Mark Brumby, of Langton Capital, asks whether the good times are over for operators in London:
London trading has been great. It might be getting a little less so.
• LfL sales have been chugging along at 4%, 5%, 6%…
• Whilst extremely positive, capacity has been increasing, new units have been going on
• New entrants (vibrant, innovative, relevant) are opening units apace
• Occupancy costs have risen sharply; a lead-indicator, they may be a little off the top
• Hotels have slowed – albeit from record high occupancy, REVPAR levels.
• Partly a supply problem, they are still servicing an increased number of visitors
• Sterling weakness should have been a positive
• But MERL & some shops have suggested numbers aren’t what they might have been
Fuller’s comments today:
• Group reports ‘another excellent year…’
• But FY15 is over & comments re current trading hint at a slowdown
• Managed LfLs +5.6% in H1, +5.3% by wk43 and +4.8% for the FY. To wk10, they are +2.7%
• H1 Tenanted profits were +3% but +2% at FY. To wk10, they are down 2%
• Beer volumes were +1% at H1 but minus 1% for the FY. To wk10, they are down 5%.
• Before leaping to conclusions we should acknowledge:
1. April was poor across the industry but May was better.
2. Wk10 comps included Easter last year but not this
3. The weather can swing numbers +/- 20% LfL on a day-to-day basis
4. The group updates analysts at 11am.
• London is not ‘over’ but growth may have, at the very least, slowed
• YNGA & FSTA are obvious players but GNK/MAB are more London-heavy than is MARS