a double-page spread on Food Retailing, largely in the form of an interview with Tesco boss Dave Lewis (who trumpeted the fact that nobody would have believed him if he had said when he started that -5% LFL sales would be turned around), but it also had an article about the pressures on the “newly media-shy” Asda ahead of its Q1 results on Thursday, noting that “regaining lost ground won’t be a piece of cake” despite signing up TV chef James Martin.

Grocer Watch:
The guest retailer, Aldi, made a triumphant appearance in the widely followed Grocer “33” weekly supermarket pricing survey in Saturday’s magazine, smashing its supermarket rivals by selling no less than 31 of the 33 items at the lowest price…Overall, the Aldi basket of just £40.68 was no less than £10.68 cheaper than second-placed Asda (which was again less than 10% cheaper than Morrisons or Tesco). Having dumped its “Brand Match” scheme to go “EDLP”, Sainsbury trailed badly in 4th place, with a basket of £57.95 and Waitrose was in last place as usual, with a chunky £61.64 basket…The separate Grocer “Mystery Shopper” weekly survey on Store Service and Availability was won by Tesco, as its 60,000 sq ft “Extra” in Riverside, Dundee, topped the rankings, with a solid score of 79 out of 100. The Waitrose store in Abingdon came
in last, on 51 points (having got 0 out of 20 for stock availability, with 6 of the 33 items out of stock…).

Today’s Press and News: BHS and Philip Green are still in the news today…after the FT scoop that BHS’s administrators have told interested parties to improve their offers by tomorrow to stand a chance of buying the collapsed chain. The other big story is the latest survey from the BRC showing that footfall declined 2.4% in April compared with a year ago.

News Flow This Week: Tomorrow brings the Land Secs finals and the Lookers IMS update. Wednesday then brings the Burberry finals. The busy day, however, is Thursday, with the Asda/Wal-Mart Q1, the Mothercare finals, the Booker finals, the ONS Retail Sales figures for April and the Game Digital EGM vote on their refinancing. The Moss Bros AGM update is then on Friday. And at some stage this week the administrators should unveil the outcome of the bidding for BHS and Austin Reed…Nick Bubb – nicholas_bubb@hotmail.com

Yester-tweet – Yesterday in a Nutshell: Live Tweets on Website:

(SOME OF OUR) EARLY TWEETS:

• Coca Cola HBC reports ‘a good start to the year’, Q1 numbers show volumes stable ‘with an improving underlying trend’

• Coca Cola HBC sees ‘good growth in Nigeria, Romania and Poland [which] offset weak performance in Russia’.

• CCHBC Q1: Net sales revenue down 2.7% (down 3.6% in established markets and down 1.9% in developing markets)

• Shareholders at Restaurant Group give board poke in eye over pay. More than 26% vote against remuneration report.

• CGA Peach data indicates there is little sign of consumer confidence picking up, with a number of surveys pointing to a generally glum mood

• Intercontinental Hotels has confirmed the Sterling amount that it will pay to shareholders via a special dividend as 438.2p per share.

• Prelim. data from STR shows London hotels had flat April, w. occupancy down 0.7% to 80% as oversupply shows no signs of abating

• UK & Russia said to be reviewing their flight bans to Sharm el-Sheikh after Germany agreed to resume its services.