TheChek News Flow

Nielsen data suggest the Food/HPC market declined by 1% in the 4 weeks ending 27 November (vs flat YTD at 27 November). Positive volume growth was offset by continued deflation in Western Europe. 

■ Food sales were broadly flat in the 4 weeks, with mid-single digit growth in Soups and Tea, offset by high-single digit declines in Margarine and Baby formula sales. Personal Care sales declined by 1% in the period, with mid-single and double-digit growth in the Colour cosmetics and Cough & Cold categories, respectively, more than offset by mid-single digit declines in the Hair Care categories. Household Care sales declined by 4% in the period. 

■ Nestlé's sales decreased by 1% in the period, driven by mid-single digit declines in its Soup (55bps market share loss YTD at 27 Nov) and Chocolate confectionery (65bps market share loss YTD at 27 Nov) categories. Nestlé's Pet Care and Waters sales were up low-single digit in the period. 

■ Unilever's sales declined by 6% in the 4 weeks, driven by a doubledigit decline in its UK sales (continued reaction to pricing?). Home Care sales were down double digits in the period, driven by a tough comparator and the UK, whilst mid-single digit decline in Unilever Foods was driven by a double-digit decline in its Margarine sales. Personal Care (impacted by Soap/Shower Gel) and Refreshment sales remained negative in the period. 

■ Danone's sales declined by 6% in the period, with a sequential decline in its Yogurt category – Activia's sales were down high-single digit despite the relaunch of the brand. Mid-single digit sales decline in Danone Waters was impacted by a strong comparator, whilst Baby formula sales (down high-single digits) continue to be impacted by a shift to direct sales by manufacturers due to tightening regulations in China. 

■ L'Oréal's sales declined by 1% in the 4 weeks, driven by a mid-single digits decline in its France sales. High single digit sales growth in L'Oréal's Colour cosmetics (130bps of market share gain) category was offset by mid-single digit declines in its Hair Care categories.

Preliminary RevPAR data for December 2016 are in line with our scenario and seem to confirm that the market is bottoming out. RevPAR is in low negative territory at -1.4% (vs. November +1.0% and -5.9% in the first ten months of the

year), but we note that COP 21 was held in Paris in December 2015. We believe the French market should be helped by easier comparables in 2017E. Accor (Buy) is the most exposed company to France (c.22% of its total EBIT).

*RevPAR down 1.4% in December 2016

HotelCompSet data shows Preliminary RevPAR in December 2016 down by 1.4% in France, with an occupancy rate of +2.0 pts and ADR of -5.1%. This performance is in line with our scenario of RevPAR being down by low single-digits in December (climate change event COP 21 was held in Paris in the first two weeks of December last year). Nevertheless, this highlights that trends are stabilizing in France, and it follows an encouraging month of November (+1.0%). It also suggests that RevPAR is down 5.1% in FY 2016E in France.

* Regions are robust, Paris improving but still negative

By area, Regions remain robust with RevPAR increasing by 3.6%. Performance in Paris is encouraging with RevPAR down 3.8% (the lowest decline in 2016). Ile-de-France (the Paris’ region) is weak with RevPAR down 10.8%.

* Budget segment is outperforming, upscale improving

By segment, budget hotels show the best performance with RevPAR up 1.3%. Economy and midscale segments are mixed with RevPAR decreasing by 3.0% and 2.1%, respectively. We note the encouraging figure in the upscale segment with RevPAR only slightly down (-0.8% in December vs. -9.1% YTD).

* We rate Accor as Buy with a target price of €41

Accor is the largest operator in France and derives about 22% of its total EBIT from France. We believe that better RevPAR trends in France, helped by easier comparables (with the terrorist attacks occurring in Paris in November 2015), should improve market sentiment. We maintain our Buy rating with a target price of €41 on Accor.