Langton Capital – 2021-02-03 – PREMIUM – Insolvencies, state aid, delivery, Time Out, Chipotle, staycations etc.:
Insolvencies, state aid, delivery, Time Out, Chipotle, staycations etc.:
PREMIUM EMAIL – PLEASE DO NOT FORWARD:
A DAY IN THE LIFE:
Things you never hear from dogs when dishing out their food:
• Not at all, you just take your time…
• That’s enough for now / I’ll miss this meal out…
• Are you sure there’s enough left for you?
• Take it all away, please, there’s a fly / chew toy in it.
• Why, thankyou…
Of course, since they can’t speak, you don’t really hear much at all but, as I was feeding the dog for perhaps the 2,000th time in his life this morning, it occurred to me that he hasn’t fed me even the once.
Which, since he eats the most disgusting rubbish, suits us both and, with the thought that the outcome as it stands leaves us both happier than we would be otherwise, let’s move on to the news:
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• The government has released company insolvency stats for the UK. This shows that numbers fell last year.
• This was partly because of the inability of insolvency practitioners, Companies House, courts & other bodies inability to process insolvencies as usual.
• And partly due to the unprecedented levels of support supplied by HMG in the face of the Covid-19 pandemic.
• England & Wales registered 12,557 insolvencies. This was the lowest number since 2012 and was down 27% on 2019.
• In Q4, which saw lockdown two but was more ‘normal’ than Q2,there were 3,071 company insolvencies in E&W, up 17% from the previous quarter. The increase was primarily due to a rise in CVAs and CV Liquidations.
• Given that many liquidations were voluntary, it’s interesting to note that compulsory liquidations were at a nearly 50yr low (lowest since 1973).
• Government help will have staved off some collapses. Compulsory liquidations decreased 55% on 2019 and ‘normal’ administrations were down by 16%
• For the year as a whole, construction saw the largest number of insolvencies at 2,042.
• Accommodation and food services saw 1,701 insolvencies and motor garages & repair shops saw 1,673 insolvencies
Scotland & Northern Ireland:
• Company insolvencies in Scotland totalled 146 in Q4 (down 44% on Q4 of 2019)
• Only 24 companies became insolvent in Northern Ireland in Q4, down 79% on the same quarter in the year before
• Government support and an absence of staff to bury the corporate bodies has reduced insolvency numbers
• It hasn’t been the buoyant nature of the economy
• 2021 will be another odd year but, as trading normalises and support is withdrawn, insolvency numbers could rise
PUBS & RESTAURANTS:
• PM Boris Johnson has suggested that the hospitality sector could reopen from its current lockdown under national rather than regional restrictions. The government had previously signalled a potential return to the Tier System.
• The PM spoke about the new, UK variant as being a ‘pretty national phenomenon.’ The Government will make an official announcement on its exit strategy on 22 February.
• A report published by the Independent Business Network is calling for more support to the tune of £35bn to support the hospitality industry. That is rather a big ask.
• The IBN is asking for a halving of alcohol duties, the maintenance of the 5% VAT rate and its extension to alcohol. It is also asking for cash rebates (£690m) and for a further 12mth extension to the suspension of business rates for retail premises. It throws in a suspension of town centre parking fees for good measure.
• Langton comment: If you don’t ask, you don’t get but, that said, this looks like a list of demands or requests that will be easy to turn down.
• The IBN says venues have been disadvantaged because they have run their business and made decisions based on ‘misleading and inaccurate government advice’. This could be seen as somewhat confrontational language. There doesn’t seem to be much by way of thanks for the help, including the huge furlough scheme and EOTHO, which has kept many businesses afloat to date.
• The IBN says ‘successive draconian lockdowns imposed by central government have decimated our hospitality and high street retail sectors to the extent that many are facing the looming prospect of financial oblivion and, in some cases, irreversible decline. The travesty is that much of this damage was entirely avoidable and was a by-product of poor leadership and an ill-informed effort on the part of government to get to grips with the virus.’
• A cri de coeur this may be, but it might not be the way to make friends. The IBN says ‘for weeks during the first lockdown the government gave those operating in the hospitality industry the false impression that an end to lockdown would bring with it a slow but gradual return to normality.’
• These comments are true but maybe do not bear repeating when one is asking for money. The IBN says ‘as a consequence of the government’s messaging, pub landlords and restaurant owners the length and breadth of the country invested in expensive PPE and other equipment to ensure social distancing and prevent the spread of the virus only to discover that, in fact, the sector would be plunged once again into closure and their equipment investment rendered redundant.’
• It concludes ‘of course it’s right, therefore, that the government should step in to provide compensation to these businesses’ [that have made investments based on wonky government advice.]
• South Africa has lifted its ban on alcohol sales in both the on- and off-trades.
Lasting impact of Covid-19.
• See comments from Freshfields on reduced business travel below. This will have an impact on the hotels, restaurants, pubs and coffee and sandwich shops where business travellers would have spent money.
• Langton Comment: Consider also fewer shops, less city-centre draw, more working from home etc.
• On the bright side, consumers who have been working from home and who return to the office should have been able to save some money. They may spend some of this going forward – though money saved is arguably more likely to be spent on large ticket items rather than two pizzas at lunch rather than one.
• Aldi is hiring around 4,000 new staff.
Companies & other news:
• Fulham Shore (Franco Manca & The Real Greek) chairman David Page has told Big Hospitality that working with third party delivery partners during Covid-19 has been a frustrating experience.
• Page says that delivery has risen from 15-20% of revenue to 100% during lockdown. Re using third parties, he says ‘it is a frustrating experience, not being 100% in charge. But then, that is something that we have to deal with.’ The company experimented with its own bikes but says that ‘didn’t work. It was a different skill. So, we are prepared to pay the percentage to the, to the experts really.’
• On the back of increased sales and good numbers, Deliveroo intends to IPO shortly.
• Time Out has updated on openings saying it ‘has entered into a management agreement with leading real estate developer, Aldar Properties, to open a new Time Out Market in Abu Dhabi’s Saadiyat Island. Time Out Market Abu Dhabi is expected to open in 2023.’
• Time Out says this is Time Out Market’s fourth management agreement and its second location in the UAE, with Time Out Market Dubai set to open in the first half of calendar 2021. The company says ‘under the agreement Time Out receives a share of revenues and profits (subject to a guaranteed management fee) but does not contribute to the capital cost of the site. Its primary responsibility being branding, curation and day-to-day management and operations.’
• Company CEO Julio Bruno says ‘signing the fourth management agreement for Time Out Market with a global real estate partner like Aldar Properties is testament to the appeal of our unique “Market” concept and the global strength of the Time Out brand. We look forward to bringing the Time Out Market to Abu Dhabi and curating the best of this international city’s home-grown culinary talent under one roof. While it remains a challenging time for the leisure industry, we know our audience is eager to return to the city life that we champion and we look forward to welcoming them to the current and planned Time Out Markets around the world.’
• Moonpig shares rose sharply on their IPO yesterday to finish up by 25% on their ussue price.
• Chipotle Mexican Grill, which had 2,768 restaurants worldwide at the end of December, has reported numbers saying that digital sales were up 177.2% in the fourth quarter to end December to reach almost half of total sales. The company says it opened 61 new restaurants, including two relocations during the quarter, and closed one.
• Chipotle says its new ‘formats continue to enhance customer access and convenience, while also helping increase new restaurant sales, margins and returns.’ CEO Brian Niccol says ‘expanding access and convenience through our digital ecosystem has kept the Chipotle brand relevant.’
• Chipotle Q4 profits rose to $191m or 669c per share. Like for like sales were up by 5.7% in Q4 and up by 1.8% for the year as a whole. The co says ‘comparable restaurant sales began to improve toward the end of December and this trend has continued with January comparable restaurant sales growing around 11%.’ It says ‘comparable restaurant sales in the last week of January were in the high single digits, with winter weather across the country contributing to the lower comp.’
• The company concludes ‘assuming the pandemic doesn’t worsen, we expect first quarter 2021 comparable restaurant sales to be in the mid- to high-teens range given an easier comparison during the second half of March.’
• Amazon founder Jeff Bezos is to step down as CEO. He will become executive chairman.
• Tech co BigDish reports that it is to form a Joint Venture food technology company, Amala Foods Inc. This ‘is being established for the production and distribution of minimally processed plant-based meat products initially within Asia.’ The company will be spun out to its own listing and BigDish will keep 70%.
• The Telegraph reports that alcohol beer sales are rising sharply. It points out ‘shoppers also looked to treat themselves to cope with another month of restrictions, while Dry January boosted sales of zero alcohol beer by 12pc compared to last year and vegan food increased 10pc thanks to the usual healthy New Year’s resolutions.’
HOTELS & LEISURE TRAVEL:
• Scotland’s first minister Nicola Sturgeon says all travellers arriving in Scotland will soon have to quarantine in hotels, regardless of the country they have travelled from.
• Cottages.com has said that it set a new sales record over the weekend after health secretary Matt Hancock said we could look forward to a “happy and free Great British summer”.
• Travel Weekly reports that ski demand is shifting from this winter to next.
• Club Med says it expects a bumper 2021-22 winter season.
• Adventure specialist Tucan Travel has ceased trading.
• Legal firm Freshfields has said it intends to cut its carbon emissions from business travel by 30 per cent by 2025. It will make more use of Zoom etc. This will clearly have an impact on travel firms but also on hotels, restaurants and the like.
• The Global Business Travel Association reports that business travel spend in Western Europe fell by 77 per cent in 2020 vs 2019. Business travel had been growing, on average, by 5.1% per annum in the decade prior to the pandemic.
• The GBTA says ‘the pandemic has been devastating for business travel and it’s clear our industry will take some time to recover given the challenges we’re facing on multiple fronts. Economic recovery is already underway, although very uneven across countries and sectors.’
• Whitbread is to open four new hotels in Scotland in the coming months.
• Hull-based caravan maker (and staycation beneficiary) Victory Leisure has created 70 jobs at a new site in the city.
• STR says ‘after a dour 2020, the pace of [hotel transaction] deals in the U.S. hotel industry is expected to pick up this year.’
• Uber Technologies Inc is to buy Drizly, the alcohol delivery app, for $1.1 billion in stock and cash. CEO Dara Khosrowshahi said ‘wherever you want to go and whatever you need to get, our goal at Uber is to make people’s lives a little bit easier. That’s why we’ve been branching into new categories like groceries, prescriptions and, now, alcohol.’
• Drizly CEO and co-founder Cory Rellas says ‘Drizly has spent the last eight years building the infrastructure, technology and partnerships to bring the consumer a shopping experience they deserve.’
• Licensing solicitors Poppleston Allen comment on the outcome of the summer 2020 consultation on gambling saying it will require companies to slow their machines in order to prevent money being lost so quickly.
• It says there must be a minimum of 2.5 seconds from the time a game is started until the next game cycle can be commenced. It must always be necessary to release and then depress the ‘start button’ or take equivalent action to commence a game cycle. Players may otherwise lose track of how much they are spending.
• Slot machines will also be stopped from playing positive-sounding noises or music when a player has lost money.
• Mobile gaming company Gaming Realms is to enter the Italian gaming market
• Premier League player transactions in the January transfer window totalled just £70m compared with the £230m spent a year ago. The amount is the lowest since 2012.
• Tesla has issued a recall on 158,000 cars.
FINANCE & MARKETS:
• The Nationwide reports annual house price inflation has slowed to 6.4% in January from 7.3% in December. The building society says ‘the slowdown probably reflects a tapering of demand ahead of the end of the stamp duty holiday, which prompted many people considering a house move to bring forward their purchase.’
• Some trade issues deemed to be more than ‘teething problems’. The EU has said that British fishermen will be indefinitely banned from selling live mussels, oysters, clams, cockles and scallops to its member states.
• The UK is to set up new state aid rules for business post Brexit.
• Sterling a shade weaker at $1.3648 and €1.1334. Oil higher at $57.69. UK 10yr gilt yield up 3bps at 0.35%. World markets broadly better yesterday with London set to open up around 30pts.
RETAIL WITH NICK BUBB:
Today’s News: There is still no more news on the mooted JD Sports share placing or the mooted Boohoo acquisition of the rump of the Arcadia brands. The big talking point yesterday was the impressive IPO debut of Moonpig, reaching 450p in first dealings, before running into profit-taking (on worries about the impact of the Covid lockdown in Guernsey on its warehouse), to close c17.5% higher at 410p, valuing it at £1.4bn.
Grocery Market Share Watch: The latest monthly Kantar and Nielsen grocery market share figures usually come out at the same time, but the calendar shift means that Nielsen have pushed their figures back by a week, to next Tuesday. The rival Kantar figures (for the 4/12 weeks to Jan 24th) came out at c8am yesterday and the Kantar overview was headlined “Shoppers balance healthy habits with life in lockdown”, flagging, inter alia, that take-home Grocery sales increased by a chunky 12.2% in the last 12 weeks, convenience stores gained market share and that food price inflation rate stands at 1.3%.
Amazon Watch: The Amazon Q4 results in the US last night beat expectations, with revenue up 44% to nearly $126bn (pushing the market cap of the Online behemoth over the $1.7tn mark in after-hours trading), but the big news was that the founder and CEO Jeff Bezos will “transition” to the role of Executive Chair in Q3, with Andy Jassy (the head of Amazon Web Services) taking over as CEO of Amazon at that point. The only explanation offered for the move by Bezos was, in his own words, that “When you look at our financial results, what you’re actually seeing are the long-run cumulative results of invention. Right now, I see Amazon at its most inventive ever, making it an optimal time for this transition”. On the Q4 analysts call, the CFO emphasised that Jeff Bezos would still be involved in all the big decisions: “He will be involved in many large “one-way-door” issues, as we say (meaning
This Week’s News: Unconditional dealings in the Dr Martens IPO start today (with Moonpig following on Friday). Tomorrow brings the Watches of Switzerland Q3 update and the MPC meeting interest rate/QE news (at mid-day).