Pizza Express, Gym Group, Thomas Cook etc.:

A DAY IN THE LIFE:

We may laugh at Pavlov’s dogs (and indeed at Langton’s idiot dog) for drooling at the sound of a bell or whatever but, when you think about it, are we humans much different.

I mean there must have been sounds, sights, smells and the like that had us reacting automatically in the past, and there certainly are now.

It may have been church bells or the clip-clop of a horse’s hooves a couple of centuries ago but now it’s a text pinging on our mobile phone, a red, flashing battery telling us that our charge is below 10% or some sort of warning that we’re approaching our data-usage limit and had better turn off our roaming.

All of which suggest that, whilst we have more computing power in our shirt pockets than existed in the whole world in our grandparents’ day, we haven’t evolved much when you really think about it.

Indeed, straying too far from your DNA (a.k.a. what makes us tick) may be tiring and time-consuming. It may even be futile. On to the news:

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PIZZA EXPRESS REPORTS H1 NUMBERS: Pizza Express has reported H1 numbers and has pointed to tough market conditions as the reason behind a fall in EBITDA. 29 Aug 2019: See Premium Email,

GENERAL NEWS – PUBS & RESTAURANTS:

• Loungers and Fulham Shore, which reported FY numbers and commented on w21 sales respectively yesterday, finished little-changed at 1.5p lower in the case of Loungers (down 0.7%) and unchanged in the case of Fulham Shore.

• Privately-owned Pizza Express yesterday said that H1 total sales rose 2.6% with LfL sales up by 0.2%. The group said that ‘industry-wide cost pressures’ in the UK meant that EBITDA slipped by 7.7% to £32.4m despite the increase in sales.

• Pizza Express opened two new sites in the UK in H1. International sales grew by 11.5%. CEO Jinlong Wang said ‘in the first half of the year, we are pleased that we have remained resilient across all our markets despite sector-wide challenges. At a Group level, total sales grew by +2.6% and like-for-like sales were broadly flat.’

• Mr Wang says ‘costs across the sector continue to rise and this offset the revenue growth with Group EBITDA down to £32.4m. We will continue to maintain our focus on cost control, further improving productivity and efficiency, and are taking a measured approach to expanding our estate.’

• Mr Wang concludes ‘although we are not immune to the cautious consumer environment in the UK and Ireland, we are pleased to have delivered positive sales growth of +0.5% and a largely flat like-for-like sales performance.’ See also Premium Email.

• Pizza Express is currently offering discounts of up to 25% off food across many of its restaurants in the UK. Getting back to full, listed prices may be difficult – or even impossible where cheaper, perhaps more authentic offers have opened in the direct vicinity of Pizza Express sites.

• UK Hospitality has called upon the Government to act decisively to support hospitality and tourism ahead of its planned spending review. UKH wants help in business rates, toourism marketing, skills and training and trade. CEO Kate Nicholls says ‘at a time of political and economic instability, the 2019 Spending Review is a fantastic opportunity to promote growth among hospitality businesses.’

• UKH continues ‘the sector is enormously valuable, in economic terms, but also socially. Hospitality makes a difference in every region and every community in the UK, but some businesses need support during what are difficult times. High streets have been hit hard and many businesses are looking ahead anxiously to Brexit. The action we have outlined in our submission could provide valuable support to businesses and the workforce.’

• The BBPA adds its voice to the call for a change in the business rates system saying ‘pubs overpay by roughly £500 million in business rates annually and foot 2.8% of the total business rates bill, despite equating to just 0.5% of rateable turnover. Bricks and mortar businesses like pubs are shouldering far too high a burden when it comes to business rates.’

• The BBPA continues ‘it is essential that the Government takes steps to relieve the pressures that business rates place on businesses like pubs and one would hope that this will be a key recommendation from the Treasury Select Committee.’

• UK Hospitality has called on the Government to relax licensing hours for pubs in England and Wales for the 2019 Rugby World Cup. The event is taking place in Japan. UKH says ‘with early kick-off times, the majority of pubs in England and Wales will face difficulties offering customers the full experience. This will be a huge opportunity missed for many pubs around the country. Times are currently challenging for businesses and the Government can give them, and rugby fans, a huge boost by granting an extension for this World Cup.’

• UKH says ‘the Government has a great opportunity here to support the UK’s pubs, many of whom are struggling against rising costs in a tough environment. This is a once in a lifetime chance to support pubs and give rugby fans a chance to enjoy the tournament even more.’

• KFC in the US tested demand for Beyond Fried Chicken, a plant-based chicken substitute by putting it on sale in a number of stores. The operator reports that ‘crowds gatherred as early as 8am’ to test the product, which sold out within 5hrs. The group sold a weeks’ worth of ‘popcorn chichen’ in less than a day.

• CBRE says that ‘the UK Leisure Industry’s Prospects Remain Positive’. It adds that ‘consumers are taking part in more unusual leisure activities such as crazy golf, social bingo or even axe throwing, or tasting lesser-known global cuisines at street food venues or emerging market halls.’

• In addition to the growth in experiential demand, CBRE says that Market Halls are growing ‘exponentially’.

• Ei Publican Partnerships’ annual roadshow is set to return this year. Publicans will get a first-look at the Ei Publican Partnerships’ Food Menu Portal which has been developed to help publicans optimise their food offering and boost profitability, whilst ensuring they are conforming with Food Safety & Allergen Laws.

• The South of Scotland Economic Partnership scheme has invested over £1m into projects to develop rural skills. 

• The Sushi handroll kiosk concept Inigo has entered into liquidation

• Taco Bell has announced its intentions to open in Hull, the group’s first site in East Yorkshire.

• Brewers in Spain have warned that the country’s beer industry will suffer if the UK leaves the Eu without a deal on 31 October.

• Per Beverage Business World, Brewdog will open its latest venue in Cambridge on 30th August. For £7 consumers are entitled to unlimited coffee all day and then a pint of Punk IPA at the end of the day, at some of the chain’s sites.  

• Data from the BRC shows the price of non-food items fell by 1.5% in August as retailers turned to heavy discounting in the face of fierce competition and weakening consumer spending.

HOLIDAYS & LEISURE TRAVEL: 

• Thomas Cook shares down 17% at 5.9p on news that Fosun and the group’s debt holders are to take substantially all of the company in its proposed refinancing.

• Investors had been waiting for a couple of years for Fosun to take a bigger stake or even substantive control of Thomas Cook.

• Hopes had first been at around or above 100p per share. Here we see Fosun effectively taking over the company at 5p or less. Whilst the Chinese investor will have seen the value of its initial investment fall, it is achieving its apparent goal at a much lower cost than had first been suggested. Just why Thomas Cook’s shares did not fall further yesterday is not clear.

• The latest Association of Serviced Apartment Providers (ASAP) / Savills sentiment survey shows overall sentiment in the sector has softened slightly since November 2018. Although there was a slight dip in leisure demand, this was against a backdrop of improving demand from corporate guests which now account for a larger share of demand (67.1%).

• Thomas Cook has slashed the number of brochure titles it produces by more than half, from 40 to 18 as part of its ‘noplaceforplastic’ initiative. So far it has removed 12 million plastic items from its operations with a target to remove 70 million single-use plastic items across the business by the end of the year.

• Marriott is to eliminate single-use toiletry bottles across its hotels. It says the program is expected to ‘prevent about 500 million tiny bottles annually from going into landfills; that’s about 1.7 million pounds of plastic, a 30% annual reduction from current amenity plastic usage’.

OTHER LEISURE:

• Gym Group reports H1 numbers to end June saying revenue rose 26.9% to £74.0m with adjusted PBT up 53.3% at £7.1m. EPS is up by 42.9% at 4p with the H1 dividend up 28.6% at 0.45p.

• Gym Group CEO Richard Darwin says ‘our rapid and profitable growth has been achieved through operating high quality great value gyms that offer affordable fitness for all.’ Mr Darwin adds ‘our growing membership visited a record 24 million times in the first half of the year demonstrating the wide and diverse appeal of The Gym.’

• Gym Group concludes ‘we are on track to open between 15 and 20 standard catchment gyms this year whilst our new “small box” format further increases the number of towns that we can go to.’ It says ‘we are confident that we can deliver further profitable growth both this year and in the years to come.’

• Peloton, the maker of internet-connected stationary bikes and treadmills, plans to raise $500m in its Nasdaq IPO. The company reported total revenue of $915m in the year to June 30, 2019, with net losses of $245.7m.

FINANCE & ECONOMICS:

• Sterling down a little on yesterday’s news at $1.2205 and €1.1011. Oil up a fraction at $60.15. UK 10yr gilt yield down 7bps at 0.44%. World markets mixed. UK up yesterday with Europe down & US higher. Far East up in Thursday trade.

• Brexit, politics etc.:

o Man who would be World King content to take it one country at a time.

o The Queen has agreed to PM Boris Johnson’s request to suspend parliament. The PM, trying to keep the smirk off his face, maintains this is to smooth the passage of the Queen’s Speech. Opponents suggest that it is to avoide Brexit debate ahead of a hard Brexit on 31 October.

o Deutsche Bank maintains there is a 50:50 chance that the UK will crash out of the EU without a deal the month after next. PM Boris Johnson had previously said that this was a ‘one in a million’ possibility.

o Ruth Davidson is likely to quit as Scottish Tory leader today. Ex-Chancellor Philip Hammond, speaker John Bercow & former Attorney General Dominic Grieve expressed concern at the recent turn of events.

o Some cabinet ministers, including Michael Gove, Nikki Morgan, Matt Hancock and even Boris Johnson himself, are now in the position of having to defend an action that they previously said was not sensible or justifiable.

o FT says ‘Boris Johnson has detonated a bomb under the constitutional apparatus of the United Kingdom.’ It says his action ‘is without modern precedent’ adding ‘it is an intolerable attempt to silence parliament until it can no longer halt a disastrous crash-out by the UK from the EU on October 31.’

o The FT adds ‘history has shown that charlatans, demagogues and would-be dictators have little time for representative government’ and says ‘Mr Johnson may not be a tyrant, but he has set a dangerous precedent. He and the cabal around him who have chosen this revolutionary path should be careful what they wish for.’

o A House of Commons petition calling on the PM not to prorogue Parliament has attracted 1.2m signatures in less than a day. Small demonstrations outside the Houses of Parliament and in Manchester yesterday could swell.

o Next week’s spending review by Sajid Javid is thought likely to concentrate on vote-winners ahead of a likely Autumn election.

START THE DAY WITH A SONG:

Yesterday’s song was Undercover Martyn by Two Door Cinema Club. Today, who sang:

“Then it looks so real,

I can see it

And it feels so real

I can feel it”

RETAIL WITH NICK BUBB:

• McColl’s: The weak share price of the struggling convenience store operator McColl’s has been telling us that life has not been easy somehow this summer and today’s Q3 update (for the 13 weeks to Aug 25th) is indeed disappointing, with LFL sales down by 2.2%, “reflecting the challenging retail trading environment and poorer weather across the summer”.  However, Jonathan Miller, the CEO, says: “We continue to make operational progress and we anticipate results in line with expectations for the full year”.

• Waitrose Watch: The weather remains a big driver of supermarket sales at this time of year and you would have thought that the developing heatwave at the end of last week would have lifted picnic and barbecue business, so it was therefore disappointing that yesterday morning’s JLP weekly overview, for w/e Aug 24th, revealed that Waitrose saw a rise of only 0.6% in gross ex-petrol sales last week, after a weak start to Q3/H2…That left the last 30 weeks still down by 0.7% gross cumulatively, albeit store space must be fractionally down (after the sale of five Waitrose stores in June), meaning that the LFL movement won’t look quite so bad.

• John Lewis Trading Watch: The increasingly hot weather in the South-East was not helpful for footfall for John Lewis last week and overall gross sales were down by as much as 5.5%. In terms of sales mix, Fashion/Beauty sales were down by 4.4% in w/e Aug 24th, Home sales were down by 5.3% gross and Electricals were down by 7.0% gross (despite bumper sales of electric fans). There are no new stores in the figures, but overall John Lewis LFL sales, however, must still down over the last 30 weeks (as gross sales are now running down 1.5%).

• News Flow This Week: With the end of the month looming large now, the widely followed GfK Consumer Confidence survey for August is out first thing tomorrow.