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Wed 5th Sep 2018 - Update: Fuller’s, The Restaurant Group, Starbucks
Fuller’s finance director steps down: Fuller, Smith & Turner, the London brewer and premium pub company, has announced that James Douglas has decided to step down from his position as finance director and will retire from the board in December 2018. Douglas and his family are moving to Germany, where his wife, Dr Anke Hoeffler, has been awarded a prestigious Humboldt Professorship. The search for a replacement is underway and we will keep shareholders updated. Chairman Michael Turner said: “The board at Fuller’s would like to thank James for his contribution to Fuller’s success during the last 11 years. James has been a valued and supportive member of the board. He leaves with our very best wishes and we all wish him every success in his future endeavours in Germany.” James Douglas added: “I have thoroughly enjoyed my time at Fuller’s – it is a truly great business with an exciting future. I wish Michael, Simon, my other board colleagues and everyone at Fuller’s continued success.”

Douglas Jack – it’s a case of The (trying to move on from) Restaurant Group: Peel Hunt leisure analyst Douglas Jack has described The Restaurant Group as The (trying to move on from) Restaurant Group to emphasise its focus on pubs as it attempts to evolve away from the volatile casual dining sector. He stated: “A third of the estate should be pubs and concessions in 2020E, sufficient to sustain 2% like-for-like sales, stable profits and dividends, provided current capex plans and the 6x net debt/Ebitdar are retained. That would be a similar investment case to that of the freehold pub companies, except with higher downgrade risk, higher P/E and EV/Ebitdar ratings, and lower dividend cover. H1/H2. 2018E forecasts require 3% like-for-like sales growth over the last four months. We estimate 1% growth over this period would equate to under £50m of PBT. Over the last four years, H1 has accounted for 42.5-47.4% of full-year PBT; applying that to 2018E gives a FY PBT range of £42m-47m. Like-for-like sales are volatile, having been -5.5% in January-March, -7% in the first half of July, and peaked at 2.4% over the last six weeks, helped by a 35% increase in weekend cinema box office in August (driven by family movies: Mamma Mia: Here We Go Again! and Incredibles 2 (Dunkirk and Spiderman last year), and growth in delivery, which has “good momentum”. Although we believe management’s rebalancing strategy is right, operational gearing is high (the Ebit margin is 6.5%) and some of the recent pick-up in like-for-like sales could soon reverse, bringing more downgrades. H1 PBT would have been down 35% without central cost reductions. We believe the potential for further cuts is limited. However, acquisitions should partially fill this gap and the like-for-like trend has improved, although it needs to stay at 2% or higher to avoid further downgrades, which are still likely, in our view. We are raising our recommendation to Reduce to reflect share price weakness, and our target price to 260p, equivalent to 13x P/E.”

Starbucks to open first Italian store on Friday: Starbucks will open it first store in Italy on Friday – the Starbucks Reserve Roastery will open in Milan. In many ways, the founder Howard Schultz told an audience of students in the US, when the roastery opens its doors and begins serving customers on Friday, it will represent a full-circle moment, both for Starbucks, and for him personally. His first trip to Italy in 1983 changed everything, he said. “I walked the streets of Milan and I was captivated, seduced, intoxicated by Italian coffee bars. There are 1,500 alone in the city of Milan alone, and they just swept me away,” Schultz said. “I rushed back to America with a great idea to replicate in United States, and everyone thought I was crazy.” The roastery in Milan is an homage to the Italian coffee culture that inspired Schultz. It’s also a celebration of the art and science of coffee Starbucks has worked for years to develop. Located in a historic former post office on the bustling Palazzo della Poste along Piazza Cordusio, it’s just a few blocks away from some of Milan’s most famous cultural and postcard-inspiring landmarks – the Duomo di Milano, Galleria Vittorio Emanuele II and Teatro alla Scala. Milan is the third Starbucks Reserve Roastery in the world; the Seattle Roastery opened in 2014, and Shanghai in 2017. “Seriously, when you do visit the roastery, I don’t think there’s a retail store in the world … that has created the atmosphere and expression in terms of the experience and what you will see and feel,” he said.

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