Industry News from a number of sources

By | October 6, 2016


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• JW Lees yesterday filed accounts for the year to 31st March 2016 showing sales of £64.1m (+0.2%), EBITDA £8.9 m (+1.6%) and operating profit £6.6m (+3.8%), a record year for the company by all three measures. The group says that it strengthened its senior management team during the year by hiring Tony Spencer as Director of Retail and Nicola Waring as the company’s first Director of People. The group comments ‘2016 has been a year of consolidation for JW Lees and, although we have not acquired any new sites, we have spent a record £5.3m on improving our pubs with the aim of building the best pub estate in the North West by raising quality, standards and service.’ MD William Lees-Jones comments ‘we are proud to be reporting a record year and our business is growing steadily. We remain hungry for acquisitions of both Managed and Tenanted pubs as well as hotels in the North West.’

• Tesco shares up on recovery. Rising pension deficit one of the rare blots.

• Vista Retail Support has found that contactless has overtaken chip and pin as the most popular payment method among students. It says that around 40% favoured the payment method & says that 13% of respondents said they would avoid a retailer altogether if they were unable to pay with one tap. Vista says ‘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. For canny retailers who have put the right solutions in place, however, the potential gains could be huge as local students become loyal customers.’

• Fleurets has suggested that operators face getting their fingers burned as record rents set across London reports Propel

• The ALMR has criticised government plans to ‘name and shame’ employers of non-UK nationals, adding that such a move ‘shows a lack of understanding of the way in which many operate’. Chief executive Kate Nicholls said: ‘Pubs, bars and restaurants do not actively recruit abroad seeking foreign workers, they recruit locally and it is unfair to imply that businesses are failing to support the UK workforce or failing in their duty to provide opportunities or training. Pubs, bars and restaurants invest a significant amount of time and money in their employees whether they are UK or non-UK nationals. Any implication that UK businesses are failing the UK populace by hiring migrant workers is unfair and uninformed.’

• Constellation Brands generated $1.04bn of operating cash flow and $676m of free cash flow in Q2 and now expects reported FY basic EPS of $6.25-$6.40. ‘The strong consumer demand for our portfolio continues to propel our business. During the quarter, we gained share and improved margins across our business, while continuing to make smart investments designed to fuel growth today and in the future. I am proud of our accomplishments in the first half of the year, which are enabling an increase in our overall guidance for the year,’ said Rob Sands, president and chief executive officer, Constellation Brands.

• JDW yesterday bought back a material 1m of its own shares for cancellation at 955p per share

• The ALMR has teamed up with the BII, Guestline, Inapub, and Stay in a Pub in order to highlight the growing importance of pub accommodation. ALMR Chief Executive Kate Nicholls said: ‘Pub accommodation is a hugely important, but perhaps overlooked, element of the licensed hospitality offering. It was one of the standout success stories of this year’s ALMR Christie & Co Benchmarking Report, showing the highest level of like-for-like growth across the whole of licensed hospitality.

• ‘There is a great deal of potential for pub accommodation to be a very lucrative revenue stream and the ALMR is looking forward to promoting improved levels of best practice and an increased focus on rooms for guests. We are looking to reframe the discussion around pub accommodation to promote staying in a pub as a feasible competitor to hotels.’

• New Home Secretary Amber Rudd tells Tories foreign worker (and student) numbers will be limited going forward

• Premium Bottled Ale September report suggests pricing down 0.7% with bigger moves at ASDA (-3%) & Morrison’s (-1%)

• PBA Sept report suggests number of lines on promotion down by 3.5% with uptick in promo activity at ASDA & Waitrose

• Property Week suggests London has lost its global property crown to New York ‘following a turbulent year that saw investment in the UK capital plummet.’

• AlixPartners growth co index shows newcomer Breakfast Club as the fastest-growing operator of any size. It says the all-day London-based business delivered annual compound Profit growth over three sets of annual accounts of 147.4%. The operator ‘now comprises nine outlets, including its biggest to date at Canary Wharf, plus a regional outpost in Brighton.’

• AlixPartners says UK out-of-home food and drink market is now estimated to be worth in excess of £80 billion.

• AlixPartners says ‘many expanding companies take the opportunity to collaborate with private equity (PE) groups who…are a significant partner in the eating and drinking-out market. A feature of PE players in this market is that many deliver deep sector knowledge and experience, and typically have access to a raft of senior operators, or ‘grey hairs’ through far-reaching contacts and previous investments. They therefore add substantial value not just through finance and funding, but also operations, property and managing fast growth and site rollout programmes.’

• British gin is a ‘global phenomenon’ as exports have surged in value by 166% and exports to the US have jumped by 533% since 2000, according to the WSTA’s. The value of British gin in its domestic market in the on- and off-trade rose by 21% and 12% respectively in the last year, while last month gin sales in the UK broke the £1bn barrier for the first time, although the authors of the report warn that gin makers must stand up for their interests in upcoming Brexit talks.

• Micro-distilled spirit Our/London has agreed a distribution partnership with Hackney Downs-based distillery Hi-Spirits. Our/London vodka is 37.5% ABV, with an RSP of £19 for a 350ml bottle. Dan Bolton, managing director of Hi-Spirits, said: ‘Our distribution expertise will make this authentic, premium vodka much more widely available. Our/London taps into long-term trends in both the on- and off-trade for premiumisation, authenticity and provenance and consumer’s increasing preference for quality over quantity when enjoying drinks.’

• Revolution Bar Group says it is well-positioned at the ‘premium’ end of the on-trade to take advantage of the trend towards fewer, bigger nights out. The group linked its run of 12 consecutive quarters of LfL sales growth to a shift towards higher end, higher margin cocktails, higher spend per head, more food, and broader key trading hours.

• Shares in RBG are down 20% from its October ’15 IPO price of 192.50p, at 154p, modestly valuing the group on a forward PE of 9.27 times and giving its shares a well-covered 3.65% dividend yield.

• Operationally, its large-format c6000 sq ft layout has the potential to roll out across secondary towns and more affluent suburbs, while its Revolucion de Cuba brand, which grows from 9 to 13 sites in the next few months, gives expansion plans added momentum. Since the bar group is cash-generative, profitable, and debt free, it can finance new units, which have an RoI of 38%, while investing in existing sites.

• Revolution’s pipeline of new sites has grown to 11 properties with 140 potential units being looked and its management has expressed a desire to grow this pipeline until it has 2-3 years of growth mapped out. Future sites will have similar pre-opening and refit costs to existing sites (of c£200,000 and £1.5m, respectively).

• Ryanair says it will cut fares by up to 12% in the next six months after seeing traffic rise by 13% to 10.8 million passengers for September.

• The number of incidents of ‘unruly behaviour’ on airlines increased sharply last year to almost 11,000, according to IATA. Many cases involved alcohol being smuggled onto flights, and IATA CEO Alexandre de Juniac wants more governments to ratify the Montreal Protocol 2014, which helps ‘close gaps in the international legal framework dealing with unruly passengers’.

• Egyptair’s weekly direct air link between London and Luxor was re-established on Monday following a suspension since May. Egyptian tourist chiefs are hoping the UK will lift its nearly year-old ban on flights to Sharm el Sheikh, which came into force in the wake of the terrorist downing of a Russian charter flight killing all 224 people on board. Flights from Germany resumed on Sunday while Turkish Airlines is to return with a service from Istanbul after an 11-month suspension. Eleven flights from Italy are also scheduled for October.

• Facebook has launched a Marketplace feature that could rival sites such as eBay and Craigslist. The feature will debut in US, UK, Australia & New Zealand. Facebook says ‘in recent years more people have been using Facebook to connect in another way: buying and selling with each other. This activity started in Facebook Groups and has grown substantially. More than 450 million people visit buy and sell groups each month.’

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