Langton Capital – 2021-03-30 – Deliveroo, vaccine passports, WFH, staycations, JW Lees etc.:
Deliveroo, vaccine passports, WFH, staycations, JW Lees etc.:
A DAY IN THE LIFE:
Good weather yesterday and better today.
But we didn’t manage it very well, yesterday. Work all day & sit outside from 5pm but it’s pretty chilly at this time of year when the sun sinks below the tree line so we’ll try harder today. Indeed, if the forecast is anywhere near right, we could get heatstroke and, at not far off 54 degrees north in March, when it was sleeting a week ago and could be again by Easter weekend, that would be a first.
Anyway, there were lots of out of office email responses yesterday and there could be more today so, whilst we’ve still the chance of finding a reader or two, we’ll get this sent. On to the news:
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PUBS & RESTAURANTS:
• This probably sounded like a good idea when it was rattling around in somebody’s head, but it hasn’t done too well when it comes to practicalities. Pubs are due to open in two weeks and there isn’t enough time to prepare anything. Virtually nobody under 50 has had a jab and the only people who have had two jabs for full immunity are over 80 or otherwise vulnerable. Younger people who may have had Covid & have antibodies may not be too keen to give blood and, in any case, it wouldn’t be practical to swamp the NHS with requests to have blood drawn in the middle of a pandemic.
• Also, the industry would be faced with 35yr old unvaccinated door-staff welcoming in older, not to say old, customers who would then be served by 20yr old unvaccinated bartenders. The measures would discriminate against younger people, anti-vaxxers (maybe considered a legit target), those with medical reasons not to get a vaccination and those suffering from trypanophobia (fear of giving blood). It would add expense, remove spontaneity and not be a sensible use of resources (either by the NHS or the pub companies themselves). Apart from that, all good.
• JDW’s Tim Martin has said that vaccine passports would put bar staff in the front line of a civil liberties debate not of their own making. It would be another sharp pivot. Martin says pubs have already been ‘devastated by G-force changes of direction’ and would create a two tier system for customers. Mr Martin says that at no time in the 41yr history of the company ‘have government actions seemed so arbitrary and capricious as today, and at no time has real debate been so ruthlessly curtailed – facilitated by extensive use of emergency powers.’ Martin says ‘suggestions for vaccination passports follow September’s moon-shots and pub curfews, October’s baffling tier systems, November’s circuit-breaker, December’s “substantial meals” with a pint, and January’s winter lockdown.’ He suggests that enough is enough.
• Langton comment: See premium email.
• CGA reports (as we covered yesterday) that 38% of licensed premises have outside space but, as always, it’s sometimes interesting to look at what isn’t said (or is implied) as well as what is. Because 62% of premises presumably do not have outside space. They will not be able to open until the second half of May at the earliest. And of the 38% of units that ‘can’ open, not all will do so. Looking at who can open and who cannot, and at where consumers want to be and where they do not, pubs, particularly suburban rather than city centre pubs, look to be the relative winners on a number of counts.
Working from home:
• Pragma Consulting points out that any new ‘hybrid’ working models – with employees splitting their time between home and the office – would have significant implications for the retail sector. It would also impact on-trade operators with venues in or near travel hubs and operators (including coffee, sandwich and grab and go operators, who service the commuter market.
• Langton comment: See premium email.
Other Covid news:
• Foodservice analyst Peter Backman says that Q2 this year, which starts this week, is going to be the period of maximum danger for UK pubs & restaurants. He says, however, that much has changed for the better over recent weeks with the vaccination programme on track, VAT rises and business rates rises pushed further out and positive news on consumer confidence (and possibly on the staycation market for later this year). Backman suggests that unpaid rent is becoming a bigger problem relative to other issues.
• Staycations. See Holidays below. It’s looking increasingly as though holidaymakers will be staying in the UK this year.
• Deliveroo has cut the price range for its IPO from 390-460p to 390-410p. It refers to ‘volatile’ market conditions. Some IPOs recently have struggled but Deliveroo says it has nonetheless seen strong demand. Some potential investors have declined to take part over regulatory concerns or because of the dual share structure, the proposed valuation or the potential for costs to rise if riders become employees. Deliveroo says it wants to price its issue ‘responsibly’. The issue will be priced overnight into Wednesday and first trading will be Wednesday morning under the ticker ROO. Some £1bn of new shares will be issued and existing shareholders including founder, Will Shu, are thought likely to sell over £500m worth of stock.
• Langton comment: See premium email.
Company & other news:
• Gregg’s CEO Roger Whiteside and his wife sold shares in Gregg’s to the value of £2.8m last week. Mr Whiteside told Reuters earlier this month ‘I am 63 this summer so at some point, certainly not this year, I’ll be retiring.’
• JW Lees yesterday filed its annual accounts for the year to 31st March 2020, with Companies’ House declaring a profit before tax of £2.2m (2019: £6.8m). The company says turnover decreased by 3% to £76.0m (2019: £78.4m). JW Lees says ‘the year to 31st March 2020 only included 11 mandatory days’ closure owing to the first Covid-19 UK closure of pubs and subsequent lockdown, so the impact of the crisis will not be felt in full until the current year.’ It says it ‘chose to open some of its pubs on 4th July but our gradual opening programme meant that we did not re-open our last sites until mid-September and, even then, Greater Manchester pubs were closed again by the government on 5th November, with our sites in Wales closed on 17th December and then all the rest of our remaining sites closed on 25th December following various restrictions with tiers, the 10pm curfew and the requirement
• Re the future, JW Lees says it will be on the lookout for new sites and says ‘we hope that we will be back to growing the business in this way as soon as the crisis is over.’ It says it has ‘strong support from our bank NatWest and our long established policy of owning the freeholds of our pubs and hotels has been an enormous benefit to our 193 years old family business, allowing us to support our Pub Partners who have benefitted from 100% rent concessions during the time that their pubs have been closed.’ The company says ‘we think that when we re-open there will be a strong demand for pubs and we have a great team in place, ready to welcome guests back but we will be cautious.’
• UK whisky exports fell by c£66.5 million, or nearly two thirds, in January 2021 compared to last year, per the HMRC. Food & drink sales in general were down in the month with sales to the EU down by more than three quarters. Some of this may have been down to stocking up ahead of the end of the Brexit transition period.
• Research company Datassential has said that over 10% of restaurants in the United States have closed permanently since the Covid-19 pandemic began. It says some 79,438 restaurants in the United States have closed, which is 10.2% of the total of 778,807 restaurants that were in operation a year ago.
HOTELS & LEISURE TRAVEL:
Staycations vs overseas holidays:
• An Opinium poll conducted for the Observer has found that 68% of consumers have not booked any summer holiday this year. Government ministers have been dampening expectations, although the message more recently has been unclear. Culture Secretary Oliver Dowden has said it is possible that not all restrictions will be removed, even by June though Matt Hancock has said ‘the door is not shut’ on international travel this summer. He says ‘it’s just too early to say, but what we can say with confidence is that the unlocking at home is on track.’ The government is due to update on 12 April, though PM Boris Johnson has said he hopes to comment by 5 April. Of those who have booked holidays, domestic cottages were the most popular venues, either in the countryside or by the coast. Only 13% had booked city breaks.
• BA boss Sean Doyle, writing in the Mail on Sunday, warns ‘we cannot delay the planning process that needs to get under way to restart complex airline operations. If we do, we risk missing the entire summer, a near-fatal blow to the industry.’ He says ‘people who are vaccinated should be free to fly, just as they were in 2019, before the pandemic. People who are not vaccinated should be free to travel too – provided they have proof of a recent negative test result.’
• Langton comment: See premium email.
Company & other news:
• Jet2.com and Jet2holidays have published polling results showing there is “buoyant confidence” remains across all age groups. The company says ‘our polling shows that customers continue to look ahead with real confidence when it comes to taking their much-needed holidays.’ This runs counter to some other comments noted in yesterday’s email.
• The government of Cyprus confirms it will welcome UK travellers as soon as restrictions (or if) are lifted.
• Airlines UK says delaying a return to international travel until September would cost the UK £3 billion in lost tourism spend and put 500,000 jobs at risk. This may not be a net figure as, if would-be outbound travellers stayed in the UK, some UK-facing leisure operators could do well.
• Celebrity Cruises and Saga have joined the list of cruise operators saying they will operate UK sailings this summer.
• STR says ‘United Kingdom hotel performance remains weak, in large part due to the government’s continued guidance that hotels remain closed until May 17 — a date that could shift if the pandemic becomes worse.’ It says ‘future bookings have picked up for that date and afterwards, but for now hotel occupancy remains flat.’ STR says ‘for those hotels open and operating, occupancy during the week is in the low 40s percentage-wise, while weekends fall into the high teens or low 20s.’
• Shares in Chinese video platform Bilibili have slumped following the company’s IPO.
FINANCE & MARKETS:
• See premium email.
COMPANY ANNOUNCEMENTS (MONDAY):
• Some of the company comment in yesterday’s Premium.
• Domino’s Pizza Group to exit Iceland. The group has announced that it has signed a binding Sale and Purchase Agreement with PPH ‘under which DPG will sell the entire issued share capital of Pizza Pizza (Domino’s Iceland) for a total consideration of ISK 2.4bn (approximately £13.7m) on a cash-free, debt-free basis, which will be satisfied in cash.’
• The Brighton Pier Group has reported H1 numbers to 27 Dec 2020 saying that revenue fell from £17.3m to £8.2m with the group reporting profit before tax of £0.8m, down from £2.0m in the prior half year. CEO Anne Ackord says ‘we look forward to the reopening of all of our businesses, following what has been a traumatic time for the whole industry.’
• Ten Entertainment Group has reported full year numbers to end-December saying that the numbers include only 11 weeks of normal trading conditions – but also 25 weeks of closure and 16 weeks of disrupted trading due to Covid-19 restrictions. The company reports revenue down by 57% at £36.3m with a reported loss before tax of £17.7m against a profit in the prior year of £9.0m. The loss per share is (23.2p) against a profit per share of 19.3p in 2019. The company says that it is ‘well positioned for growth and expansion post Covid’ and it saw ‘strong demand in the summer when the business reopened after first Lockdown.’
• E-sports company Gfinity has reported H1 numbers for the six-month period ended 31 December 2020 saying that revenue rose by 212% to £3m with an adjusted operating loss of £0.9m, a ‘71% improvement on six months to 30 June 2020 (FY20 H2 £3.1m loss) and 63% improvement on the same period in the prior year (FY20 H1: £2.4m loss).’ The Company says it ‘has sharpened its strategic focus on its three core areas, positioning it to continue delivering positive results moving forward.’ The company has completed its strategic review and is no longer in a formal offer period. CEO John Clarke says ‘now it is time to accelerate the growth of the business by being focused on the growth areas identified under each of our strategic pillars.’
RETAIL WITH NICK BUBB:
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TRADING STATEMENTS & EVENTS:
Upcoming results are set out below:
• 29 Mar 21 Ten Entertainment FY numbers
• 29 Mar 21 Brighton Pier Group H1 numbers
• 30 Mar 21 AG Barr FY numbers
• Est. 30 Mar 21 Time Out H1 numbers
• 31 Mar 21 Various Eateries AGM
• 1 Apr 21 Sportech FY numbers
• 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
• 15 Apr 21 Naked Wines FY trading update
• 22 Apr 21 Domino’s Pizza PLC AGM
• 23 Apr 21 Gear4Music results
• 28 Apr 21 Carlsberg Q1 numbers
• 28 Apr 21 YUM Brands Q1 results
• 29 Apr 21 Molson Coors 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
• 26 May 21 C&C FY 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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