Langton Capital – 2021-04-09 – Covid passports, R rate, jobs, confidence & reopening plans etc.:
Covid passports, R rate, jobs, confidence & reopening plans etc.:
A DAY IN THE LIFE:
Although I try to avoid mirrors where possible, I still catch sight of myself reflected in windows from time to time and, as if I didn’t know it, my hair needs cutting.
Of course I have to accept that the last two haircuts have been brave but reckless DIY attempts but, as I suffer from over-optimism mixed with a lack of talent, chronic impatience and a bad memory, I’m wont to do it all again despite the fact that previous attempts have left me looking something like a Kojak who, over time, has matured into Worzel Gummidge.
Apologies there to those too young to know who either character is but a quick Google will set you right and, despite Einstein’s observation that doing the same thing multiple times and expecting a different outcome is a definition of insanity, another attempt is in the offing because, after all, what could really go wrong?
Admittedly you can’t stick it back on but you can always cut it all off so, without further ado, we’ll get this sent out and have a hunt around for the clippers, secure useless promises that they haven’t been used on the dog recently and Bob’s your uncle. On to the news:
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PUBS & RESTAURANTS:
• Representatives of the wider retail industry have joined hospitality bodies is saying that vaccine passports would damage their operations. The British Retail Consortium has warned that checking documents at the door would not work. The BRC says ‘while Covid status certification may play an important role in certain activities, such as international travel, our members are clear that it would not be appropriate or useful in a retail setting.’ It says ‘high streets and other shopping destinations rely on impulse and ad hoc purchases from customers who visit; this would be badly affected by the additional barriers to trade.’
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The pandemic on the ground:
• There are concerns that the suggestion of causality between the Astra Zeneca vaccine and blood clots may damage confidence in the UK’s rollout programme. Though such a risk would still be justified on the balance of probabilities given the odds may not stop conspiracy theorists from suggesting otherwise. Meanwhile, the NIESR has looked again at the R rate and says that it has fallen to around 0.8. This is consistent with an increasingly vaccinated population and it suggests that the pandemic, in the UK at least, remains in retreat.
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Other Covid news:
• Kantar suggests that independent restaurants will trump the chains when consumers are allowed to visit venues again from next week. Kantar says this is consistent with people staying closer to home and visiting neighbourhood restaurants where they can. Looking back to the first of last year’s reopening days (4 July 2020), Kantar says ‘while not everyone rushed back to restaurants, pubs and cafés in 2020, the number of consumers dining out reached 95% of pre-pandemic levels by September.’ As outside trade will be allowed first, it says ‘this year, business owners and customers will be keeping an eye on the weather. We had both sun and snow over the Easter weekend and changeable conditions will have a big impact on initial sales as dining is limited to outdoor seating.’
Company & other news:
• Markit has reported a sharp rebound in service sector activity, even before non-essential venues have been allowed to reopen. Its Purchasing Managers’ Index hit 56.3 in March, up from 49.5 in February and it says ‘around 66% of the survey panel forecast an increase in activity over this period, while only 8% predict a fall. This signalled the strongest optimism since December 2006.’
• Sky reports that Soho House ‘has taken a big step towards a stock exchange listing after kicking off a formal registration process in the US.’ It says the company this week submitted a confidential filing for an initial public offering in New York that will value it at more than $3bn. Sky points out that the company considered an IPO two years ago but did not pull the trigger. Whilst nobody from the comment would comment, Sky feels sure that ‘JP Morgan and Morgan Stanley are leading the Soho House IPO’.
• Constellation Brands in the US yesterday came out with full year numbers ahead of reduced expectations but the shares nonetheless fell by around 5% in early trading.
• We effectively comment on supply every time we talk about reopening plans, units that will remain permanently shuttered etc. But demand is also important. Business confidence leads to investment, which leads to jobs which boosts consumer confidence which drives spending decisions and here the outlook is arguably improving. Accountant KPMG reports ‘the UK job market is starting to rebound off the back of the Government’s plan to ease national lockdown measures over the coming months, with the highest rise in permanent placements in six years and a sharp increase in temporary billings.’
• Langton comment: See premium email.
• The Restaurant Collective, which says that its ‘ethos is to provide independent operators with a louder voice’, says that it is on a mission currently to ‘build awareness of the new initiative among the restaurant community and help to recruit experienced founder members’. CEO Paul Shaw says ‘the pandemic has shone a light on the importance of supporting local businesses and we’ve seen a shift in how people value and connect with their local independent restaurant, takeaway or pub. But these businesses are far from out the woods.’
• Nestle Waters in the US is to rebrand as Blue Triton Brands.
• TipJar and Trilo have allied to ‘help hospitality and leisure workers keep more of their hard-earned tips.’
• Morrison’s is to remove all plastic carrier bags from its stores over the next year, even bags for life.
HOTELS & LEISURE TRAVEL:
• Amadeus has undertaken a poll and finds that 91% of respondents would be comfortable using a digital health passport for trips but that 93% had some concerns around data storage. Some 42% said an app could improve their overall travel experience. Amadeus says ‘there is no doubt that Covid-19 will continue to shape the way we travel for the months ahead, just as it influences so many other areas of our lives.’ The responses vary across geographies. Some 45% of UK respondents were receptive whilst on 335 welcomed the idea in France.
• The Travel Trade Gazette reports that PM Boris Johnson is under pressure from a number of his own MPs not to let the cost of testing materially drive up the price of holidays.
• IATA reports that the demand for air travel fell by 74.7% in February this year compared with February last. Not that it will be much consolation but the comps, clearly, are about to get much easier.
• Royal Caribbean Group has announced that it is extending the suspension of sailings from the US until June 30.
• Travel Weekly reports that Norwegian Cruise Line has no plans to operate UK sailings this summer, despite competitors doing so.
• CoStar Group in the US has reported that the US hotel industry last year saw a major shift from business to leisure travel. It suggests that this year could see more of the same.
• STR reports that U.S. hotel occupancy remained flat from the previous week in the week to 3 April. Comps are now much easier. Occupancy was 58% with room rates of $113 and REVPAR of $65.
• The Playhive at Stockeld Park near Wetherby promises to be one of Europe’s largest indoor play areas. The site is being created by the owners of the park with a £3.5m investment.
FROM YESTERDAY’S PREMIUM EMAIL:
• Everyman Media Group has reported full year numbers for the 52 weeks ended 31 December 2020 saying that ‘the year included 10 weeks of normal trading conditions, 25 weeks of full closure, and 17 weeks of disrupted trading due to COVID-19 restrictions.’ It says revenue fell from £65m to £24m with a loss before tax for the year of £22.2m versus a profit of £2.3m in the prior year. The company is reporting a loss per share of 24p versus a prior year profit of 2.4p.
• Everyman says it has a ‘strong balance sheet boosted by £16.9m fundraise in April 2020 and increased available banking facility to £40m.’ it says ‘new covenants [have been] agreed covering the period from year end to June 2022.’ Re the outlook, Everyman says ‘if the vaccine roll out continues as planned, we plan to reopen all our venues. We are highly optimistic for the coming year post-lockdown and continue to be confident in people’s appetite to safely socialise and be entertained; we believe we will be in a strong position once it is safe to welcome back our customers and teams.’ It says ‘we have made light refurbishments in a number of venues and upskilled staff by offering training during lockdown. Whilst uncertainty does of course remain around the future, we are eager to welcome back customers and look forward to providing them with an exceptional experience out, so deserved
• Everyman CEO Alex Scrimgeour says its teams have ‘minimised all costs during periods of closure, strengthened the Group’s balance sheet, worked with our landlords to achieve rent concession and not least, remained actively engaged with our people and customers throughout.’ The CEO says that, post opening, the company ‘will be in a strong position to bounce back, with a great opportunity to return to expansion once more when it is safe to welcome back our customers and our staff in just over a month’s time.’
FINANCE & MARKETS:
• Markit reports that the UK Composite Output PMI rose to 56.4, up from 49.6 in February ‘and above the neutral 50.0 threshold for the first time in 2021 to date.’ Markit says that this was driven by the services sector. It says ‘UK service providers were back in expansion mode in March as confidence in the roadmap for easing lockdown restrictions provided a strong uplift to new orders. Total business activity increased at the fastest rate since August 2020 and this return to growth ended a four-month sequence of decline.’
• Markit also reports that the ‘recovery in UK construction output gained considerable momentum in March, supported by robust rises in house building, commercial work and civil engineering.’ The PMI rose to 61.7 from 53.3 in February. This is important for hospitality as construction is one of the areas where jobs can be put on (or working hours increased) most rapidly. This should feed through to spending power – and, crucially, to the inclination to spend. The IEA says that house-building in the UK is still at internationally low levels.
• The RICS says the decision to extend the stamp duty holiday lifted property sales and prices in March.
RETAIL WITH NICK BUBB:
• Nick is taking a well-earned break and is back on 12 April.
TRADING STATEMENTS & EVENTS:
Upcoming results are set out below:
• 8 Apr 21 Everyman Media FY numbers
• 8 Apr 21 Constellation Brands FY numbers
• Est. 9 Apr 21 Barclaycard Consumer Spending (March)
• 13 Apr 21 Just Eat Q1 numbers
• 13 Apr 21 Revolution Bar Group H1 numbers
• 15 Apr 21 Deliveroo 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
• 29 Apr 21 Texas Roadhouse 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
• 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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