Langton Capital – 2020-08-12 – More on EOTHO, Hostelworld, Just Eat, pubs, UK recession etc.:
More on EOTHO, Hostelworld, Just Eat, pubs, UK recession etc.:
A DAY IN THE LIFE:
Though working from home, we had all the usual self-employed back-to-office problems when we applied the defibrillator to the well-oiled Langton machine earlier this week.
Viz nobody, meaning me, had emptied the teapot.
The ink in the printer, though warning that it was ‘very low’ since about 2018, finally ran out. Nobody, meaning me, had reordered any. There was no paper for the printer, the frayed keyboard lead finally snapped, apparently of its own volition and the milk, which had been thoughtfully left in the switched-off fridge, was solid.
The broken coffee percolator hadn’t fixed itself and the new one’s box was wrapped in about half an inch of cellophane and, when freed, had an instruction manual similarly thick. The ‘plug-it-in’ approach seemed to work although, set up for the morning, it did turn itself on in the small hours and boiled a couple of pints of Aldi’s best into a thick stew.
And emptying the bins and all those other hundred-and-one jobs that got put off were still to be done but that’s all done now and, like many returning holidaymakers, I feel as though I need a holiday.
Anyway, sad to report there was mist on the grass this morning. Oh, dear. Still, there were a huge number of out-of-office replies yesterday, so many are still away from their desks. On to the news and follow us on Twitter at @brumbymark.
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EAT OUT TO HELP OUT: Extremely helpful as far as it goes. Here we consider Week Two, the scale of the aid, side-effects, potential extension, the impact on the consumer’s mindset and the reaction of those operators that are missing out. 12 Aug 2020:
• Money is finite and there was always the risk that last week, which was very good, could have been a flash in the pan. Thankfully, that has not proven to be the case. See Premium Email.
PUB & RESTAURANT NEWS:
Covid-19 – Eat Out to Help Out
• Several suggestions that EOTHO is having at least as good, probably a better, week this week compared with last.
• Press coverage and FOMO appear to be helping trade. Good weather doesn’t hurt. Storms later in the week may dampen weekend trade.
• Glasgow based Scottish restaurant Mharsanta has announced that it will be extending the current ‘Eat Out to Help Out’ scheme until at least the end of September. The company says ‘we have seen a fantastic response from guests to the introduction of the government scheme and will continue to offer exactly the same discount for diners until at least the end of September.’
• Comptoir Group jas ammpimced that CFO Mark Carrick has notified the Board of his intention to resign. The company says ‘Mark will remain at the Company in his current role until 10th November 2020 to ensure an orderly handover of his role and responsibilities. The Board has begun a process to identify a successor and a further announcement will be made in due course.’
• Mharsanta says ‘the discount scheme will offer 50% discount on all food and non alcoholic drinks up to a maximum of £10 per person, all day every Monday, Tuesday and Wednesday in September, just as the current government scheme does in August.’
• See Premium Email for further detail.
Covid – Other news:
• JD Wetherspoon chairman Tim Martin has challenged scientists to prove what evidence they have that Covid-19 is spread in pubs. Mr Martin says that government policy ‘is implicitly based on the assumption that there is a high level of Covid-19 transmission in pubs.’
• He says the fact that ‘pubs can be crowded, behaviour can be uninhibited and the general warmth and conviviality seem, on the surface, to offer a plausible basis for transmission of the virus.’ However, as there is much uncertainty with regard to Covid-19, Mr Martin says ‘people with a high level of general scepticism, or scientific enquiry, will legitimately question these sorts of assumptions.’
• Mr Martin says ‘by lockdown on 20 March only five of our 43,000 staff had tested positive, even though they were working in the busiest pubs in the UK, at the tail end of the winter, when the virus was rampant in the country.’ He continues ‘since pubs have re-opened and the level of testing has dramatically increased, there has been a handful of individual cases of positive tests for the virus in our pubs but nothing, it appears, which could be described as an outbreak and there appears not to have been, up until now, a case of transmission from person to person among staff or from staff to customers- or vice versa.’
• An investigation by Sky News has found that ‘pubs and bars in England are ignoring COVID-19 guidance, potentially putting public health at risk.’ Sky says ‘nine out of 10 venues visited [in one Greater Manchester suburb] were not following government guidance by asking for customer contact details.’
• Langton was recently in the Yorkshire Dales and Lincolnshire where four out of four pubs did ask for contact details and 0 out of 1 restaurant(s) did not. Collecting names is not mandatory though the government says venues “should assist” the test and trace programmes “by keeping a temporary record of your customers and visitors for 21 days”.
• Foodservice analyst Peter Backman has said that the thousands of suppliers to the foodservice sector are facing a major challenge. Looking forward, Mr Backman comments on the likely demand withing the foodservice industry and concludes that large parts of it, namely those supplying food to local and central government, to prisons, education establishments and the armed forces amongst others in the public sector, should be relatively unaffected over the medium term. He says ‘public services are likely to carry on much as before Covid, perhaps on a slightly smaller scale.’
• Analyst Morgan Stanley has suggested that only 34% of UK white collar workers have returned to work compared with over 70% in France. This will have implications for the likes of Pret as well as for pub, bar and restaurant companies servicing the sit-down trade over lunchtimes in heavily-officed districts.
Pub & Restaurant news:
• Amsterdam listed online food ordering company Just Eat Takeaway.com NV has reported revenues and underlying profit for H1 up on last year but a bigger headline loss.
• JE reports adjusted earnings before interest, taxes, depreciation and amortization of €177m (last year €76m) with revenue up 44% at €1.03bn. The net loss was €158m.
• C&C Group has rebranded Irish business Bulmers Ireland. The company says the move is aimed at better aligning its business units in Ireland under one corporate identity.
• A petition calling on the Government to reverse the proposed tax rise for small independent breweries, has attracted over 7,000 signatures in its first 24 hours.
• Debenhams is reported set to cut another 2,500 jobs.
• Red Robin Gourmet Burgers in the US has reported a net loss of $56.3 million forQ2.
• Intu’s Trafford Centre in Manchester is reportedly up for sale. This should not come as a surprise.
HOLIDAYS & LEISURE TRAVEL:
• Hostelworld Group has reported H1 numbers saying the period was ‘in line with expectations [with the] modest increase in bookings in recent weeks in line with the easing of travel restrictions.’ The company reports net revenue of €12.0m (down 69%) with total bookings down 67%. Costs have been reduced. The adjusted EBITDA loss was €8.3m (H1 2019: €8.9m profit). The co adds this is ‘in line with guidance’.
• Hostelworld CEO Gary Morrison comments ‘the COVID-19 pandemic has resulted in significant trading disruption for our business and the global travel industry.’ He adds ‘we entered the year in a strong position, having delivered a return to net bookings growth during Q4 2019, however, COVID-19 drove a sharp reduction in our trading performance.’
• Hostelworld says ‘over the last few months we have taken the opportunity to accelerate our Roadmap for Growth program to strengthen our core platform, completing items planned for H2 2020 and 2021 ahead of schedule.’ The company says ‘while the short-term outlook for the travel industry remains extremely challenging, I remain confident that Hostelworld will emerge from the COVID-19 crisis stronger than before.’
• Hostelworld adds ‘in recent weeks we have seen an increase in demand as travel restrictions have eased, and we are tracking slightly ahead of our Base Case scenario. This recovery started with very modest growth in domestic bookings in June, and more recently has progressed to very modest growth in domestic and short-haul bookings into Europe. Overall, we expect the pace of recovery to mirror changes in travel guidance in individual markets over the coming months, both positive and negative. Elsewhere, source markets in the Americas, Asia and Oceania continue to remain very depressed.’
• Carnival’s Holland America Line has extended the pause in its operations to 15 December. The co says ‘the pause extension affects Caribbean, Mexico, Panama Canal, Pacific Coastal, South America, Antarctica, Hawaii, South Pacific, Australia and Asia itineraries. Guests Automatically Receive Bonus Future Cruise Credit.’
• Holiday company Haven has extended their opening until November 2020 for the first time. It remains to be seen whether the weather and the school authorities will play ball.
• UK Inbound has said that the government should extend the furlough scheme to impacted sectors, including its own. Operators will currently be counting back from the end of furlough as they consider whether to announce redundancies.
• UK Inbound’s latest Business Barometer of members finds ‘a significant number of companies are in a critical state’ and that confidence levels are at ‘a near-record low’. Despite the growth in staycations, only one in five respondents said that the cut in VAT had boosted trade.
• UK Inbound chief executive Joss Croft says ‘many inbound tourism businesses are in critical need of support and the government’s ‘one size fits all approach’ leaves many in the cold.’ He adds ‘our members are hopeful the international market will return from spring 2021, but this leaves a gaping hole in business finances until then and, although the VAT cut and Job Retention Bonus are welcome, they will not help previously profitable businesses stay afloat.’
• Carnival’s Costa Cruises is planning to restart its sailings from Italian ports on a gradual basis from September 6, 2020.
• The Airports Council International Europe has reported on traffic for Q2 saying that airports remain seriously impacted by travel restrictions. Travel has picked up slightly but, in Q2, European airports saw a 96.4% drop in passenger volumes.
• The ACIE reports that UK airports were quieter than those elsewhere in Europe in June. Gatwick was down 99.4% and Heathrow had slipped to number 11 in terms of passenger numbers in Europe.
• Separately, Heathrow has reported that passenger numbers were down 88% in July this year compared with last. CEO John Holland-Kaye comments ‘tens of thousands of jobs are being lost because Britain remains cut off from critical markets such as the US, Canada and Singapore. The government can save jobs by introducing testing to cut quarantine from higher risk countries, while keeping the public safe from a second wave of Covid.’
• Sky reports that the aviation industry is responsible for as many as a quarter of job losses announced since lockdown.
• Walt Disney is to drop the 20th Century Fox brand name.
• Gambling hub Macau has recommenced issuing tourist visas.
FINANCE & ECONOMICS:
• The UK is now officially in recession for the first time in 11 years as the economy shrank by 20.4% between April and June compared with the first three months of the year. This included what officials say was a ‘bounce back’ in the month of June itself.
• Sterling lower at $1.3025 and €1.1115. Oil down at $44.06. UK 10yr gilt yield up 8bps at 0.21%. World markets broadly lower yesterday though UK was up. London set to open up around 8pts as at 6.45am (pre the GDP announcement).
• The ONS has reported that average weekly earnings, excluding bonuses, declined at an annual rate of 0.2 per cent in the three months to June. Including bonuses, which are pretty thin on the ground at the moment, total pay fell by an annualised 1.2%.
• The NIESR says wages ‘will pick up in the short term as workers return from furlough. But pay will weaken again in the second half of the year when unemployment is set to rise sharply.’
• The ONS reports that employment levels fell by 220k in the quarter ended-June. Headline unemployment, held at bay for the present by the furlough scheme, was unchanged at 3.9%.
• The suspension of stamp duty on houses below half a million pounds is reported to have boosted transaction volumes.
START THE DAY WITH A SONG:
The song has been furloughed. See you on the other side.
RETAIL WITH NICK BUBB:
Today’s News: The big news last night was that the delayed final results from the hapless Frasers Group (aka Sports Direct) due tomorrow are being delayed again, by a week, to Aug 20th, to give the auditors and the company time to make sure the Accounts will be able to meet the scrutiny of the press (!) #MadMike #Hopeless. Today Reuters report that the administrators of the now bankrupt shopping centre business Intu have put its flagship asset, the Trafford Centre in Manchester, up for sale. We have also had interims from Intu’s former stable-mate, the Covent Garden landlord CapCo, along with the strong interims from Just Eat Takeaway
ASOS: We flagged the other day that ASOS is now bigger than Boohoo again, after an astonishing rally in its share price has taken the market cap up to the heady levels of £4.2bn, and it is unlikely to come to much harm today after an unscheduled trading update has flagged that sales and profits in y/e Aug are going to be “significantly ahead of expectations”. It is only a month since ASOS issued an update for the 4 months to June 30th, with cumulative sales growth running at 16%, but it now thinks that the full 12 months will be between 17% and 19% up, so July and August so far must have been very strong and ASOS has also flagged the benefit of a continuing decline in the returns rate (driven by sales mix and more deliberate buying behaviour.
TRADING STATEMENTS & EVENTS:
Upcoming results are set out below:
• 10 Aug 20 Royal Caribbean Q2 numbers
• 10 Aug 20 Marriott Q2
• 11 Aug 20 Domino’s Pizza Group H1 numbers
• 11 Aug 20 Intercontinental Hotel Group H1 numbers
• 11 Aug 20 UK unemployment – ONS
• 12 Aug 20 Just Eat Takeaway H1 numbers
• 12 Aug 20 Hostelworld H1 numbers
• 12 Aug 20 UK Q2 GDP – ONS
• 13 Aug 20 TUI trading update
• 20 Aug 20 Tasty AGM
• 2 Sept 20 Gym Group H1 numbers
• 8 Sept 20 Fever Tree H1 numbers
• 10 Sept 20 Morrison’s H1 numbers
• 10 Sept 20 Rank FY numbers
• 11 Sept 20 JDW full year results
• 30 Sept 20 Compass Group FY update
• 30 Sept 20 Everyman Media H1 numbers
• 6 Oct 20 Restaurant Group H1 numbers
• 9 Oct 20 JD Wetherspoon FY numbers
• 3 Nov 20 DART Group AGM
• 24 Nov 20 Compass Group FT numbers
• 26 Nov 20 Britvic FY numbers
Many results are likely to be delayed. For information purposes, the results below were delivered at these dates last year.
2019 COMPARATIVE RESULTS:
• 11 Jul 19 Dart Group FY numbers, 16 Jul 19 Fulham Shore FY numbers, 17 Jul 19 Nichols H1 numbers, 24 Jul 19 Marston’s Q3 trading update, 25 Jul 19 Fuller’s FY numbers, 25 Jul 19 Compass Group Q3 update, 25 Jul 19 Diageo FY numbers, 30 Jul 19 Gregg’s H1 numbers, 31 Jul 19 M&B Q3 update
• Holiday firsts (for a while). Drew cash out of an ATM. Anomalies. Chippie was cash only but iced cream vendor was just plastic. Ate in pubs (several). Some virtually normal, others treating hospitality guests as though they were loaded with nuclear waste.
• Staycation. No sign of anybody putting prices down post VAT cut. When challenged, most common reason was ‘we’ve had our menus printed’. More honest response was a bashful shrug. But hey-ho. The industry needs the cash.
• Is it just me or is this ‘one-person-only’ in the shop rule bringing out the uniformed ‘Park Warden syndrome’ in many people, some maybe enjoying bossing others around just a little too much?
• #EatOutToHelpOut very welcome & getting mega bangs for the taxpayers’ bucks. Nudge at its best? Only cost £50m in first week, say £200m in the month. Hospitality furlough at 1.4m workers was perhaps 15x that much every 4wks.
• #EatOutToHelpOut. Spare a thought for the losers. Takeaways, delivery, wet-led units & big-ticket restaurants (where a tenner off doesn’t move the dial much). We’re hearing from the winners only just now – but they’re very happy
• #EatOutToHelpOut. Sales early last week perhaps doubled for high volume, modestly priced, food-led operators. Some cannibalisation but last week, overall, probably up on 2019. Good weather, yes, short term stimulus, yes. But every little helps.
• #EatOutToHelpOut. Week two, which is now, looks to have started very, very well. FOMO seems to be kicking in.
• Haven’t worn long trousers for 6wks; what’s going on? Worried I look like a tall Crankie. Must lose the cap. Not worried enough to make it to the wardrobe, though.
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