Langton Capital – 2020-11-20 – PREMIUM – Outlook for 3 Dec, GfK confidence, Deltic, eviction legislation etc.:
Outlook for 3 Dec, GfK confidence, Deltic, eviction legislation etc.:
A DAY IN THE LIFE:
Is it just me or has it been something of a slog getting to Friday?
But we’ve got here and, as usual, it’s time now to start working on the excuses you’ll need to drag out if you’re not to do all (or any) of the jobs that you’ve been ‘putting off to the weekend’.
Because clearing out and cleaning the greenhouse, demolishing the coal bunker to make a brick-lined flowerbed, collecting all the fallen apples, sweeping up leaves and cutting back the Virginia Creeper are all jobs that feel better in the contemplation than in the act itself.
Indeed, jobs like those are like a good cheese, they need to mature a bit. Have a good weekend and let’s move on to the news:
ADVERTISE WITH US:
Langton’s free email now carries adverts. See front page of website for today’s copy & contact us for further details.
LANGTON PREMIUM EMAIL:
Langton produces a premium email alongside the free version that you receive. It’s about 100 lines longer than the free version (depending on what’s going on) and includes analysis and opinion.
If you would like an example, please let us know.
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.
THE MORATORIUM ON BUSINESS EVICTIONS: This will end, at some point. What happens then? 20 Nov 2020:
• The free market isn’t working right now. That may be a good thing. Landlords are not permitted to evict tenants who are not paying their rents. See Premium Email.
PUBS & RESTAURANTS:
Lobbying re post-2 December environment continues:
• CAMRA has called for the tier systems to be changed to allow all pubs trade in December. The group has commissioned YouGov research that has found that the majority of pub-goers believe that pubs and other hospitality venues offer a COVID-secure environment.
• YouGov finds that 82% of GB adults who have been to the pub at least once in the last 6 months felt hospitality businesses were COVID-secure environments after the investment many operators have made in health security
• CAMRA has queried on a number of occasions just how much transmission is taking place in pubs. It has asked ministers to publish the evidence on which decisions are being taken about regarding the tier system and other restrictions.
• CAMRA is calling for all pubs, including those that do not serve main meals, to be allowed to open next month. Chairman Nik Antona comments ‘businesses should be allowed to open based on whether they can provide a COVID-secure environment – not based on whether they serve food. Publicans have invested thousands to keep their customers safe this year and comply with additional regulations and track and trace requirements, and this research shows that customers recognise this too.’
• CAMRA says ‘we are particularly concerned that wet-led pubs have been hit by forced closure in Tier 3 areas even before lockdown and have been left out from the VAT reductions that only apply to food and non-alcoholic drinks, despite needing support just as much as other hospitality venues. It’s vital that they are given the chance to trade after lockdown ends.’
• It concludes that pubs are the home of responsible drinking and says ‘this Christmas, we believe pubs should be the COVID-safe home to enjoy a pint.’
• The Sun has weighed in saying that ‘Boris Johnson must listen to pubs and shops.’ It says such outlets have ‘stuck to the rules’ and adds that ‘if the law now forces them to pull down the shutters during the festive season they will stay down forever.’
• Sky reports that supermarkets are the venues most often mentioned by people who have caught Covid-19 as being sites that they have visited in the run up to their contracting the virus. This does not, admittedly, mean that they caught it there. The second most common location reported by those who tested positive for COVID-19 were secondary schools.
• The Scottish Beer and Pub Association yesterday called on MSPs to reject the proposed Tied Pubs Bill when it is voted on one week today. CEO Emma McClarkin says ‘this Bill is not evidence-based, and far from helping Scotland’s pubs, it poses a real danger to future investment in the sector, entrepreneurship opportunities, threatens jobs and it should be resoundingly rejected by MSPs.’
• Ms McClarkin says the bill ‘was ill conceived before Covid-19, but it would be economically ruinous to the sector if it was passed in the current circumstances and it is vital that all MSPs show their support for Scottish pubs by voting this Bill down.’
• Data produced by the ONS has suggested that more than a third of hospitality firms have little or no confidence of surviving the next three months, reports the BBC. Only 82% of hospitality firms were trading even before stricter restrictions were made UK-wide a fortnight ago.
• Few doubt this will linger. But over 200 Facebook workers worldwide are reported to have accused the firm of forcing its content moderators back to the office.
• Global real estate advisor Avison Young has commented on the lockdown in Wales. It says its ‘Recovery Index for Cardiff begun to decline significantly in mid-September, following the imposition of local restrictions on surrounding areas.’ The firebreak in Cardiff was between 23rd October and 9th November.
• Comparing Cardiff with Bristol, the Welsh capital lagged by c10% at the end of September but this dropped to a 20% underperformance by 1 November. The performance in Cardiff post the end of the lockdown has not yet been collated.
The outlook for the consumers, confidence etc:
• We most often comment on supply side issues, but demand is also vital. Consumers need to have the money to spend and they need to have the desire and the confidence to spend it.
• The Telegraph says that ‘workers are bearing the economic cost of the Covid crisis with one-fifth of companies imposing pay freezes in the three months to October despite the resurgence in GDP growth as industries reopened.’ Pay rises across the whole economy have been around 2%, down from the 2.5% achieved in 2018 and in 2019.
• GfK has updated on its UK Consumer Confidence index saying that there has been a ‘worrying decline in consumers’ views on personal finances for the year ahead.’ It says that its measure fell by two points to minus 33 points in November. It says that three of its five measures decreased in comparison to the October 23rd announcement and two were unchanged.
• GfK says ‘in our post-lockdown pre-vaccine Index this month we report another deterioration in headline consumer confidence to minus-33, a drop of two points. Although there is no movement in our views on the economy, people are clearly losing their nerve regarding their personal finances with scores for the last 12 months and the year to come sharply down by seven points and five points respectively.’
• GfK says ‘this will deal a blow to any future rebound because bullish consumer spending fuels the UK economy and low confidence is the enemy of recovery. The second lockdown couldn’t have come at a worse time for the UK’s high-street retailers and it’s no surprise that our major purchase sub-measure is once again mired deep in negative territory. On all fronts, economic headwinds still outnumber tailwinds sadly and consumers can be excused for showing little in the way of Christmas cheer.’
• The ONS says that one in seven companies in the UK fear they are at risk of collapse in the next three months. The figure rises to over 30% for businesses in the hospitality and food service industry.
• Peacocks and Jaeger have fallen into administration, putting more than 4,700 jobs and c500 shops at risk. Owner Edinburgh Woollen Mill Group had failed to find a buyer for both businesses.
• Mintel reports that UK households will spend £6,600 less this year as a result to fhe pandemic. Spending on holidays, eating out and transport has collapsed but there has been increased demand for food and drink bought for home consumption. Mintel says ‘some sectors have benefited from the lockdown, with retail sales of food and drink boosted as all eating and drinking occasions moved into the home.’
• The BBC reports that millions of public sector workers face a pay freeze in next week’s Spending Review. The Treasury has expended billions supporting individuals and businesses through the pandemic and it will have to source the funds from somewhere over time.
• The TUC reports that a record number of young workers lost their jobs this summer due to the coronavirus pandemic. The number of 16-to-24 year-olds in employment fell by 8% to 3.5 million. The TUC says ‘we are on the edge of a national unemployment crisis. This generation of young workers must not be abandoned to mass unemployment.’
• Thinktank Centre for London says that the labour market in the capital has been harder hit by Covid-19 than the rest of the UK. This is likely as a result of London’s heavier reliance both on tourists (international and domestic) and on workers and visitors who have to travel further to their destination than they do elsewhere in the UK.
• There are reported to be around 200,000 fewer people working in London in October compared with last year. The Guardian reports that ‘by October, there had also been a 170% increase in the number of people in London claiming unemployment-related benefits, compared with the same period in 2019, equal to about 300,000 new claims.’
• Deltic has written to landlords warning that the company could collapse unless a sale is agreed imminently. Around 1,000 jobs could be lost. Sky reports that the company’s CEO, Peter Marks, has said that ‘no interested party is prepared to proceed and accrue a rental liability without the knowledge that long term occupation of the property can be secured’. He says ‘without a successful sale, the business will have no option but to be closed’. Some 52 units would be shut.
• Deltic says ‘the management team of Deltic Group firmly believe that when they are allowed to open they will once again have a viable long term business. In the interim any investor will have to fund substantial holding costs to maintain the staff and meet statutory obligation until the clubs can be reopened.’ It says ‘whilst bidders are willing to invest without clarity on an opening date, they require the support of the landlord group through the closure period.’ Deltic says formally that ‘it has received a number of credible offers and will provide an update in due course.’
• McDonald’s is reported set to invest $381m in expanding its coffee outlets in China over the next three years.
• Eataly is to open a 40,000 square foot Italian food and wine hall in London’s Liverpool Street next year.
• Starbucks is to give all US employees a pay rise of at least 10% from 14 December this year.
HOTELS & LEISURE TRAVEL:
• Bill Gates has predicted that 50% of business travel and 30% of days in the office will disappear. He says ‘there will be a very high threshold for actually doing that business trip and there will be ways you can work from home a lot of the time.’
• Aparthotel operator Staycity Group has reported the conclusion of a €70m debt and equity refinancing ‘ensuring the privately-owned company will emerge from the impact of the Covid-19 pandemic fully capitalised and ready to continue with its European plans to almost double the size of the company over the next 18 months and to operate 15,000 keys by 2026/2027.’
• Staycity’s Tom Walsh says ‘despite unprecedented challenges, we have achieved occupancies above 50% year to date. This is significantly ahead of traditional hotels and underpins the robustness of the aparthotel model which is increasingly regarded as an attractive asset class.’
• STR reports that the US hotel industry saw occupancy in the week to 14 November down around 33% on last year. Room rates were down 29% and REVPAR was some 52% lower.
• The FT reports that ‘Cineworld is looking to arrange a rescue deal that could mean UK cinema closures.’
• It says ‘one option being discussed with bank lenders is a company voluntary arrangement, an insolvency process that could help Cineworld cut its rent bill.’ AlixPartners is reported to be advising on developments.
FINANCE & MARKETS:
• UK / EU trade talks have been impeded due to a member of the EU team testing positive for Covid-19.
• The IMF has warned that the global recovery from the first wave of coronavirus in the spring has begun to lose momentum. It says ‘the economic path ahead remains difficult and prone to setbacks.’
• Sterling up a little at $1.3279 and €1.1171. Oil higher at $44.20. UK 10yr gilt yield down 1bp at 0.33%. World markets mixed yesterday. London set to open up around 13pts.
RETAIL WITH NICK BUBB:
TRADING STATEMENTS & EVENTS:
Upcoming results are set out below:
• 12 Nov 20 Young & Co H1 numbers
• 17 Nov 20 Gear 4 Music H1 numbers
• 18 Nov 20 DP Eurasia 10mth update
• 19 Nov 20 Dart Group H1 numbers
• 19 Nov 20 Naked Wines H1 numbers
• 19 Nov 20 Nichols trading update
• 24 Nov 20 Compass Group FY numbers
• 26 Nov 20 Fuller’s H1 numbers
• 26 Nov 20 Britvic FY numbers
• 26 Nov 20 New River H1 numbers
• 2 Dec 20 Loungers H1 results
• 2 Dec 20 Shepherd Neame AGM
• 2 Dec 20 Stock Spirits FY numbers
• 4 Dec 20 Shepherd Neame AGM
• 8 Dec 20 Vianet H1 numbers
• 10 Dec 20 Marston’s FY results
• 10 Dec 20 On the Beach FY results
• 17 Dec 20 Revolution FY numbers
• 17 Dec 20 JD Wetherspoon AGM
• 22 Dec 20 Revolution AGM
• 12 Jan 21 Nichols FY trading update
• 20 Jan 21 JD Wetherspoon H1 update
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.