Langton Capital – 2020-09-22 – Restrictions, pubs, footfall, UK hotels & other:
Restrictions, pubs, footfall, UK hotels & other:
A DAY IN THE LIFE:
So, given that I haven’t yet reached the cross-over point between a) getting over an illness and b) being lazy, I reckon I can take it easy for a few more days.
Hence, this note has been pre-written as getting out of bed at the hour required to write it in real time is still a bit beyond us.
At least that’s my story and, as I cut the grass a couple of days ago and had to ‘take a moment or two’ on a number of occasions, I think there could still be some genuine recovery left to go – and the fact that the weather is due to be wonderful today (and horrible thereafter) and I fancy reading a book in the garden is completely coincidental.
Follow us for real time developments on Twitter at @brumbymark.
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FURTHER COVID RESTRICTIONS? Boris Johnson is due to address parliament today on potential further measures: 22 Sept 2020:
Introduction: See Premium Email
PUBS & RESTAURANTS:
Potential second lockdown:
• Second lockdown concerns hit the sector yesterday with most companies registering material losses. Young & Co was off 6%, C&C and Revolution Bar Group 7% and Cineworld, TUI, Hotel Chocolat and Saga off 8%.
• Rank, Ten Entertainment and JD Wetherspoon were off 9%, Hollywood Bowl was 10% lower, and Hoselworld and Loungers were off by 11%. Gym Group was down by 12%, City Pub Group and On The Beach were off by 13% and Fulham Shore was 14% lower. M&B was down by 15%, Marston’s was 16% lower and Restaurant Group’s shares were down by some 18%. Not a good day for the sector.
• Whether it is called a second lockdown or a circuit breaker or a fire break or it composes of many discrete geographical areas going into lockdown at the same time, a second major forced closure of non-essential retail outlets spooked markets yesterday.
• We mentioned yesterday that simply saying you don’t want something to happen may not be enough to prevent it.
• Emotions are genuine and sector operators are warning that there could be a ‘tsunami’ of job losses in the event of a second lockdown.
• Some 900k hospitality workers are yet to come off furlough and the whiff of a second lockdown might mean that redundancy paperwork is filled in rather than a request for the individuals to return to work.
• JD Wetherspoon chairman Tim Martin says that ‘the main government mistake is a dizzyingly complex set of rules, which keep changing.’ He says ‘only two things are scientifically proven to work: social distancing and handwashing. By introducing a changing rota of complexities like the rule of six, millions of people have forgotten the two main rules.’
• Hugh Osmond, whose restaurant group Various Eateries is currently attempting to raise funds to buy distressed assets has said ‘we have to bring an end to this randomness of announcements made at the last minute. Is it Eat Out To Help Out and everybody should go back out, or is it rule of six? We don’t know if the Government is accelerating or reversing.’
• Simon Emeny of Fullers warns against government mixed messaging. Emeny says re the Rule of Six that ‘I think they [the rules] are sensible, but any further creep on that will cause untold damage and result in a tsunami of job losses.’
• Other observers are focusing on compensation arguing that, if the government wants to have a hospitality industry in the future, it will have to support it, particularly if it is shut down again, today.
Footfall & current trading:
• S4 Labour reports that ‘hospitality likes for likes stabilise at 91% of last year for second week in a row but remain 15.5% up on July levels.’ S4 Labour says ‘like the previous week, food sales continue to be in growth, up 4.9%. However drink sales slipped 18.7% on the same week last year.’
• Geographically, ‘London like for likes continue to lag behind the rest of the country, down 28.4% on the same week last year, with food down 23.9 and drink down 30.5%. However, outside the capital likes for likes were down just 3.7% with food sales up 11.3%.’
• S4 Labour says there is a ‘flattening out of sales, it may be that in the short term we have settled at a new normal. The extension of the warm weather has been a welcome boost to the sector.’
• Morgan Stanley reports that, at the end of August, some 63% of UK office workers had still not returned to work. This is in contrast to the 62% of workers that the ONS said were once again commuting. The latter figure seems high. The BBC points out that the ‘government has been encouraging workers to return to offices to help revive city centres.’ This may be about to go sharply into reverse.
• Pragma Consulting says there may be too much retail space in our city centres and not enough residential capacity. Swapping the one over to the other will have a big impact on rents, rates and other costs.
Other Covid-19 news:
• Foodservice analyst Peter Backman reports that ‘sadly, the sector, now weakened by 6 months of uncertainty, faces more of the same.’
• Private rents in some parts of London are said to have fallen by up to 20%. Landlords are now once again able to pursue eviction proceedings against tenants.
• Stonegate Pub Company has announced further business support within its lease and tenanted business, Ei Publican Partnerships. It says this is ‘creating an overall support package, which has been implemented in response to the COVID-19 lockdown, in excess of £36.5 million.’
• Stonegate says ‘the road out of lockdown is a long one and we are standing by our publicans every step of the way to help safeguard their businesses in these uncertain times.’
• Grolsch Premium Pilsner it to return to the UK market this Autumn as a 4% beer brewed in Enschede, The Netherlands.
• Imbibe Live Online is to join forces with BCB Berlin, BCB Brooklyn and BCB São Paulo, to produce Global Bar Week – a worldwide networking and education event, from 12 – 18 October
HOTELS & LEISURE TRAVEL:
• STR reports that ‘the United Kingdom has enjoyed a summer of warm weather and pent-up demand, but now that schools have reopened, the question is what awaits hoteliers for the next two quarters and beyond.’ It says a concern is ‘the almost complete absence of convention, meetings and group business.’
• Jet2holidays has cancelled all package holidays to Iceland for the rest of the year.
• Menzies Aviation could cut 1,050 workers at Heathrow. It has told all staff they are to face a 50% cut in hours (per the GMB union). Menzies yesterday said that 200 staff at Luton could lose their jobs.
• Business travel in the doldrums. FCM Travel Solutions and Corporate Traveller have reported that only 26% of businesses plan to return to pre-Covid-19 levels for domestic travel during 2021.
• Speakers at Travel Weekly’s Future of Travel Week have suggested that cruise bookings for the second half of next year are strong.
FINANCE & MARKETS:
• Shares fell sharply yesterday on fears of further restrictions on business. All major markets were down. Sterling is $1.0901 and €1.2799. Oil stands at $41.33 and the UK 10yr gilt yield is 0.15%.
• Labour has launched an attack on the government’s “financial mismanagement” of the coronavirus pandemic
RETAIL WITH NICK BUBB:
• Yesterday’s News: The much delayed Superdry finals yesterday morning report a huge underlying £42m loss for y/e April, even before big exceptional costs, but the main surprise is that recent trading has been weak again, after a better than expected Q1, with sales over the last 7 weeks down by 30%, although CEO Julian Dunkerton says “I am very excited about our new AW20 collection which will be almost fully ranged by the end of October and is the first full collection I’ve overseen since my return to the business last year”.
• Monday’s Press: The front-page headlines yesterday were about the warning from the Government’s chief scientific advisers this morning that the country is at a “critical point” and faces further lockdown measures unless the public responds…In terms of Retailing stories, the Daily Mail goes big again on the IPO of The Hut, highlighting that private investors are expected to rush to buy the shares today, despite the worries about poor corporate governance. The FT follows up on the story that the controversial entrepreneur Philip Day is to break up his embattled Peacocks and Edinburgh Woollen Mills chains, whilst the Times notes the windfall for ASOS staff from the success of the recent share placing and also flags that one of the private equity bidders for ASDA wants to develop the supermarket sites for housing.
• News Flow This Week: Tomorrow brings the Kingfisher interims. The Mothercare AGM and the Joules AGM are on Wednesday. On Thursday we get the DFS finals and the Pendragon interims. The widely followed GFK Consumer Confidence index is out first thing on Friday.
TRADING STATEMENTS & EVENTS:
Upcoming results are set out below:
• 16 Sept 20 Loungers FY numbers
• 23 Sept 20 Ten Entertainment H1 numbers
• 24 Sept 20 Mitchells & Butlers FY trading update
• 24 Sept 20 Safestay H1 numbers
• 28 Sept 20 Diageo AGM
• 28 Sept 20 Time Out AGM
• 29 Sept 20 Gregg’s Q3 update
• 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
• 1 Oct 20 Constellation Brands Q2 numbers
• 6 Oct 20 Restaurant Group H1 numbers
• 8 Oct 20 Restaurant Group General Meeting
• 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:
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
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