I would like to say how much I enjoy the e-mails from Langton Capital on a daily basis. I use the newsletter as an ideal way of keeping me up to date with what is going on financially in the drinks industry.
Tenanted pub company
Pub & restaurant trading, Deliveroo, IPOs, C&C & other:
A DAY IN THE LIFE:
A few years back what appeared to be an American lady advised me, a Yorkshireman, standing harmlessly in a pub in London (your honour) to eff off back to Ireland.
Just what elicited the suggestion remains shrouded in mystery but what came across clearly, was that the falling-down-drunk person’s understanding of the regional accents of the British Isles was somewhat off.
Because, she seemed to believe, if you’re not somewhere on a scale between Hugh Grant and Prince Charles, then you must be either a Cockney or an Irishman. And she’d decided that I was the latter and, moreover, that I would benefit from some advice as to where I should go and what I should do when I got there.
Still, water off a duck’s back and, as I was talking to a Liverpudlian at the time, I’ve consoled myself with the belief that she might have been talking to him. On to the news:
ADVERTISE WITH US:
Langton’s free email now carries adverts. See front page of website for today’s copy & contact us for further details.
CHANGED EMAIL FORMAT:
The Premium Email is unchanged. The Free Email is written and pre-sent the evening before. It may not include breaking stories nor Langton comment. See Twitter for in-day comment. Let us know if you would like an example of the Premium Email.
Prices: £295 for one subscription, £495 for multiple, both plus VAT. Or sign up for easy in, easy out monthly option:
PUBS & RESTAURANTS:
• Evidence, some anecdotal, other observations via the Press, trade bodies and individual companies, continues to suggest that, albeit weather-assisted, trade is currently buoyant – at least for those operators that have been able to reopen. There has been talk of queues waiting for some shops to open and Springboard says that footfall across UK shopping destinations was up 87.8% week-on-week last week. That is a) good but b) is measured from a low base. The near-doubling of footfall, however, is good news for the coffee and sandwich shops located nearby. York was busy, with certain roads pedestrianised and perhaps a little under half of units in the town centre appearing to be open. It is hard to judge these numbers on the ground and CGA maintains that, across the whole industry (restaurants as well as pubs) the number was nearer to 25%.
• In a statistic that effectively compares the severity of last year’s lockdown with the one that we are just exiting, Springboard said total retail footfall was up 330% from 11-17 April versus the same week a year ago. Overall footfall is still said to be around 25% below 2019 comparatives. This does not give the full picture as it is possible that people going out in 2021 are on more of a mission to spend than they were when they went out in 2019. Springboard says ‘these results provide concrete evidence of the desire of shoppers to return to bricks and mortar stores and destinations. The key issue for retail destinations will be whether this momentum can be sustained.’
• Langton comment: See premium email.
Other Covid news:
• Foodservice analyst Peter Backman says ‘as the covid waters recede we shall find out how much has changed.’ He says these changes will ‘shape the foodservice sector over the months and years ahead.’ He says he believes 15% or so of foodservice units will not reopen at all. There are other suggestions of an even higher percentage. Backman also questions whether there will ‘be enough competent, trained people around to work in the foodservice sector’ when it has reopened. Hundreds of thousands of staff have returned to their home countries with some estimating that the population of London alone has fallen by 700,000. Some but not all of these people may return.
• Backman asks how will delivery fare and evolve? He says it is here to stay but it will have to evolve. Whoever has downloaded a delivery app is unlikely to delete it just because restaurants have reopened. But the frequency of use could diminish. Backman says ‘dark kitchens, virtual brands, meal kits, and apps that give control back to operators, will all play their part.’ There is a widespread feeling at the moment that too much power has accrued to the delivery companies.
• Langton comment: See premium email.
• Working from home. HSBC has said top managers in its Canary Wharf HQ will now have to hot-desk as it is expected that not everyone will be in the office at the same time going forward. HSBC’s Noel Quinn says ‘hybrid working’ is inescapable. He says on LinkedIn ‘my leadership team and I have moved to a fully open-plan floor with no designated desks.’
Company and other news:
• Deliveroo shares down another 9p or 3.6% at 238p. They are now little more than half the 460p that was initially mooted as the top of the range of prices at which the company could float its shares. They came at 390p and are currently some 49% below that level.
• We mentioned yesterday that, on the heels of Deliveroo, Soho House, Music Magpie and Hawthorn Leisure, another company that may list its shares has been outed as Yo! Sushi. This is either a sign that demand for leisure shares is healthy or that the current owners want to get out (or both).
• Langton comment: See premium email.
• Coca-Cola yesterday reported Q1 numbers saying that sales had bounced on the back of increased Covid-19 vaccinations and fewer restrictions in several key markets. The company says that it generated $9bn in net revenues during the period, a 5 per cent increase year on year and ahead of estimate of around $8.6bn. Sales were up 6% on an organic basis. The company has retained its guidance that sales will rise by a high single-digit percentage this year. Net income for the quarter fell to $2.25bn, or 52 cents a share or 55 cents a share on an adjusted basis.
• April frosts may have cost the French wine industry as much as €2 billion per the Fédération Nationale des Syndicats d’Exploitants Agricoles
• The Garden Cider Company, has announced it is expanding its Doorstep Drop initiative to include local vineyards and distillers.
• China’s Luckin Coffee Inc is to raise $240 million from investors
• We usually look at confidence and job statistics. However, it is worth saying that the advent (or reintroduction) of 95% mortgages got a lot of attention yesterday. This may be marketed as either help to get first time buyers on the housing ladder or an attempt to further bolster prices. If the move is successful in reducing the size of deposits needed, then consumption (in pubs, restaurants and in other areas) could be boosted.
• Langton comment: See premium email.
Costs & prices:
• The latest Foodservice Price Index from CGA and Prestige Purchasing has suggested that ‘several months of falling food and non-alcoholic drinks prices are expected to come to an end as the hospitality industry reopens.’ Figures for a basket of products showed prices rose by 2.2% year on year in February, though prices in that month were down by 2.6% on January. The Price Index suggests that, as the economy reopens, ‘a repeat of the considerable firming of prices experienced during the sector’s unlocking in Summer 2020 can now be expected.’ Prestige Purchasing says ‘we expect prices to rebound as volumes recover, probably to above 2020 levels by later in the year. Operators would be well advised to seek price holds from suppliers whilst the current inflation levels remain benign. They should also avoid taking a renewal of pre-lockdown supply for granted, as the commercial impacts of the winter lockdown have been harmful to many supplier balance sheets.’
COMPANY RESULTS – COVERED IN YESTERDAY’S PREMIUM:
• C&C Group yesterday announced that its subsidiary, Matthew Clark Bibendum Ltd, became aware on Friday ‘that it was the subject of a cyber-security incident, which has impacted both Matthew Clark and Bibendum.’ The company says ‘MCB responded quickly, enacting its cyber-security response plan and shutting down all of its IT systems. A leading forensic information technology firm and legal counsel have been engaged to assist MCB investigate the incident and restore its IT systems as quickly and as safely as possible. The issue has not affected the IT systems of the wider C&C Group, which continue to operate as normal.’
• C&C says ‘due to the ongoing COVID-19 restrictions, MCB is operating at reduced volumes and, in order to minimise the impact of the incident on its operations, is temporarily supporting customers and suppliers manually, while IT systems are being restored.’ It adds ‘MCB is in the process of informing its customers and suppliers of the incident and the actions the Company is taking and has notified the relevant authorities, including the Information Commissioner's Office.’
• The Telegraph reported Monday that Yo! Sushi ‘is exploring a stock market listing as it invests in a major expansion into supermarkets and the US and seeks to navigate a post-Covid recovery.’ The company was purchased by Mayfair Equity Partners for £81m in 2015. The Telegraph reports the ‘company paid $100m (£72m) for Canadian sushi brand Bento Box in 2017 before merging with American rival Snowfox in 2019, giving the combined group an enterprise value of $400m.’ It says ‘the company has been shifting its focus in recent years to selling pre-packaged sushi and opening kiosks in supermarkets such as Sainsbury’s and Tesco. This month it secured a deal with WH Smith to start selling its Food To Go range in some of the retailer’s hospital and travel locations.’
HOTELS & LEISURE TRAVEL:
• The Telegraph reports that the government is considering VAT exemption for all forms of Covid testing. This would help, though only on the margin. Travellers returning from "amber list" or "red list" countries have to take a pre-departure test and tests on days two and eight of their mandatory 10-day self-isolation period. For any sort of family holiday, this will jack the prices considerably.
• Agency Travelplanners is reported to have ceased trading after 45 years
• India has been placed on the UK’s ‘red list’.
• Boutique Hotelier has reported that ‘hoteliers in England have reported strong bookings levels and an ‘overwhelmingly positive’ response from guests in the first week of reopening outdoor facilities.’
• The CDC in the US has said that fully vaccinated people can travel within the U.S. without the need of COVID-19 testing or self-quarantining post-travel. STR points out that ‘people are considered fully vaccinated two weeks after their recommended second dose of vaccine.’
• The plans for a breakaway European Super League got a lot of coverage yesterday with a lot of opposition from various parties with the notable exception of the teams that would benefit financially. The Premier League, UEFA and FIFA are particularly upset.
• The proposed European Super League in football has provoked a furious response. The ferocity may be a mark of how seriously the Premier League and UEFA etc take the proposal. UK culture secretary, Oliver Dowden, has said he will do “whatever it takes” to block the plans. That’s rather a bold comment. Dowden said ‘it was a tone-deaf proposal, but the owners of those clubs won’t have been able to ignore the near universal roar of outrage from all parts of the football community over the past 24 hours.’ PM Boris Johnson has said in The Sun ‘I'm going to do everything I can to give this ludicrous plan a straight red.’ It’s not clear just how interested in football the various commentators were just 48hrs ago.
FINANCE & MARKETS:
• See premium email.
RETAIL WITH NICK BUBB:
• See premium email.
TRADING STATEMENTS & EVENTS:
Upcoming results are set out below:
• 15 Apr 21 Deliveroo Q1 numbers
• 15 Apr 21 Entain Q1 update
• 15 Apr 21 Pepsi Q1 numbers
• 15 Apr 21 Naked Wines FY trading update
• 15 Apr 21 Heavitree Brewery AGM
• 21 Apr 21 Wagamama (Restaurant Group) bondholder report Q4 2021
• 22 Apr 21 Domino’s Pizza PLC AGM
• 23 Apr 21 Gear4Music results
• 23 Apr 21 GfK Consumer Confidence numbers
• 27 Apr 21 Starbucks Q1 numbers
• 28 Apr 21 Carlsberg Q1 numbers
• 28 Apr 21 YUM Brands Q1 results
• 29 Apr 21 Molson Coors Q1 numbers
• 29 Apr 21 Texas Roadhouse Q1 numbers
• 30 Apr 21 Safestay General Meeting
• 4 May 21 Campari Q1 numbers
• 5 May 21 Ten Entertainment AGM
• 6 May 21 Shake Shack Q1 numbers
• 6 May 21 Bank of England MPC meeting
• 7 May 21 Intercontinental Hotels Q1 numbers
• Est 9 May 21 Barclaycard Consumer Spending (Apr)
• 10 May 21 Marriott Q1 numbers
• 12 May 21 Compass Group H1 numbers
• 12 May 21 Stock Spirits H1 numbers
• 12 May 21 TUI H1 numbers
• 12 May 21 Just Eat AGM
• 18 May 21 Britvic H1 numbers
• 19 May 21 Marston’s H1 numbers
• 20 May 21 888 AGM
• 25 May 21 Restaurant Group AGM
• 25 May 21 Shaftesbury H1 numbers
• 26 May 21 C&C FY numbers
• 3 Jun 21 New River full year numbers
• 15 Jun 21 Vianet full year numbers
• 24 Jun 21 Bank of England MPC meeting
• 27 Jul 21 Campari H1 numbers
• 5 Aug 21 Bank of England MPC meeting
• 10 Aug 21 Intercontinental Hotels H1 numbers
• 12 Aug 21 TUI Q3 numbers
• 18 Aug 21 Carlsberg H1 numbers
• 22 Oct 21 Intercontinental Hotels Q3 numbers
• 26 Oct 21 Campari Q3 numbers
• 8 Dec 21 TUI FY numbers
LANGTON CAPITAL: Made in Hull. Like all the best things. Langton Capital is a financial advisory company providing insightful views on the UK and global leisure industry and the wider consumer sector in general. Subscription to the daily email is free. Unsubscribing is painless. We provide daily off the shelf and bespoke research. We have helped with transactions, fund-raisings, disposals and other corporate issues. We have a good ear, we are impartial, independent and not half bad at what we do. If you think that we could help you or your business, drop us a line.