Langton Capital – 2021-03-16 – Gregg’s, delivery, lost pubs & trade, High St, business confidence etc.:
Gregg’s, delivery, lost pubs & trade, High St, business confidence etc.:
A DAY IN THE LIFE:
Deliveroo is all over the news and we’re sure the tech is impressive, a £7bn valuation says that it must be. The company must be a lot more than just a bloke on a bike with a pizza strapped to his back.
But then again, isn’t a ‘sustainably powered, timeless, versatile & reliable driving implement for the 21st century’ still a hammer? And, if it is, then I have no end of them spawning rust in the shed. I’m attached to them, sure, but, for £7bn, they’re yours.
We have a bit more to say on the matter below but, for the moment, let’s move on to the news:
DELIVERY: DELIVEROO, RESTAURANT GROUP & OTHERS:
JUST WHO WILL STEAL WHO’S LUNCH?
• We’ve been thinking. Often dangerous but, if Deliveroo is going to move upstream into food prep and Restaurant Group (and others) are moving sideways into Dark Kitchens to try to head them off, who’s going to be the winner? See premium email
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PUBS & RESTAURANTS:
In the Premium. Deliveroo vs Restaurant Group & peers. Deliveroo valuation, Gregg’s FY numbers and other morning news:
• The BBPA has reported that, as the initial shutdown is about to annualise, some 2,000 pubs have been ‘lost forever’ and around ‘£8.2bn in trade [has been] wiped out.’ Some taxpayer aid should maybe be netted against that figure.
• The BBPA reminds us that ‘since the first lockdown in March 2020, pubs have faced a further two lockdowns. They have also faced severe restrictions to their trade during other periods of being “open”, including tier restrictions that ultimately forced many to stay shut regionally or open but under conditions that made their trade unviable due to the 10pm curfew and substantial meal rules.’
• As for the future, outdoor opening should commence from 12 April, followed by indoors from May 17th at the earliest and with all restrictions lifted by June 21st at the earliest. The BBPA says whilst it ‘has welcomed continued support for the sector in the most recent Budget, in the form of £2 billion worth of measures including grants and furlough support, it stated that longer term investment in the sector was still needed.’
• Langton comment. See premium email
• Drinks Business reports that a number of Scottish pub trade bodies including the SHG, UK Hospitality Scotland, SLTA, NTIA and the Scottish Beer & Pub Association have suggested a number of changes to Scotland’s reopening plans that could save jobs across the sector.
• The bodies ask the Scottish Government to mirror reopening plans in England as closely as possible. That may not go down too well politically, but it would add certainty and put dates on a number of the proposed measures. Beer, food and staff cannot be sourced immediately and any notice period would be an improvement on none. The bodies ask for last admissions to pubs & restaurants at 8.30pm and venue closing times of 10.30pm.
• A poll by Accenture & Markit has found that business optimism is at its highest in almost six years. Business believes there may be a way out of lockdown.
• Why does this matter? Business confidence leads to investment, which provides jobs and it is jobs that influences consumer confidence and, ultimately consumer spending. Optimism may be fragile but this is, hopefully, one of those valuable things – a lead indicator.
• Only 11% of businesses interviewed expected a decline in activity this year. Over two thirds of companies expected to expand activity. Accenture says ‘although we are not out of the woods yet, it is important for UK business to take advantage of this confidence in order to build a sustainable recovery.’
• Langton comment. See premium email
• Foodservice analyst Peter Backman notes that the three largest players in the UK delivery market released their 2020 figures in the past week. He notes that ‘Deliveroo recorded 65% growth in the UK and Ireland, Just Eat Takeaway (JET) rose 54% globally and even industry veteran, Domino’s Pizza Ltd increased online delivery order values by 21% in UK and Ireland.’
• The operators overlap but do not cover completely the same geographies. Nor do the ‘turnover’ or ‘revenue’ figures equate exactly as they may be system sales, commission revenue, or a mix of the two.
• Backman notes that the sales run rates of ‘all three companies was higher at the end of the year than their annual figures primarily because of the inclusion of figures for the first three non-covid, slower growth months in 2019 but also because of strong growth towards the end of the year.’ See comments on Deliveroo above and below.
• Gregg’s has reported full year numbers for the 53wks to 2 Jan saying that the group is well-positioned for growth having held the decline in total sales for the year to 31%. Sales for the year were £811m (2019: £1.17bn) and like for like sales were down by 36.2%. the company says that it saw a ‘progressive recovery in sales levels through second half of year.’
• Gregg’s reports a pre-tax loss of £13.7m, including government support for job retention and relief from business rates (2019: £108.3m profit). The company says it had a ‘positive cash position at end of year and additional liquidity available under new £100m revolving credit facility.’ See premium email for detail and comment.
• The Telegraph reports ‘Deliveroo cut a quarter of its staff in 2020 as pandemic bit.’ It says ‘the reduction in roles came as the company warned over its finances last year.’ The company has now launched an IPO with a valuation of c£7bn.
• The Telegraph says the company ‘reduced its headcount for sales and marketing staff by around three quarters, with numbers falling from more than 800 at the end of 2018 to just 202 at the end of 2020.’ It says ‘the company warned regulators at the time it would face collapse if they did not approve an investment worth hundreds of millions of pounds from Amazon.’ The pandemic clearly changed the landscape.
• Star Pubs & Bars is reported set to move its licensees on leased and tenanted agreements in England back to full rent from 21 June, the date on which all restrictions on gatherings is due to be dropped. Star has extended its 90% rent concessions to 16 May, when pubs should be allowed to open indoor spaces.
• The Caterer reports that US chicken chain Wingstop is to open three further UK restaurants this year.
• Joe & the Juice has reported that it sees ‘strong potential’ in the UK & it is planning to open more sites.
• Thornton’s has said it will shut all of its 61 shops in the UK, putting over 600 jobs at risk. Retail director Adam Goddard says ‘the obstacles we have faced and will continue to face on the High Street are too severe.’ The company has been on the High Street for over 100yrs.
• Pub is the Hub highlights the versatility of pubs pointing out that pubs can diversify and provide essential local services. It refers to the case of a pub opening a village shop in Northamptonshire.
• The Drinks Trust is launched a new initiative, the Drinks Community. The platform is intended to be ‘where people from the UK drinks industry can share knowledge on work and wellbeing and raise sector-specific questions, and will provide the bridge between disciplines, specialisms, and product channels.’
HOTELS & LEISURE TRAVEL:
• Jet2.com and Jet2holidays have raised capacity to several Mediterranean destinations for summer 2021. Travel Weekly quotes CEO Steve Heapy as saying the ‘number of customers booking flights and package holidays with us to the Canary Islands, Spain, Portugal, Greece, Turkey and Cyprus tells us that many people want nothing more than to get away this summer.’
• He adds ‘this demand is there, and as ever we are quick to respond to what our customers are telling us, making sure we take them from our rainy islands to their favourite holiday choices.’
• TUI has delayed its first river cruises until the end of June. The first departures will be from Budapest, on the Danube.
• Ski operator Silver Ski Holidays Ltd has ceased trading
• Blackstone Real Estate Partners and Starwood Capital Group are to buy Extended Stay America alongside its REIT ESH Hospitality for around $6 billion in cash. The boards of the target companies have approved the deal. Starwood says the extended-stay hotel segment has continued to perform despite the pandemic hit to hotel demand.
• Blackstone says ‘travel and leisure is one of Blackstone’s highest conviction investment themes, and we have confidence in the extended stay model.’
• MiNT Festival is reported to have bought a 136 acre site near Leeds in what will be Yorkshire’s “first ever dedicated festival site”.
• Payment system Stripe has raised another $600m at a valuation of $95bn. That’s a very big number. The group is said to be considering expanding its European footprint.
FINANCE & MARKETS:
• Sky reports that the EU has launched legal action against the UK for making changes to Northern Ireland’s trading arrangements.
RETAIL WITH NICK BUBB:
TRADING STATEMENTS & EVENTS:
Upcoming results are set out below:
• 11 Mar 21 Playtech FY numbers
• 11 Mar 21 Morrison’s FY numbers
• 15 Mar 21 Carlsberg AGM
• 16 Mar 21 Gregg’s FY numbers
• 16 Mar 21 C&C pre-close trading update
• 17 Mar 21 Hostelworld H1 numbers
• 18 Mar 21 Fever Tree FY numbers
• 18 Mar 21 Gym Group FY numbers
• 18 Mar 21 Bank of England MPC meeting
• 19 Mar 21 JD Wetherspoon H1 numbers
• 19 Mar 21 GfK UK Consumer Confidence numbers
• 23 Mar 21 DP Eurasia FY numbers
• 24 Mar 21 M&B AGM
• 25 Mar 21 Compass Group H1 update
• 25 Mar 21 TUI AGM
• 29 Mar 21 Ten Entertainment FY numbers
• 30 Mar 21 AG Barr FY numbers
• 31 Mar 21 Various Eateries AGM
• 7 Apr 21 Saga FY numbers
• 8 Apr 21 Sportech FY numbers
• 8 Apr 21 Constellation Brands FY numbers
• Est. 9 Apr 21 Barclaycard Consumer Spending (March)
• 13 Apr 21 Just Eat Q1 numbers
• 15 Apr 21 Pepsi Q1 numbers
• 22 Apr 21 Domino’s Pizza PLC AGM
• 23 Apr 21 Gear4Music results
• 28 Apr 21 Carlsberg Q1 numbers
• 4 May 21 Campari Q1 numbers
• 6 May 21 Bank of England MPC meeting
• 7 May 21 Intercontinental Hotels Q1 numbers
• Est 9 May 21 Barclaycard Consumer Spending (Apr)
• 12 May 21 Compass Group H1 numbers
• 12 May 21 Stock Spirits H1 numbers
• 12 May 21 TUI H1 numbers
• 18 May 21 Britvic H1 numbers
• Est 19 May 21 Marston’s H1 numbers
• 24 Jun 21 Bank of England MPC meeting
• 27 Jul 21 Campari H1 numbers
• 5 Aug 21 Bank of England MPC meeting
• 10 Aug 21 Intercontinental Hotels H1 numbers
• 12 Aug 21 TUI Q3 numbers
• 18 Aug 21 Carlsberg H1 numbers
• 22 Oct 21 Intercontinental Hotels Q3 numbers
• 26 Oct 21 Campari Q3 numbers
• 8 Dec 21 TUI FY numbers
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