Langton Capital – 2018-10-03 – Food prices, labour, Soho House, Jet2, UK inbound etc:
Food prices, labour, Soho House, Jet2, UK inbound etc:A DAY IN THE LIFE: Given our record on spillages, I think it’s a good idea to have a tea-coloured carpet. At home, at least and, when in the office, it’s best to have either hard floors or dark, preferably washable, carpet tiles that don’t show the dirt and which, if the worst comes to the worst, can be pulled up one at a time and thrown in the bin. This because the life of a carpet can’t be much fun. I mean you spend your life communing with feet and dogs’ backsides and, every now and again, someone will spill a cup of tea, a glass of wine or a chocolate pudding with lemon custard all over you and tread it in for good measure. So, in the absence of a liberty-for-carpets movement, the least we can do is buy ones that don’t show the muck, dontcha think? On to the news: PUBS & RESTAURANTS: • The latest CGA Prestige Foodservice price report reveals that ‘the level of Foodservice Price inflation has reduced by a third, as Meat prices fall in the short term whilst Breads & Cereals reflect harsh summer.’ • CGA Prestige reports ‘overall inflation in foodservice prices appears modest, but beneath the topline figure there is a lot of turbulence. Brexit’s impact on currencies, trading and labour has concerned the sector for a couple of years now, but this year’s extreme weather patterns have overlaid more problems. Foodservice businesses must now be braced for more inflationary pressures through the remaining months of 2018, and stay alert to ways of mitigating the challenges.’ • Meat prices fell by 2.1% in August alone and are now down by 5% year on year. Sugar is down 9.3% year on year but bread and cereal prices are up by 4.3% up on August alone. • CGA Prestige reports ‘the unusual weather patterns of 2018 will continue to push up inflation in cereal-related foodservice items. Knock-on impacts are also likely to be seen in other categories including Meat, where feed stocks and grazing pastures have been reduced by the hot summer.’ It adds ‘the natural volatility within the supply markets experienced this year has proven to be challenging enough for our industry, and with more turbulent times expected as we head towards Brexit, it will be critical that businesses take a proactive approach to managing the future risks of inflation.’ • The BRC reports that shop prices are edging higher in other areas as fashion retailers and others cut back on discounts. The BRC says that unusual weather patterns (see above) have pushed up some food prices. • UKHospitality has warned of possible employee shortages, with Chief Executive Kate Nicholls stating: ‘In the wake of today’s immigration policy announcement, we face mounting concerns over the future of the hospitality workforce. A system based solely on high skills and high wages will not work for hospitality where we have labour shortages. The sector employs over 3 million people, many of whom are migrant workers, but under the new policy 90% of these roles could not be filled under planned changes’. • The Dry Drinks Company has launched a new range of alcohol-free drinks in the UK. The Dry Drinks Company managing director Richard Clark said: ‘Directly linked to our changing more balanced lifestyles & leisure time is a growing demand for premium non-alcoholic drinks for when drinking alcohol is not appropriate’. • Soho House has reported revenue up 23% for the calendar year 2017 to £360.1m, with the group announcing a £60m loss before tax. • Pepsi has announced its first increase in beverage sales volumes in its home market for seven years. • Fuel duty will stay at current levels for the ninth year a row, Theresa May has announced. With pump prices increasing drastically recently, the government’s new proposal aims to show the public they are ‘on their side’, by leaving more cash in the consumers’ pocket. • William grant & Sons has opened the £13m Hendrick’s Gin Palace, which will increase the group’s capacity to meet surging global demand. • EI Group and Oakman Inns have ended their 3yr-old Hunky Dory partnership, reports Propel. Oakman Inns is reported to have bought out EIG’s 51% share of the venture. • Family brewer and pub operator, Robinsons, has reported LfL sales in its tenanted arm up 3.1% in 2017. The group reported LfL sales climbing 15.6% in its 11-strong managed estate. However, the company has declared that profit before tax declined 19% to £3.1m. • Amazon has raised the minimum wage for all its employees in the London to £10.50 and £9.50 outside the capital. It is expected that this will affect over 17,000 full time employees and 20,000 seasonal workers. HOLIDAYS & LEISURE TRAVEL: • Jet2holidays is reported to have increased its potential passenger numbers, as suggested by its ATOL licence, by around a third. The group is now the UK’s second largest ATOL holder with a licence to carry 3,810,320 passengers, up from 2,936,420 at the same point last year. • UKinbound reports 78% of its members saw revenue rise or stay flat in July and August yoy, with the summer heatwave driving demand in the sector. The survey also reported 56% of members were feeling confident about business conditions in the upcoming 12 months. A record 30% of members highlighted China as now being their main growth market. • HotStats reports European hotel occupancy up 1.7% to 78%, ADR up 5.8% to €169.86 and RevPAR up 8.3% in August. • HotelRunner will integrate with AirBNB to enable its 49,000 accommodation partners to list directly on the platform. • The sudden collapse of Primera Air has left an unconfirmed number of passengers stranded and out of pocket, with the airline not covered by the Civil Aviation Authority’s Atol Protection scheme. • A study conducted by Egencia has found business travellers value convenient travel times, hotel locations and direct flights the most. Despite wanting to find more convenient options, 82% of respondents said they always book on policy. OTHER LEISURE: • The Gym Group has announced that Mark George has been appointed to the Board as Chief Financial Officer. He will join the business and the Board on 31 October. • FC Barcelona has reported record revenues of €914m, with EBITDA at €177m. • Tesla has said it produced 80,000 vehicles in its most recent quarter, including 53,000 of the Model 3. FINANCE & ECONOMICS: • HIS Markit’s measure of the UK Construction PMI slipped to 52.1 in September from 52.9 in August. The number, which was below estimates, is the weakest in 6mths – though any number over 50.0 still implies expansion. • Markit says ‘civil engineering was the worst performing subcategory of construction work, with activity declining at a slightly quicker rate in September. House building and commercial construction continued to increase at a solid pace, although the latest survey indicated weaker growth than in August.’ • Markit continues ‘UK construction firms experienced softer output growth during September, with house building, commercial and civil engineering all losing momentum.’ The much larger Services PMI is announced at 9.30am today. • Sterling down at $1.2995 and €1.1224 • Oil down a shade at $84.84 • UK 10yr gilt yield down 5bps at 1.53% • World markets. UK & Europe down yesterday with Dow higher. Far East lower in Wednesday trade. • Brexit etc.: o Boris says PM’s Chequers’ plan is an ‘outrage’. He says the UK is ‘locked in the tractor beam of Brussels’. That’s what 45 some years operating a certain way will do to you. o Brexiter Boris says Chequers is ‘not what we voted for’. He says it will lead to ‘continued acrimony’. He says it would encourage calls for another vote should the economy suffer etc. o Vauxhall has warned of ‘dramatic consequences’ of a no-deal Brexit PRIOR DAY LATER TWEETS: • Later tweets: RBG highlights poor H2, losses for the year just reported and current LfL sales running down 5%. Shares little down so broadly expected • BBC reports that Britons spend less on food as a proportion of income than most other countries in the developed world • Unsecured lending up 8.1%. It’s a 3yr low but still 3x rate of pay rises. Not really sustainable longer term. • Mike Ashley has sacked the entire senior management at House of Fraser. Actions speak louder than words? • House prices up 2% on year per Nationwide. Construction PMI down to 52.1 against 52.9 in Aug & estimates of 52.5 START THE DAY WITH A SONG: Yesterday’s song was Every Breath You Take by Police, today who sang: Say you want a revolution, We better get on right away Well you get on your feet And out on the street RETAIL NEWS WITH NICK BUBB: |
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