Langton Capital – 2020-08-25 – Geography, September, commuters, coffee, JDW, KFC etc.:
Geography, September, commuters, coffee, JDW, KFC etc.:
A DAY IN THE LIFE:
So, yesterday, as we do our bit for the staycation economy, it was Flamingoland and the North York Moors.
And, as always, it reminded me that there are two areas where Yorkshiremen (and women, of course) meet their Geordie peers: there’s Northallerton, Ripon, Middleton etc where the racing and yachtie set park their Jags to swap stories over their pink gins and truffles and then there’s Scarborough, Whitby and Flamingoland, where they don’t.
Probably enough said on that for just now as we’ll be up in Robin Hood’s Bay and Whitby tomorrow for a return match after a visit to Stamford Bridge today for a subsidised pub lunch and a yomp in the drizzle.
But, if anything, yesterday brought home that a) it’s mentally and physically quite challenging to keep up the Covid-secure lifestyle that the text books recommend whilst trying to have a life and b) there are some very different views out there as to what precautions people should be taking in the first place.
Not that the venues themselves aren’t trying hard.
Because they are, but, with the best will in the world, many people forget what’s going on around them and having a ‘keep left’ and a ‘two metre distancing’ policy is more easy to implement on paper than it is in practise.
Anyway, most people are trying hard so, with that in mind, let’s move on to the news:
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A NUMBER OF COMMENTS:
• Geographical differences in trade:
• Heading for a September crunch?
• There were others but we ran out of time. See Premium Email.
OTHER THEMES TO BE PICKED UP ON WHEN WE HAVE TIME:
• Re-closures could be a thing. Most operators of scale will have considered closing one or two units that they opened in haste. Tasty yesterday said that the ending of EOTHO could be the catalyst that causes this.
• When is a failed restaurant not a failed restaurant? Perhaps when it has changing hands and reopened post a rent reduction & various other inducements from the landlords but, in all honesty, it’s failed really, hasn’t it?
• Dead men walking? Many companies were in a poor state last year. Covid will have made this worse. It’s hard to see them surviving.
PUB & RESTAURANT NEWS:
Regional differences in trade.
• Where a company’s pubs are could be an accident of birth. But it makes a big difference. Most restaurant operators are of a more recent vintage and they (that is to say this generation of management) have chosen their locations. Either way, it makes a major difference to trade.
• New West End has reported that West End footfall rose by 15% week on week last week – but that it stood down to only 41% of the level that it was in the same week last year. Year to date footfall is down 57% (and stands at 43% of last year’s level).
• Springboard separately reports that last week retail footfall across all retail locations in the country was 68% of its level last year. The week seems to be the same but, if the country is at 68% and the West End is at only 41%, there is something going on here. See Premium email.
• Springboard reports that retail parks have seen the strongest recovery and are now at 85% of last year’s footfall. High Streets are at 60%. Retail parks could find social distancing less of a problem. Certainly many High Street shops seem to be adopting a one-in, one-out policy or are restricting numbers to a handful of people.
Returning to the office:
• The Manpower Group carried out research (albeit in June) as to the attitudes of office workers. It found that staff in the US and UK were more negative about returning to their offices than were staff in Germany, France, Italy, Mexico, Singapore and Spain.
• The FT reports that office owners could have to spend millions of pounds on making their workplaces ‘pandemic-proof’. This could delay the re-staffing of offices. Analysts Genesis estimate that the measures it is proposing, e.g. automatic, no-touch doors, could add around 2% to the build cost of an office.
• The FT reports that City of London employers are making plans to allow more staff to work from home more regularly. Some employers, such as NatWest Group and Standard Life Aberdeen, do not anticipate a major return to the office until early next year. Other employers may well be going further.
Other Covid news:
• Licensed premises in Aberdeen will reopen their doors tomorrow, Wednesday, August 26, once an environmental health check has been completed.
• In order to track the health of employees, Bizimply has launched a new Attendance Questionnaire, which will allow operators to design their own questionnaire which automatically appears on-screen as staff members log on to Bizimply’s clock in app at the start of their shift. The company suggests that, by asking a few questions about known COVID symptoms, employers can be kept informed of any team members who might have the virus and take appropriate action.
• North American alcohol eCommerce platform Drizly has secured $50 million in funding. The company increased revenue by 350% in 2020. The company says ‘we’ve spent years methodically building the three-tier compliant ecommerce foundation for the alcohol category.’
• Foodservice analyst Peter Backman has updated on the sector saying that most attention, at the moment, is on the supply side (that is hospitality companies). He says that the consumer (the demand side) will ultimately be what really matters.
• Backman suggests that consumers will be somewhat poorer and that some of them may have lost their jobs. In addition, he says, they ‘are likely to be significantly more aware of the need for cleanliness, safe distancing and other factors with a social dimension.’ London is quiet at the moment but Backman says the city in general is an ‘essential way of the world, and London, like all other major cities will be back.’
• Backman says ‘looking at the total hospitality numbers I am struck by the share that depends on overseas visitors – they accounted for almost 20% last year. This year they are gone – well almost. And another striking feature is the startling different ways that visitors from overseas spend their money on hospitality – compared with how Brits spend their hospitality pounds, at least in this country.’ UK consumers are spending in Bournemouth and Bognor whilst overseas visitors are not spending in London.
• Allegra’s World Coffee Portal has suggested that ‘after visiting family and friends, going to a café or coffee shop was the most popular outing made since the national lockdown was eased on 4 July 2020.’
• Some 55% of respondents said they had visited a café or coffee shop since the national lockdown was eased, second only to the 69% who visited family and friends. Allegra says ‘UK cafés proved even more popular than pubs, and bars & restaurants, which attracted 28% of respondents. Of those who ventured to a café or coffee shop since lockdown restrictions were eased, 43% purchased take-away only, 22% opted exclusively to sit-in, and 35% did both.’
• Allegra Group CEO and Founder, Jeffrey Young said: “Cafés and coffee shops should be heartened by the wave of public support they have received since national lockdown restrictions were eased in July 2020. “Nevertheless, this study indicates there are difficult times ahead for many businesses, and the extension of government support is likely needed to ensure the medium-term viability of the UK hospitality industry.”
• JD Wetherspoon shares slipped by 3% in a rising market yesterday as traders digested the suggestion that the group will make a loss this year (as will many if not most operators) and that its LfL sales were perhaps below the management’s expectation at the time of its equity placing.
• Since then (April), the chancellor’s Eat Out to Help Out scheme has boosted trade. Although the group’s financial year ended just before the scheme began, the company updated yesterday on sales to 16 August, meaning that there were some hopes that expectations could have been beaten. JDW’s shares finished yesterday down by 30p or 3.1%.
• KFC has paused the use of its ‘Finger Lickin’ Good’ slogan in light of the Covid-19 pandemic. KFC says ‘we find ourselves in a unique situation—having an iconic slogan that doesn’t quite fit in the current environment. While we are pausing the use of It’s Finger Lickin’ Good, rest assured the food craved by so many people around the world isn’t changing one bit.’
• Domino’s Pizza in the US has just released the company’s first new pizzas in eight years. It is introducing two new pizzas, chicken taco and cheeseburger pizzas, which are both designed ‘with delivery solutions for the COVID-19 era in mind.’ Domino’s says ‘consumers are now getting more food delivered than ever before and they are looking for variety.’ It says ‘every time we see an opportunity to make the consumer’s pizza experience better, we home in on that.’
• Tesco is to create 16,000 new permanent jobs. It has seen an ‘exceptional growth’ in its online business.
HOLIDAYS & LEISURE TRAVEL:
• TUI’s Marella Cruises has extended its pause in operations until November 15. It blames the ‘ongoing uncertainty’ re quarantine requirements and travel bans.
• The Business Travel Association has warned that corporate travel faces a “bleak” autumn and winter. It says talk of a restart in September has been pushed into Q1 next year by many corporate travel buyers.
• UK Inbound has said that the inbound travel sector has had a “disastrous” summer. It says that a boom in domestic tourism will not be sufficient to rescue the sector on its own. UK Inbound says ‘VisitBritain predicted a 60% fall by the end of the year, but that was based on a very short quarantine period.’
• IATA has warned that travellers risk penalties for refusing to wear face masks on flights. It says ‘the vast majority of travellers understand the importance of a face covering for themselves as well as for their fellow passengers. But a small minority create problems.’
• Elsewhere, Lufthansa Group airlines is to allow passengers with health conditions to fly mask-free with a negative Covid-19 test and a medical certificate from next week.
• Eurostar is to start a direct London-Amsterdam services from October 26. The Netherlands is currently on the list of countries that travellers will have to self-isolate for 14dys when they come back from.
• STR has said that the week ended 16 August was the first week since hotels were reopened in the UK on 4 July that occupancy has not risen sequentially. STR says ‘staycations remain the story, with rural locations doing very well.’ STR mentions ‘Cumbria, the Lake District, North Wales, Norfolk, Suffolk, Devon, Cornwall and Dorset.’
• STR reports that London is still ‘suffering’. Central London is underperforming most other London postcodes.
• STR says that, worldwide, a total of 3.5m hotel rooms were temporarily closed at the height of the global lockdown. STR says ‘rooms were slow to reopen throughout the month of May, but hundreds of thousands of rooms re-entered the active supply pool on the first of both June and July, and throughout each of those months. At present, about 70% of the rooms that were closed at peak have since reopened, leaving just over 1 million rooms still locked down.’
• STR says the US hotel industry made a gross operating profit per available room in July, for the first time since February.
• Microsoft is reported to be supporting Epic Games, the company behind Fortnite, in its legal tussle with Apple.
FINANCE & ECONOMICS:
• The Telegraph reports that the UK Treasury has denied that its planned digital services tax could be scrapped in the search for a trade deal with the US.
• Facebook, meanwhile, is to pay the French government €106m in back taxes to settle a dispute over where revenues were generated.
• Sterling up v dollar at $1.3108 but level with the Euro at €1.1095. Oil higher at $45.15 and the UK 10yr gilt yield was steady at 0.21%. World markets mostly better yesterday with the Far East mixed in Tuesday trade. London set to open up by around 23pts.
START THE DAY WITH A SONG:
The song has been furloughed. See you on the other side.
RETAIL WITH NICK BUBB:
Nick is back after the Bank Holiday.
TRADING STATEMENTS & EVENTS:
Upcoming results are set out below:
• 20 Aug 20 Tasty AGM
• 21 Aug 20 GfK consumer confidence numbers
• 2 Sept 20 Gym Group H1 numbers
• 8 Sept 20 Fever Tree H1 numbers
• 8 Sept 20 DP Eurasia H1 numbers
• 10 Sept 20 Morrison’s H1 numbers
• 10 Sept 20 Rank FY numbers
• 24 Sept 20 Safestay H1 numbers
• 28 Sept 20 Diageo AGM
• 30 Sept 20 Compass Group FY update
• 30 Sept 20 Everyman Media H1 numbers
• 30 Sept 20 888 Holdings 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 FY 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:
15 Aug 19 Vianet trading update, 22 Aug 19 Playtech H1, 22 Aug 19 Sportech H1, 28 Aug 19 Loungers FY results, 28 Aug 19 Fulham Shore AGM, 30 Aug 19 Gear 4 Music AGM, 6 Sep 19 Greene King AGM, 10 Sep 19 888 Holdings H1, 12 Sep 19 Comptoir H1, 19 Sep 19 Diageo AGM, 19 Sep 19 City Pub Group H1, 19 Sep 19 Saga H1, 23 Sep 19 Brighton Pier Group FY, 24 Sep 19 TUI Group FY trading update, 24 Sep 19 DP Poland H1, 24 Sep 19 Ten Entertainment H1, 24 Sep 19 Hotel Chocolat FY, 24 Sep 19 AG Barr trading update, 24 Sep 19 Tasty H1, 25 Sep 19 Shepherd Neame FY, 26 Sep 19 Time Out H1, 26 Sep 19 M&B FY trading update, 26 Sep 19 SSP FY update. 27 Sep 19 Escape Hunt H1
• None yesterday.
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