Langton Capital – 2021-04-06 – Deliveroo, reopening confirmation, R-rates, demand, overseas hols etc.:
Deliveroo, reopening confirmation, R-rates, demand, overseas hols etc.:
A DAY IN THE LIFE:
I cut the grass at the weekend and, after wrenching the sit on mower around one too many corners, the steering rod snapped.
This left me spinning the steering wheel like an idiot while the mower kept going in a straight line. It then developed a bit of a list to the right and deposited me in a bank of thistles. I had to push it back to the garage and now find myself leaving messages on the answering machine of the local repair shop over what must be one of the busiest weekends of the year for mowers and the like, ignored all winter, to develop faults on their first or second outing.
On a brighter note, the Mighty Hull City (don’t ask which division we’re in, it will spoil the magic) has now taken 23 points from it’s last nine matches with seven wins and two draws.
That’s good by any standards but, elsewhere, we had email problems last Thursday. An unformatted version of our note had to go out to some subscribers. This wasn’t a chronically unfunny April Fool’s joke (see Deliveroo’s attempt at humour below) but hopefully it’s behind us now so, without further ado, let’s move on to the news:
ADVERTISE WITH US:
Langton’s free email now carries adverts. See front page of website for today’s copy & contact us for further details.
The comment was made about Dirk Gently by the narrator in Douglas Adams’ Dirk Gently’s Holistic Detective Agency.
CHANGED EMAIL FORMAT:
The Premium Email is unchanged. The Free Email is written and pre-sent the evening before. It may not include breaking stories nor Langton comment. See Twitter for in-day comment. Let us know if you would like an example of the Premium Email.
Prices: £295 for one subscription, £495 for multiple, both plus VAT. Or sign up for easy in, easy out monthly option:
DELIVEROO: Horizontal vs Vertical Integration:
See premium email.
PUBS & RESTAURANTS:
Covid – The rules:
• PM Boris Johnson yesterday confirmed 12 April as the day on which pubs & restaurants will be able to serve guests outdoors. Mr Johnson said there was no visible reason why the 17 May indoor opening would not go ahead as well.
• The PM said there ‘was no question’ of vaccine passports being demanded as a requirement for entry into pubs next week. He said there were no plans at present for 17 May either. The future thereafter was left slightly hanging. The BBPA has welcomed the reopening confirmation. However, it said it ‘was important to remember that just 40% of pubs in England – 15,000 – would be opening for outdoors service from the 12th, making it all the more important that the Government sticks to its roadmap dates to ensure pubs can reopen indoors from May 17th and without any restrictions from June 21st so they can all reopen and begin their recovery. It reiterated that those opening from 12th April will almost certainly be making a loss, but are desperate to welcome back their customers and serve their local communities.’
• The earlier leaked suggestion that all customers over the age of 16 will have to sign into pubs & restaurants via the NHS app from next week (not just one member of each group) has caused some concern as UKH and others have said it will add to pubs’ administrative burden. Pubs & restaurants will have to take “reasonable steps” to ensure this is done or face a £1,000 fine. UK Hospitality, the British Beer & Pub Association and the British Institute of Innkeeping have said the rules would add “more confusion and inconvenience for customers and staff”. The three trade bodies say that ‘it now seems the hospitality industry could be burdened with vaccine passports, over-complicated test and trace rules and an inability not able to take payments indoors at reopening – a triple whammy for hard-pressed publicans who have been forcibly closed for months.’
• The trade bodies referenced above say that they are incredulous ‘at the Government’s stealthy backsliding on pub reopening rules.’ Looking, perhaps, on the gloomy side, the bodies says ‘the review into Covid Status Certification, led by Michael Gove, looks likely to recommend that pubs and other hospitality venues must demand immunity proof from people, to allow them to enter – with the threat of fines for venues if non-compliant. This could prevent millions of young people visiting the pub for months, unless they get themselves tested in advance.’
• Langton comment: See premium email.
• The trade bodies say ‘adding further disproportionate and discriminatory measures threatens the very survival of thousands of businesses. It’s unfair to single out our sector again with these added impractical burdens that will have economic consequences and risk our recovery.’ They conclude ‘we We want to trade our way back to prosperity, not rely on state handouts but if Government insists on restricting our ability to trade then they will need to stump up more business support. We need to see a further extension of the business rates holiday through to October and more furlough support to save the millions of jobs we support.’
• A government spokesperson has said ‘no final decisions have been taken on whether COVID-status certification [vaccine passports] could play a role in reopening our economy.’
• The NIESR estimates this weekly. It says it is currently between 0.9 and 1.0, unchanged on a week ago. As most over-50s have been vaccinated, and groups representing 85% of Covid deaths have had the jab, this (the R-rate around 1.0) is still consistent with improving health stats.
• Langton comment: See premium email.
• S4 Labour suggests that ‘hospitality operators are forecasting 70% of revenue compared to the same week in 2019 (not 2020). The figure of 70% is somewhat remarkable considering that the vast majority of capacity, i.e. inside, will be unavailable. The research is also encouraging as the sector prepares to re-open with over a week left to secure even more bookings.’
• Langton comment: See premium email.
• S4 says ‘there has been a scramble and huge investment to prepare outside spaces for the 12th of April, however, it comes with a large dose of caution as much of the pent-up demand could quickly be washed away with poor weather.’ Alastair Scott, MD of S4labour and owner of Malvern Inns who operate 3 pubs, added “we have seen an unprecedented amount of bookings in all of our sites with customers showing a clear desire to meet up and start enjoying hospitality once more”.
• CGA says ‘consumers are set to prioritise eating and drinking out in their spending after lockdown, but remain cautious about longer term financial impacts of the pandemic.’ It says 29% of GB consumers are ‘planning to spend more there [in pubs, bars & restaurants] over the next 12 months than they usually would. It puts hospitality ahead of international holidays (26%), domestic holidays (25%), clothing (22%) and home improvement (19%) in the list of priorities for spending.’
• CGA says prospective customers are confident about their safety but many remain cautious about the impact of the pandemic on their finances. CGA says ‘74% of the population remain concerned about financial implications, though this is down from a peak of 85% in April 2020. Numbers worried about finances have overtaken concerns around the health of friends and family (73%) and personal health (68%) for the first time since the start of the pandemic.’
• Clearsight takes a more cautious line, saying that ‘the improving public outlook on the COVID crisis suffers a setback in March.’ It says ‘after 2 months of consistent improvement in the public’s outlook from the start of the year, the positive trend comes to an end in March. Relatively few of us feel that there is cause to believe the worst is still come, but there is a prevailing sense that the UK now finds itself in something of a holding pattern – this, despite the fact that the long awaited relaxation of restrictions is within touching distance.’
• Langton comment: See premium email.
• Clearsight says ‘the mood of UK business leaders continues to improve.’ It says ‘business sentiment is now ahead of consumer sentiment. Nearly half of all decision-makers believe the worst has passed, while confidence in the government’s handling of the crisis has recovered to levels last seen in May.
• The Welsh Beer & Pub Association has responded to indications over the reopening of pubs in Wales. The indication is that they will be able to reopen outdoors from April 26th, with a view to reopening indoors between May 17th and the late May bank holiday.’ The WBPA says ‘we look forward to further discussions with the Welsh Government concerning the types of restrictions that will be in place and a funding package going forwards.’
• SIBA says the dates ‘are weeks behind England and there are no clear dates when indoor pubs will open. Struggling small breweries and community pubs only have an ambition from the First Minister that he will consider reopening in advance of the Spring Bank Holiday.’ It says ‘small breweries and the community pubs they serve in Wales have been badly impacted by this crisis and these delays show that more support is needed for the sector. In Scotland they have introduced a Brewers Support Fund and it’s now time that Wales introduced the same package before these businesses close for good.’
Other Covid news:
• The BBPA says UK pubs will miss out on selling 85 million pints this Easter due to forced closure.
• The Guardian says that vaccine passport were being considered in secret as long ago as December.
Companies & other news:
• Deliveroo shares finished last week 28% down on their issue price. Leader writers have had field day with the ‘wheels coming off the bike’ and renaming the company variously Floperoo, Stinkeroo and Deliver-oops. There have been calls for the company to withhold payments to its advisors. The Chancellor is questioned for his ‘true British success story’ comments. The company has been criticised for its pricing, its stance on worker rights, it’s split share structure, its timing etc. The papers have suggested that its future (post Covid) could be tougher than the recent past, not all of the increase in delivery spend will stick, and more.
• Langton comment: See premium email.
• French Deliveroo customers who received fake bills for hundreds of euros’ worth of pizza as an April Fool’s joke are reportedly unamused. The BBC says ‘many took to social media to express anger at the stunt. The Beeb quotes one customer as saying ‘he had “almost had a stroke” after receiving a €466 invoice for 38 pizzas that he had never ordered.’ Many spent a frantic few hours ringing their banks to block what they feared would fictitious payments.
HOTELS & LEISURE TRAVEL:
• PM Johnson said yesterday that there was no decision on non-essential overseas travel (including holidays) yet. There should be an update next Monday. This could be seen as a slight disappointment. The mood music worsened just over two weeks ago. The PM then said he hoped to update earlier than the planned 12 April (i.e. yesterday) but this did not happen. There seemed to be a confirmation that, when international travel is allowed once more, there will be a traffic light system in operation.
Switch to 2022 holidays:
• The PM’s cautious words yesterday evening (there will be a fuller update next Monday) may consolidate what seems to be a move to book holidays abroad for summer next year rather than for 2021. The Guardian says ‘in the past week, Thomas Cook’s 2021 bookings have been overtaken by bookings for 2022.’ TUI says that it has further cut capacity for this summer and put on additional flights for 2022. For an industry that desires certainty (given its high fixed costs) more than many others, the lack of clarity is damaging. TUI has reportedly added more than 100,000 holidays to its capacity for next summer. TUI says ‘we continue to see strong pent-up demand in the UK, with bookings for summer 2022 now around 120% higher compared to summer 2021 bookings. Bookings for May 2022 are recording an increase of more than 150% compared to May 2021.’
• Notwithstanding the above, PC Consultancy says around a dozen countries could be in a position to welcome British travellers by May 17 under a traffic light system. There is no clarity with regard to what the rules will be.
• The IMF says that countries with a heavy reliance on tourism could be amongst those to feel damage for the longest period by Covid-19. Social trends such as flight-shaming might not help either.
• The CAA is reported to have confirmed the collapse of three firms this week, Ace Point Travel, Williams D and Travel Day.
• Carnival-owned Cunard has reported its busiest day of bookings in the UK for a decade. This in response to the offer of UK to UK cruises for vaccinated passengers.
• Comps are now much easier for travel and hotel companies. STR reports that US hotel occupancy is up 161% on the same week last year for the week to 27 March. STR has reported that US hotel profitability is at its highest since Feb last year. This is as expected. Comps over the same week in 2019 might be more meaningful.
• Gyms are still on track to reopen next week.
• The UK government will trial measures in England, including Covid passports, to allow the safe return of sports matches & events.
• App spending in Q1 this year hit a new record. App Annie suggests that $32bn was spent through apps in Q1 this year, up 40% on last.
FINANCE & MARKETS:
• Markit reports that the ‘upturn in the UK manufacturing sector gained further momentum at the end of the third quarter.’ It says its PMI hit a decade high of 58.9 in March, ‘its best outcome since February 2011.’
• The FT reports that the UK household saving ratio rose to a near record high in the final quarter of last year.
• The US economy added more jobs than expected in March, at 900,000 positions.
RETAIL WITH NICK BUBB:
• Nick is taking a well-earned break after this weekend’s comments. He’s back on 12 April. See premium email.
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
• 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
• 7 Apr 21 Carnival Q1 update
• 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
• 15 Apr 21 Heavitree Brewery AGM
• 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
• 30 Apr 21 Safestay General Meeting
• 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
• 12 May 21 Just Eat AGM
• 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
LANGTON CAPITAL: Made in Hull. Like all the best things. Langton Capital is a financial advisory company providing insightful views on the UK and global leisure industry and the wider consumer sector in general. Subscription to the daily email is free. Unsubscribing is painless. We provide daily off the shelf and bespoke research. We have helped with transactions, fund-raisings, disposals and other corporate issues. We have a good ear, we are impartial, independent and not half bad at what we do. If you think that we could help you or your business, drop us a line.