Langton Capital – 2020-12-21 – Tier Four Fears, Tortilla, food deliveries, DPP, T4 & holidays etc.:
Tier Four Fears, Tortilla, food deliveries, DPP, T4 & holidays etc.:
A DAY IN THE LIFE:
Christmas is nearly upon us & this is a shorter-than-usual email.
Getting out of London last week was a bit like skiing ahead of an avalanche as the bad news just kept on coming. Good luck to all.
We’re upset on two counts at present.
First, we’ve had people point out that the scandalous £6.25 we were paying for a pint of beer in London last week (before the first-of-the-two Tier rating increases) was really £7.03 if you added in the 12.5% service charge – and second, the Mighty Hull City’s halo has slipped as we’ve lost our last three league matches on the trot.
Anyway, if we’re going to challenge Richard Osman on the best-sellers’ list this year, we’d better get a move on. There are late runs and then there are very late runs. Here’s the book, go on, treat yourself HERE
Merry Christmas to one and all and on to the news:
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IN TODAY’S PREMIUM EMAIL:
Here we consider the hot topics & hope to analyse as well as report.
YOU COULDN’T MAKE IT UP: Well, some would say, you could and, just maybe, you did. 21 Dec 2020:
• In the last three weeks of trading, London has been in Lockdown, in a beefed-up Tier Two, in a crippling (for hospitality) Tier Three and now it’s in Tier Four. See Premium Email
TORTILLA – RESULTS TO END-DEC 2019:
• Mexican Grill Ltd, which trades as Tortilla, has reported full year numbers to 19 December 2019 to Companies’ House. See Premium Email
PUBS & RESTAURANTS:
All of us, overtaken by events:
• Langton was down in London last Monday, when it was Tier Two, got out of the Capital on Friday, when it was in Tier Three & heard, alongside everyone else, that it was going into a newly invented Tier Four a bare 24hrs later.
• The cries of complaint in London about the Capital going into Tier Three hadn’t died away before it was placed in Tier Four. This brings a terrible year to a pretty terrible end.
• Pub and bar bosses had been attacking the government’s move to put London into Tier Three, saying it was scandalous & punitive – but now the government has gone one stage further.
• In actual fact, the move from Tier Three to Tier Four may do little as pubs in London are already banned from opening. The move will, however, increase the fear factor and perhaps slow down the purchase of takeaways.
• On a slightly more optimistic (or less pessimistic) note, if consumers can’t shop in non-essential outlets, they may spend more on food.
• JD Wetherspoon chairman Tim Martin told his company’s AGM last Thursday that the Government was “relying on false information” in imposing Tier Three. Tier Four has since been added to the mix.
• There have been numerous cries for more help alongside loudly-voiced questions as to just where Rishi Sunak is with his chequebook in the sector’s hour of need.
• Chairman of Loungers Alex Reilley tweets re appeals to government ‘I know how hard everyone is working on behalf of the sector but have we not figured out yet that writing letters isn’t working – we need to get the people on side because the government have gone beyond caring.’
• Sky tweets ‘Britain’s leading hospitality trade body has written to Boris Johnson to beg him for more help in the wake of tightened coronavirus restrictions, in the form of a more generous compensation scheme for affected businesses, and a “clear exit strategy” from the crisis.’
• The Night Time Industries Association has said that it believes hospitality is “bearing the brunt of ill conceived, unsubstantiated restrictions and inadequate support” following the announcement of a Tier 4 and that relaxed rules for Christmas have been scrapped. It says ‘the sector has suffered horrendously since the start of the pandemic and will continue to suffer under these new measures.’
• The NTIA press release says it and the wider sector ‘has lost all confidence in the government strategy against Covid.’ It adds ‘the unrelenting closing and reopening of businesses is costing owners hundreds of thousands of pounds, and coupled with the erratic decision-making around restrictions, is rapidly destroying the ability of the sector to bounce back.’ The NTIA says ‘thousands of businesses and employees have supported the government’s public health campaign against Covid, creating safe, regulated environments for people to socialise. This financial burden and commitment has been recognized only in lip-service, with insubstantial support measures to repay confidence in the sector.’
• The Telegraph reports that retailers are pleading for more rates relief as tier 4 threatens a flood of job losses. It says ‘stores are haemorrhaging money in London and the South East in what is normally their busiest trading time of the year.’
Food & delivery issues:
• The Channel Tunnel has been closed for at least 48hrs after the UK announced the ‘out of control’ spread of a new variant of Covid-19 in Kent. The Port of Dover has been closed to traffic from the UK to France & lorries are backing up further than they already were. The Cabinet will meet today to discuss emergency measures to ensure the distribution of food.
• Sky reports ‘Boris Johnson is holding emergency talks to avert Christmas food shortages after France banned freight and travel from the UK.’ It says Mr Johnson is chairing a crisis Cobra meeting. Sky says it ‘understands that the government is tracking how many days of food are left on supermarket shelves, amid fears that if the ports shut for longer than the current two days, some foodstuffs will run out in just a couple of weeks.’
• It is likely that panic buying will be back in the news tonight. Freight from France to the UK is currently being allowed through but, if the drivers are unable to get back to the continent, they may not wish to come to the UK in the first place.
• DP Poland announces that it has completed ‘an oversubscribed Placing of 19,965,361 New Shares and a Subscription of 23,784,639 New Shares with certain existing and new investors, at a price of 8 pence raising a total of £3.5 million before expenses.’
• DPP says a further 21,828,204 Sale Shares (comprising part of the 283,766,661 Consideration Shares) have been successfully placed at the Issue Price equating to £1.7 million (before expenses) sales proceeds for the benefit of Malaccan Holdings [the vendor of Dominium Pizza]’.
• DPP says ‘the Company expects to publish the Admission Document, which includes a circular and a notice of general meeting, at the beginning of next week.’
• The BBPA has welcomed the move by Leicestershire County Council to offer one-off payments of £1,000 to support small village pubs which are unable to open their doors over the festive period. CEO Emma McClarkin says ‘we have been calling on the Government to increase the £1,000 one off payment for pubs impacted by the tighter restrictions, highlighting that it is not enough to cover local pubs fixed costs let alone compensate for the loss of the business over the crucial Christmas and New Year trading period.’
• CGA reports that it has signed up the 60th company to participate in its Coffer Peach Business Tracker. The Tracker was established in 2009 to measure sales performance across the key market sector. Founder Peter Martin says ‘the Tracker has played an important part in the growth of the chain restaurant and managed pub and bar sector for more than a decade now. As the out-of-home market continues its road to recovery in 2021, it will be at the side of businesses to act as a pivotal source of trading patterns and actionable insights.’
• The 2020 ProWein Business Report says that Covid-19 and the economic impact that it is having poses the most acute challenge to the global wine industry in many years.
• The BRC says that the UK government’s “stop-start” Covid restrictions will cost retailers a further £2bn a week in lost sales. Food manufacturers, on the other hand, should ‘benefit’ from what will be another switch towards cooking at home
HOTELS & LEISURE TRAVEL:
• Would-be holidaymakers living in Tier Four areas are now banned from overseas travel.
• TUI & EasyJet have given holidaymakers in Tier Four areas the option of taking an alternative holiday or getting a refund.
• Luton & Heathrow are in Tier Four. Also, City Airport. TUI is cancelling all flights out of Luton. Gatwick & Stansted are in Tier Two.
• Several European countries including Italy, Austria, Ireland, France, The Netherlands & Belgium have banned flights arriving from the UK from landing. Germany and a number of other countries are reported to be considering a similar move.
• Bloomberg reports that New York hoteliers are concerned there may be a winter shutdown of the City.
• STR quotes studies as suggesting that US hoteliers have ‘significantly’ reduced capex.
• STR says November US hotel occupancy fell by 34.5%. Room rates were down by 27.7% and Revpar was down by 52.6%.
FINANCE & MARKETS:
• UK / EU talks still ongoing into today. Fish the issue. A deal likely, surely, as you can always do a deal. Though maybe only a bad one.
• The FTSE100 looks likely to finish 2020 materially down in what will be the worst year since 2008.
• Sterling has slipped against the dollar overnight on concerns over closed borders. Sterling is $1.3353 vs the US dollar and €1.0955 vs the Euro. Oil lower at $50.65. UK 10yr gilt yield down 3bps at 0.24%. World markets weaker on Friday with London set to open down around 82pts.
RETAIL WITH NICK BUBB:
• Saturday’s Press and News (1): The front page headlines of most of the Saturday papers were mostly focused on the worries about the Covid pandemic and Christmas: the Daily Mail got to the heart of it with “It’s beginning to look a lot like lockdown”, flagging up the plans for a new Tier 4 in England, whilst the Times went with “Postal tests blocked as lockdown fears grow”, although the Telegraph looked on the bright side with “Green light for Oxford jab before new year” and the Guardian highlighted the row about the ludicrous plan to ask secondary skool teachers to test their pupils for Covid after Christmas: “Teachers reject “inoperable” plans to test pupils for Covid”. With Brexit trade deal talks going down to the wire, the FT ran with “French to patrol Eurostar trains as gridlock signals border chaos”.
• Saturday’s Press and News (2): In terms of Retailing stories, the big story was the extraordinary news that, as first revealed by Sky News on Friday afternoon, Next is weighing up a bid for Arcadia with the US fund Davidson Kempner…The FT implied that Next are only interested in Top Shop and Top Man and the Guardian flagged that Davidson Kempner (which owns Oak Furnitureland and was interested in Peacocks recently) might take the other Arcadia chains, but other papers implied that Next are prepared to buy the whole business. There are plenty of other people still interested in the Arcadia brands, however, with first round bids to the administrator delayed from Friday to Monday eg the Times flagged that the Chinese Online fast fashion group Shein is a late entrant to the bidding.
• Saturday’s Press and News (3): In other news, the weak ONS Retail Sales figures for November got plenty of uncritical coverage, with the Telegraph taking a particularly bullish line on the outcome, but the late news on Friday that Stuart Rose is to step down as Chairman of Ocado only merited small snippets in the Times, the Telegraph and the Daily Mail. Slightly bizarrely, the news that the wretched CMA had let the funeral services industry off the hook with price controls (as highlighted by the Times) hit the Dignity share price hard on Friday and that was the lead story in the Telegraph market report. The Daily Mail flagged that Pets at Home boss Peter Pritchard dumped £5m worth of shares last week. The Telegraph had a snippet on the news that John Lewis is rolling out staff testing for Covid and it also flagged that the Costcutter convenience store chain has been sold to the Bestway
• Sunday’s Press and News (1): The headlines on the front pages of the Sunday papers were all about the PM’s decision to cancel Christmas three days after accusing the Labour leader of wanting to exactly that…The Sunday Times (“Christmas is cancelled by surging mutant virus”) and the Sunday Telegraph (“Christmas cancelled for millions”) both had the same photo of an atypically serious-looking Boris Johnson at the 4pm press conference on their front pages, but they kept his name out of it, although the Observer highlighted that “Johnson’s U-turn leaves nation’s plans for Christmas in tatters”. The Mail on Sunday asked the question “Will this nightmare never end?”.
• Sunday’s Press and News (2): In terms of Retail stories, the main news was obviously the shock closure of non-essential shops in London and the South-East on Saturday night and the lead Business front page headline in the Sunday Times was “New rules “will hammer retailers””, whilst one of the main News stories in the Observer was headlined “Shops and businesses in despair as curbs halt Christmas bonanza”. As far as company news is concerned, the paper to read was the Mail on Sunday, as it flagged that the Online fast fashion business Missguided is boasting of record sales and talking about an IPO again and that #MadMike (despite being on holiday in the Maldives) is trying to secure a deal to get a chunk of empty Debenhams stores as he doesn’t want the stock in the stores…The Mail on Sunday also had the wit to ask the American ex-boss of Debenhams and Arcadia, John Hoerner (who is
• Sunday’s Press and News (3): In terms of all the Economics and comment columns in the Sunday papers, we would, as usual, highlight the column by the Sunday Times Economics correspondent David Smith (“Inflation returns – but so far only for house prices”), in which he said that, although inflation remains low for now, “This would not be the first Government to inflate away debt”. We would also flag up the column by the veteran City commentator Jeremy Warner in the Sunday Telegraph (“Prepare to be pleasantly surprised by the speed of next year’s recovery”), although he was talking about the global economy, on the back of mass Covid vaccination, rather than the UK…
• Today’s News: Today is the revised deadline of the administrator for first-round bids for the Arcadia brands, so there should be more news on this later, but Next have not made any official comment on the Sky News scoop that they are working on a full bid. In the meantime, the CBI Distributive Trades survey for “December” is out at 11am, for what little it’s worth. As for company news, Frasers and #MadMike are first off the blocks this morning with a reaction to the shock closure of non-essential shops in London and the South-East, announcing that they are withdrawing their profit guidance for the year, given the impact on peak trading and the uncertainty about when their shops will reopen again…And if you’d forgotten that Boohoo has been looking for a new auditor since the resignation of Pwc, you may be reassured to hear that it has appointed the little-known but not insubstantial
TRADING STATEMENTS & EVENTS:
Upcoming results are set out below:
• 15 Dec 20 Shaftesbury FY numbers
• 16 Dec 20 Wagamama (Restaurant Group) bondholder update
• 17 Dec 20 Revolution FY numbers
• 17 Dec 20 JD Wetherspoon AGM
• 17 Dec 20 SSP FY numbers
• 18 Dec 20 Fulham Shore H1 numbers
• 22 Dec 20 Revolution AGM
• 5 Jan 21 Morrison’s Xmas update
• 6 Jan 21 Gregg’s Q4 update
• 7 Jan 21 Constellation Brands Q3
• 12 Jan 21 Nichols FY trading update
• 12 Jan 21 Games Workshop H1 numbers
• 14 Jan 21 C&C EGM
• 15 Jan 21 Gym Group trading update
• 19 Jan 21 Premier Foods Q3 update
• 20 Jan 21 JD Wetherspoon H1 update
• 5 Feb 21 On the Beach AGM & trading update
• 11 Feb 21 Pepsi FY numbers
• 3 Mar 21 Government Budget Statement
• Getting Covid R-rate <1.0 during Lockdown #1 cost 13wks & 12% of GDP. This variant is ‘70% more transmissible.’ So, what does HMG think getting ‘mutated’ R rate from c6.0 to <1.0 will cost? Just asking for a friend (but keeping that cat in the bag would cost effin’ trillions)
• Lockdown 1.0 got R down from 3.5 to 0.8 (with schools & everything non-essential shut). If this is ‘70% more transmissible, implies R=c6.0. So, how can you get that <1.0? What else do you shut? Is this a) not true or b) is HMG accepting R<1 is scarcely possible? Level with us ffs
• Yes, deal likely & misdirect to keep Tory right off his back. At least for a few days. Mr J quoted Keynes yesterday ‘when the facts change, etc.’ Here’s another one: ‘if you survive for enough short-terms (think wobbly clown on a unicycle), you’ve made it for the long term.
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