Langton Capital – 2021-03-19 – JD Wetherspoon H1 numbers, R rates & interest rates, holidays etc.:
JD Wetherspoon H1 numbers, R rates & interest rates, holidays etc.:
A DAY IN THE LIFE:
I think that, in common with most of the population, lockdown’s starting to get to me.
Because I’ve graduated, if you could call it that, from betting with myself which raindrop will make it to the bottom of the window first to counting the bricks on the outside privy (now a wood-shed, it has to be said, since we got running water in the house) and I don’t know which is the more interesting.
However, whilst the above isn’t altogether riveting, there are some compensations to living on the edge of town in what might charitably be called a ‘brownfield site’ because the wildlife, for better or worse, is a mixture of country and town and there’s more of both than there is in the heart of either – if you know what I mean.
We have plenty of verminous foxes, squirrels, magpies (they eat poo, you know, they really do) and deer. And, as they are fed by our neighbours to the west and shot by the farmers to our east, they tend to live in our garden and hereabouts and, just this week passed, we’ve seen roe deer, sparrow hawks, buzzards, a barn owl, a greater spotted woodpecker, treecreepers, no end of finches and thrushes and more than our fair share of t-one-t-s.
I’m talking here of the great, blue, long-tailed and coal varieties which, though two legged, aren’t the two legged ones that you sometimes meet in the workplace or when you’re buying a car, etc.
Anyway, the weekend is nearly upon us and it’s time to move on to the news. Incidentally, if a brick privy has a broadly square base, is 5 bricks wide and 20 bricks high and one wall is taken up by the door, there will be about 300 bricks. Call it 320 for cash.
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JD WETHERSPOON – H1 NUMBERS:
Headline numbers: JDW reports that revenue in the half year was down by 53.8% at £431.1m. Like for like sales were down by a similar 53.8%. The group is reporting a pre-IFRS 16 loss before tax of £46.2m (prior year: profit £57.9m) with an operating loss of £20.7m (prior year profit £76.6m). The loss per share is 36.4p vs a profit per share in the prior year of 44.3p. Detail and comment, see premium email.
PUBS & RESTAURANTS:
Covid in retreat. Yes, but caution required…
• The NIESR conducts its own research into the pandemic, specifically the R-number, on a weekly basis. It reports, for the week to 16th March, that the R-number had edged up again to a central range figure of 0.925 from a figure of 0.9 in the week prior. The NIESR has ‘controlled out’ the testing in schools, which is picking up more cases (but wasn’t in operation in prior weeks). Inclusive of school testing, the R-number would be 0.975 in the centre of its range.
• The NIESR says ‘based on our model, by 12th April when non-essential retail is scheduled to reopen, we expect trend value of daily cases to be around 2,900, admissions to be around 100 and deaths to fall below 50. Regarding schools, it cautions that infections may increase further. The NIESR says that, even if cases pick up, ‘the path of hospital admissions and deaths will depend on the follow through from increased transmission due to the reopening, countered by the efficacy of the vaccination programme as the roll out continues at pace.’
• Langton comment: See premium email.
Pub reopening, practical issues:
• Cask Marque has pointed out that, ‘with pubs being closed for over three months there is much preparation to undertake to welcome customers back and give them a great beer experience.’ Cask Marque provides a brief tick list towards reopening that is available here – https://cask-marque.co.uk/Re-opening-Checklist.pdf. Cask Marque director Paul Nunny stresses the importance of preparation saying ‘three months is a long time with equipment not being used. Would you leave your car for 3 months? Pubs need to test their equipment and get the cellar fit for use. If there are any issues call into technical services for support. Don’t leave it to the last minute.’
Covid – other issues:
• Big Hospitality quotes a survey undertaken by The Compensation Experts which finds that only 39% of hospitality employees working during the pandemic think their employers take social distancing rules seriously. It’s easy to criticise without the right to reply and this may be slightly unfair on employers. Most operators, though admittedly not all, have gone to some length to make their sites Covid-secure and have communicated this to staff and customers.
• Is there a ‘wall of money’ and is the consumer itching to spend? Yes, probably many consumers are but work by Scottish Friendly and the CEBR suggests that the area where the largest number of consumers say they will spend money post lockdown is on going on holiday. Fortunately, staycations will claim a larger-than-average share of that spending this year and the ‘holiday-spend’ should include visits to pubs & restaurants. Some 29% said they expected to spend more on domestic holidays in 2021 and 28% specifically mentioned restaurants and cafes. Some 19% said they would increase spending in pubs and bars.
• Langton comment: See premium email.
• Step Change has warned that some 460,000 private renters have fallen behind on payments during the coronavirus pandemic. These consumers may not be contributing to the wall of money mentioned above. Step Change says 150,000 renters are at risk of eviction when rules change to allow repossessions. The charity is calling for emergency government support.
Company & other news:
• Big Hospitality reports that Pizza Pilgrims is set to open four new pizzerias in London by late summer with four more in negotiations. The group currently has 15 units. It says it will delay its opening in the UK regions until next year.
• Private company Open House, which has the Percy & Founders and The Lighterman sites in London, has reported rather historic results to the end of December 2019 to Companies House saying that turnover rose by a short 2% to £11.78m with EBITDA up by 28% at £0.78m. Open House says it ‘will be opening one new site in 2021 with the lease for that site completed in July 2019. The company continues to actively seek additional sites to expand the company’s brand within its preferred location of Central London.’
• The accounts were signed on 9 Feb this year and do comment on Covid. The directors say they ‘remain confident that they can meet the external challenges affecting the hospitality’ but concede ‘the outlook for the UK economy has become increasingly uncertain during 2020 due to the spread of COVID 19. The hospitality industry is facing various and changing restrictions on trade which have never before been experienced and this is likely to continue into 2021.’ The group made an operating loss in the year of £69k (2018: operating loss £305k. The loss after interest charges was £599k. The group issued £5m of new shares during the year.
HOTELS & LEISURE TRAVEL:
• Travel Weekly quotes sources close to talks with government as saying it is “too early to tell” if travel will restart as tentatively planned on 17 May. TW quotes a second source as saying that ‘it is really uncertain. Health experts are most worried about the ‘variants of concern’. The UK government strategy is to keep quite high barriers and the vaccination approach [in destination markets in the EU] is hampering our ability to reassure the government.’
• Portugal has said it will welcome UK visitors as soon as the UK government allows citizens to travel. Greece, Cyprus, Turkey and Spain have made similar comments.
• Jet2 has put on capacity for the next ski season, reports Travel Weekly.
• With the impact of the pandemic now annualising, STR reports US occupancy down only 1% on last year in the week to 13 March. It says room rates were 15% off and REVPAR was some 16% lower. STR spells it out, saying ‘year-over-year percentage changes are now more favourable as comparisons have shifted to pandemic-affected weeks from 2020. When indexed against 2019 levels, the U.S. has recaptured between 70-75% of occupancy in recent weeks.’
• Other news. TUI has suggested that its Marella Cruises business could operate some UK domestic routes this summer. Some 23 days of strikes are being planned at Heathrow starting over the Easter long weekend. BA parent IAG is raising €1 billion through two bond offerings.
FINANCE & MARKETS:
• The Bank of England’s MPC yesterday decided unanimously to maintain Bank Rate at 0.1%. It also voted unanimously to keep QE purchases and stocks of assets unchanged. Bank Economist Andy Haldane says we should see a “rapid recovery soon”. The Bank says the outlook for the UK economy remains “unusually uncertain” and ‘continues to depend on the evolution of the pandemic, measures taken to protect public health, and how households, businesses and financial markets respond to these developments.’
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