Langton Capital – 2020-09-03 – Revolution Bars, PPHE, Jet 2, discounting, London & other:
Revolution Bars, PPHE, Jet 2, discounting, London & other:
A DAY IN THE LIFE:
Staycations are puttering along into September this year and, with more of a staggered return to school than normal, that’s understandable.
And even Langton has been selflessly undertaking daytrips to scope out the opportunities for bargains in the north of England meaning that, yesterday, it was Wetherby and Marston Moor.
Why, you may ask.
And that’s a fair question but, as we threw stones in the River Wharfe and pottered around what is a very attractive little town, we managed to keep costs under control and limit spending to pasties and ice-creams (very important that it’s in that order) and five quid’s worth of petrol so that, as the parking was free, Marston Moor is a field with a stone in it and we couldn’t get into the Costa because there was a queue, we had a day out for four for little more than a tenner.
However, whilst the cost side of the revenue account might be under control, the revenue side very much isn’t, so there’s no room for complacency.
Today we’re off to slide around on the seaweed in Staithes and perhaps, as gawping at waterfalls is free, perhaps check out Mallyan Spout and Beck Hole on the way back. On to the news:
LANGTON PREMIUM EMAIL:
Corporate Offer: Annual subscription just £295 (plus VAT) for a single subscriber or £495 (plus VAT) for multiple subscribers. Drop us a line to get involved. Retail Offer: Easy in, easy out. £30 per month (inclusive of VAT, £25 net) via PayPal. Any one email that takes your fancy, twenty quid plus VAT (still 20% chez Langton), cash up front.
ADVERTISE WITH US:
Langton’s free email now carries adverts. See front page of website for today’s copy & contact us for further details.
DIY EAT OUT TO HELP OUT. HOW’S IT GOING? Various operators have extended early-week discounts. We’re only a couple of days in but here a little feedback. 3 Sept 2020:
A look back at the now-ended scheme: See Premium Email
OUTLOOK FOR TRAVEL HUBS: Bits of Langton decamped to York this week & confirmed that travel hubs are quiet. But what about the retailers? 3 Sept 2020:
• Being located at a travel hub was good until it most definitely wasn’t. See Premium Email.
PUB & RESTAURANT NEWS:
Working from home:
• Nielsen has put it succinctly by saying that Home = Office + Media. You might argue that it should be Home + Media = Office, but we got the point.
• Nielsen says, admittedly re the US, that ‘we’re seeing the power of choice play out in how they [workers] manage the balance between living and working in the same place.’
• Bank of England director for financial stability has said that a “sharp return” to “dense office environments” is not likely in the short term. He told a committee of MPs ‘we should expect a more phased return.’ Various companies are making preparations for workers to work from home for a considerable period of time.
• Cities may always be with us but the do evolve. Many were pulled around when the railways arrived, others tore out their centres to accommodate markets etc. A further evolution is perhaps to be expected.
• Wireless Social has reported that ‘total footfall on Sunday was the largest jump we have seen in weeks. With it being bank holiday Sunday in England and Wales and the weather turning sunny, people were keen to get out and about again.’ It says ‘Liverpool on Sunday – 13% behind pre-lockdown footfall figures, with a 25% jump on the previous week.’ The West End footfall was ‘in slight growth’ but is still ‘55% down on February figures.’
• Early feedback on the various DIY eat-out schemes that are now in operation suggests that covers were well up on this time last year with take also ahead, albeit with a ‘complicated’ margin (as VAT is down, food costs are up and mains are 50% off). See Premium email.
• Barclaycard Payments reports that diners spent 34.2% more at restaurants on Mondays, Tuesdays and Wednesdays in August than they did in the prior month. That is before the addition payment from government of up to £10 per diner. The number of transactions was up by 33.7%. The company says that cannibalisation looks to have been minimal with total spending from Thursdays to Sundays in August also up 33%.
• Nielsen reports that consumers have been trading up when it comes to shop-bought wines. Drinks Business quotes the analyst as saying ‘wine in general has been one of the standout categories in the off-trade since lockdown began along with beer and cider, making up a quarter of all growth.’
• Revolution Bars Group has updated on trading saying that it had ‘reopened 18 bars by the end of July, and as of Monday 25 August 2020, 39 bars were trading.’ It says that ‘trading in the period since reopening has been ahead of the Board’s expectations, in part as a result of the Eat Out To Help Out scheme.’
• RBG goes on to split the trading period down saying LfL sales were 72.5% of last year for the 8wks of trading but that rose from 60.0% of last year in the first four weeks and 77.5% of last year during the EOTHO scheme. It says this ‘has been a big success in the last four weeks driving Monday to Wednesday comparable venue sales to 188.4% of last year.’
• RBG says ‘a further 10 bars have opened this week and a further 13 are currently planned to reopen on Monday 7 September 2020. This leaves 11 bars that are unlikely to reopen until social distancing restrictions are further relaxed.’ CEO Rob Pitcher says ‘having opened two thirds of our estate I’m pleased that these bars have outperformed our base case scenario assumptions, however, sales in the 8 weeks since reopening commenced remain 27.5% below last year despite the assistance of the government’s ‘Eat Out To Help Out’ scheme that finished earlier this week.’
• Pitcher says ‘overall, the Board’s expectations for the year ahead remain unchanged.’ He concludes ‘we would welcome an indication from government as to their inclination to assist in the grave issues that exist with commercial rental arrears and the moratorium that is due to end on 30 September 2020 as well as an indication of further financial support for the late-night venues sector that remains closed by government order.’
• Pernod Ricard yesterday reported full year numbers saying that ‘sales growth in H1 was robust but H2 was impacted by Covid-19.’ No surprises there. The company says Europe was only down 6% overall with ‘good resilience with Germany, UK and Eastern Europe growing, partially offsetting declines in Travel Retail, Spain and France.’
• Pernod’s CEO Alexandre Ricard says ‘the Group has proven very resilient through FY20 and demonstrated its agility and ability to keep its supply chains operational, control costs and manage cash.’
• M Ricard says ‘for FY21, Pernod Ricard expects continued uncertainty and volatility, in particular relating to sanitary conditions and their impact on social gatherings, as well as challenging economic conditions. We anticipate a prolonged downturn in Travel Retail but resilience of the Off-trade in the USA and Europe and sequential improvement in China, India and the On-trade globally.’
• Yo! Sushi creditors have approved its Company Voluntary Arrangement proposal. Some 19 of its 69 sites will permanently close. CEO Richard Hodgson says ‘this will ensure Yo! has a solid foundation to continue to adapt to the changes brought about by Covid-19 and allows us to focus on reopening remaining sites and rolling out our new restaurant model.’
• Meatailer is offering Mon-Weds 50% off food bills for parties of up to six with no £10 cap.
• Manchester bar operator East Coast Concepts has been bought out of administration by The Cairn Group.
• The government has ‘introduced a new Kickstart Scheme in Great Britain, a £2 billion fund to create hundreds of thousands of high quality 6-month work placements aimed at those aged 16 to 24 who are on Universal Credit and are deemed to be at risk of long term unemployment.’
• Aimed at younger people, the scheme ‘will cover 100% of the relevant National Minimum Wage for 25 hours a week, plus the associated employer National Insurance contributions and employer minimum automatic enrolment contributions.’
• Intrepid Spirits ‘has added Brazilian Cachaça brand Fubá to its innovative portfolio in time for Brazilian Independence Day on 7th September.’
HOLIDAYS & LEISURE TRAVEL:
• Dart Group has updated on its trading saying that ‘we were pleased to resume operations on 15 July, gradually ramping up Summer 2020 flying to approximately 40% of our planned destinations for August, ensuring we could provide as many of our customers as possible with their well-deserved and eagerly anticipated summer holidays.’
• It says ‘whilst there have been setbacks, such as the imposition of quarantines and evolving guidance from the UK Government, we have been satisfied with the average load factors and financial contribution achieved to date and will continue to add further capacity, as appropriate, for the remainder of Summer 2020, supported by our quick to market, flexible operating model.’
• It adds ‘winter 20/21 forward bookings have yet to match our revised on-sale seat capacity, with customer bookings displaying a shorter lead time than in previous years.’ It says this could depress pricing. The group says it has £1,064m in cash and adds it will provide a further trading update on publication of its interim results on 19 November 2020.
• Dart also announces that, following the sale of our Distribution and Logistics business, Fowler Welch, earlier in the year, it is to change its name to Jet2 plc ‘reflecting the continued focus on its longer-term strategy of growing its leisure travel business.’
• PPHE Hotels has reported H1 numbers saying that it ‘outperformed the market in January and February prior to the onset of COVID-19. Significant impact of COVID-19 from March resulted in reduced customer demand and property closures.’ It says 84% of its units are now open.
• PPHE President and Chief Executive Officer Boris Ivesha says ‘the first half of the year has brought unprecedented challenges unlike anything the hospitality industry has seen before. In the face of these difficulties, the Group has shown its ability to adapt to the new environment, supported by the high quality of our portfolio, our flexible owner operator model and broad customer appeal.’ He says ‘looking ahead, we are focused on maintaining this positive momentum and ensuring that the Group is well-positioned to navigate the ever-evolving trading environment and to capitalise on future opportunities in line with our growth strategy.’
• The Scottish government is reported set to reintroduce a 14-day quarantine on travellers returning from Greece.
• President of Barrhead Travel Jacqueline Dobson has said that the response is ‘disproportionate’. She says ‘once again, Scottish holidaymakers are faced with a disjointed approach and a decision that is out of step with the rest of the UK. It is a conflicting and confusing message for those due to travel.’
• Elsewhere, the price of flights from Portugal to the UK have risen sharply due to fears that a quarantine restriction could be imposed from today (3 Sept).
• See comments from Pernod Ricard above on likely sales through retail outlets in airports. Not good.
• Representatives of the coach travel industry have said that up to 27,000 jobs could be lost this winter if lenders repossess coaches.
• Brittany Ferries is to take one of its cross-channel ferries out of service. It says this is due to a ‘terrible summer season and weak forward demand for services this autumn.’
• Heathrow could cut a quarter of its jobs after talks with trade unions broke down
• The American Hotel & Lodging Association says that four out of 10 hotel employees are still not working. It says 65% of hotels remain at or below 50% occupancy. The AHLA says ‘while hotels have seen an uptick in demand during the summer compared to where we were in April, occupancy rates are nowhere near where they were a year ago. Thousands of hotels can’t afford to pay their mortgages and are facing the possibility of foreclosure and closing their doors permanently.’
• Zoom has told analysts that it should generate some $1.8bn in revenues this year.
• Rare retail success story Lego has said that it should open 120 new shops this year, albeit worldwide. The company currently has around 610 sites.
• There are reportedly 600 books being published in the UK today.
FINANCE & ECONOMICS:
• Deputy Bank of England governor Sir Dave Ramsden and Gertjan Vlieghe have told a committee of MPs that the damage inflicted on the economy by Covid-19 and the ensuing lockdown may be worse than the Bank thought. They say the economy could take ‘several years’ to recover and add that some parts of it may never do so.
• Chancellor Rishi Sunak has (apparently accidentally) aired his views that there will be no “horror show of tax rises” but there are “difficult things” to come.
• Low-deposit mortgage deals are apparently being pulled by banks nervous that borrowers may struggle to repay loans.
• Sterling down vs dollar at $1.3312 but up vs Euro at €1.1275. Oil down at $44.35. UK 10yr gilt yield down 6bps at 0.24%. World markets broadly better, London set to open up around 20pts.
• The Nationwide reports that house prices rose by 2% in the year to last month.
START THE DAY WITH A SONG:
The song has been furloughed. See you on the other side.
RETAIL WITH NICK BUBB:
Today’s News: Further to last week’s ITF news, The Hut has confirmed that it is pressing on with the IPO of the business, although there is very little information about timing, other than it will take place this month. The pre-new money valuation is fixed at £4.5bn, but there is no information on how many shares are being sold by existing shareholders, on top of the £920m that the company itself is raising. The company has, however, announced that it has 4 cornerstone investors willing to stump up a total of £565m: BlackRock, Janus Henderson, Merian and the QIA. And Watches of Switzerland, one of the last retailers to go public, has announced that its veteran Chairman Denis Millard is to retire: in the statement the CEO Brian Duffy notes that during the IPO “Dennis’s counsel and advice, delivered with a firm hand and a fair degree of charm, were invaluable”. And, 6 years on from the IPO
News Flow This Week: At lunchtime today the Q2 results of Signet (aka the UK jewellery chains H Samuel and Ernest Jones) will be published in the US.
TRADING STATEMENTS & EVENTS:
Upcoming results are set out below:
• 1 Sept 20 Gear 4 Music AGM
• 2 Sept 20 Gym Group H1 numbers
• 3 Sept 20 PPHE 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
• 28 Sept 20 Time Out AGM
• 30 Sept 20 Compass Group FY update
• 30 Sept 20 Everyman Media H1 numbers
• 30 Sept 20 888 Holdings H1 numbers
• 1 Oct 20 Pepsi Q3 numbers
• 6 Oct 20 Restaurant Group H1 numbers
• 9 Oct 20 JD Wetherspoon FY numbers
• 22 Oct 20 Gear 4 Music trading update
• By 31 Oct 20 DP Poland H1 numbers
• 3 Nov 20 DART Group AGM
• 17 Nov 20 Gear 4 Music H1 numbers
• 19 Nov 20 Dart Group H1 numbers
• 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
• Working from home. How much is temporary, semi-permanent, permanent? Has laptop, mobile comms & The Cloud finally killed the office? Probably not. But this is a sticky time for sandwich shops, that’s for sure.
• Getting back to work. Government pleads with employees to dive back into commuting hell. Yes, well, how did that go. Sky says ‘Boris Johnson’s ‘return to work’ plea fails.’ Others say ‘workers are revolting’.
• Getting back to work & herding cats. Tasks more similar than they are different? Worry or sloth? Maybe a bit of both (says man sitting in his PJs at 3pm). Not a picture to leave you with, can only apologise for that…
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.