Langton Capital – 2021-04-15 – Current trading (at least there is some), coffee, Co news, travel etc.:
Current trading (at least there is some), coffee, Co news, travel etc.:
A DAY IN THE LIFE:
It’s interesting, isn’t it, that charts etc can seem to have a character in that they either look mournful and sad or upbeat and optimistic.
A ‘hedgehog chart,’ for example, is one featuring several lines where they get flatter the more you move along the X axis – which is typically time. The chart’s lines speak of reality crushing dreams and have the weight of the world on their shoulders. They suggest that a) everything tends to get pushed out to the right (see Hofstadter’s Law) and b) as the future arrives, it is frequently less wonderful than you had hoped.
A ‘J-curve’, on the other hand, is beloved by tech and biotech companies and it simply oozes optimism. However, that’s only because we read from left to right and, at the end of the day, it’s just a line on a sheet of paper. It doesn’t tell you anything about how much the curve will cost to ‘buy’ and its almost always charting sales which, the wags will tell you, equal vanity whilst profits equal sanity.
Both charts may be little more than illustrative of intentions but, if you’re going to have a discussion with your bank manager, you might prefer to pack plenty of the second alternatives and recruit somebody else, ultimately, to go back in the future to explain why life turned out like the first. On to the news:
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PUBS & RESTAURANTS:
Comments on reopening:
• Whilst it would be unwise to take three days’ trading and extrapolate it too far, there are some strong trading numbers coming back from some operators. This may be somewhat selective (in that journalists etc may be more likely to hear from operators doing well than from those doing poorly – or who remain shut) but, for the moment, trading looks to be a) existent and b) not bad.
• CGA has released figures for trade on Monday only saying that LfL sales were up by 60% on the same day in 2019. This is good as far as it goes – but there will be a lot of closed units excluded from these figures. CGA says ‘this is a good start for the hospitality sector, which is currently limited to trading outdoors. Around 41,100 premises in Britain have outdoor space – some 38.2% of all sites.’ It says ‘the first day of trading after England’s lockdown showed a fairly solid performance and demonstrates how consumers were keen to enjoy their first drink out – with like-for-like drinks sales up nearly 115% for outlets that were open compared with the equivalent day in 2019. Food sales didn’t fare quite so well, at 12% below 2019 levels, but this is understandable given that operators can currently only trade outside.’
• The Guardian says ‘celebration was in the air as England welcomed the return of outdoor drinking and dining.’ It says there remains ‘a wider sense of nervousness within the hospitality sector as businesses tried to operate at significantly lower capacity and with some confusion over the rules.’ Boris Johnson has urged people to “continue to behave responsibly.” The BBPA says ‘we should remember that those opening will be loss-making, with the ability to trade beyond break-even coming with the removal of all restrictions.’
• Sky says ‘sales at pubs, bars and restaurants that were able to reopen on Monday were sharply higher than pre-pandemic levels with consumers keen to have their first drink out in months.’ Separately, Springboard suggests visits to shopping destinations more than doubled compared with the previous Monday. Sky quotes Lloyds Bank as saying that debit card spending was up by 157% on Monday compared with the same day in the previous week. Lloyds Bank says ‘it’s a really encouraging sign of consumer confidence but we will wait to see how strongly this initial demand will be sustained over the coming weeks.’
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• The BBPA has reacted to reports of leaked Government proposals for calorie labelling on pints of beer in pubs saying such proposals ‘are ludicrous – and especially outrageous at this difficult time. After more than a year of being forced to close fully or operate under severe loss-making restrictions, now is not the time to heap burdensome and expensive regulation on our pubs.’ It says ‘our pubs are on their knees and the Government already knows this. Calorie labelling would be kicking pubs and brewers when they are down.’
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• UKH also comments on the calorie labelling proposals (not confirmed at this stage) saying ‘if true, these proposals are absurd at a time when pubs and other hospitality businesses are struggling to survive. The last thing the sector needs after prolonged periods of forced closure is unnecessary red tape that creates yet more burdens for operators, who are simply desperate to get back to running their businesses. The labelling of food and drink is a complex area and we’d urge the Government to work closely with the industry on workable solutions that strike a balance between meeting public health objectives and not creating additional business burdens.’
• Allegra comments on the coffee shop industry saying ‘Covid-19 has severely disrupted sales across the continent, but the branded coffee shop segment stabilised in terms of outlets, growing 0.9% to 39,308 sites. However, some of Europe’s largest markets saw net store closures, with the UK, Germany and Turkey contracting by 1.9%, 3.1% and 6.9% respectively.’ Whether this is a pause for breath or the first signs of indigestion is not yet clear. Allegra says ‘eighteen out of 40 European branded coffee chain markets contracted during 2020 as Covid-19 caused significant disruption to out-of-home sales.’
• Allegra says ‘major chains continue to dominate the European coffee shop market. The three largest branded coffee chains in Europe – Costa Coffee, Starbucks and McCafé – comprise 8,756 outlets, holding a combined 22% share of the European branded coffee shop market and collectively expanding by 250 outlets.’ Looking to the future, Allegra says ‘despite lingering uncertainty over further national lockdowns in Europe, most industry leaders are anticipating improved trading later in 2021. With the UK and many Eurozone economies forecast to rebound in 2021, 60% surveyed expect trading conditions to improve over the next 12 months, with just 20% forecasting a further deterioration in trading.’
• The Resolution Foundation has reported that younger people are bearing the brunt with regard to job losses. It says ‘this pandemic has created a highly generationally unequal unemployment surge, and widened pre-existing gaps between different ethnic groups. Young people have sacrificed their livelihoods in order to save the lives of others from Covid-19, and putting their careers back on track must be a priority for the Government in the months and years ahead.’
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• At the other end of the age spectrum, Age UK has said that the need to download apps & use QR codes etc could discriminate against older pub and restaurant customers who do not have smart phones.
• Diageo has purchased vodka-based drinks company Loyal 9. Diageo says the ready to drink market in the US was worth over US$7.8 billion in 2019.
COMPANY COMMENTS EXPECTED TODAY:
Deliveroo trading update, Naked Wines full year numbers, Heavitree Brewery AGM. See Premium Email.
COMPANY RESULTS – COVERED IN YESTERDAY’S PREMIUM:
Just Eat & Deliveroo:
• The Telegraph quotes Just Eat’s comments on rival Deliveroo’s IPO flop. The former says this is a ‘disaster. This is clearly very damaging to their business, their customers and the trust in the European tech sector as a whole.’ The Telegraph says ‘there’s no doubt Just Eat is one of the main reasons that Deliveroo had such a disastrous debut on the public markets last month.’
Admiral Taverns full year numbers.
• Admiral Taverns has reported full year numbers to 30 May saying that turnover was £64.7m with underlying operating profits of £11.2m (versus around £17.2m last year). The company says ‘the period was significantly impacted by the Pandemic which resulted in the UK Government’s mandated closure of all the Group’s pubs on 21st of March in response to a rising number of Covid-19 infections. This resulted in an almost complete loss of income for the Group leading up to the end of the accounting period, with income from sales of beverages falling to zero and rents charged to licensees initially cancelled.’
• Admiral CEO Chris Jowsey says ‘Admiral Taverns made significant strategic progress in the last financial year delivering an underlying profit of £11.1m despite the huge impact of Covid-19 pandemic, which fell in the final quarter.’ He adds ‘as the industry begins to reopen its doors, the role of the community pub has never been more important. An integral part of the UK’s social tapestry, they are vital hubs which bring people together, provide a forum to combat loneliness and raise over £100 million pounds for charity each year.’ The CEO concludes ‘from the onset of the pandemic we have worked hard to ensure our licensees received the support needed to emerge from the crisis energised, motivated, and not weighed down by debt. As consumer macro trends for ‘localism’ and authenticity grow ever stronger, the Group remains well placed to succeed with its strategic plans for long-term
New River to exit Hawthorn.
• New River has announced that it could offer Hawthorn shares to the market via an IPO. The company says it has committed to ‘divest ourselves of our community pub business in order to reset our LTV and provide the firepower to reshape our portfolio. This includes a potential Initial Public Offer of Hawthorn.’ It says ‘Hawthorn opened over 60% of its pubs in England on 12 April 2021, following the easing of restrictions on outside trading, and plans to reopen the remainder of its portfolio when inside trading is permitted from 17 May. With a focus on well-located community and suburban pubs, our portfolio is well placed to benefit from consumers working from home and using their local services and facilities, and we expect this to lead to a strong bounce back, as we saw in the summer of 2020 when on reopening Hawthorn outperformed the UK pub sector.’
Vianet trading update.
• Vianet updates on trading saying that ‘although the vast majority of H2 was characterised by a more challenging Government regime of enforced lockdowns and pub closures, we are very pleased to report that, notwithstanding this challenging business backdrop, trading for the period showed a slight improvement on our H1 financial performance; free operational cash flow in H2 was neutral despite one-off rationalisation costs and the delayed receipt of £0.45m which arrived post year end.’ The company says ‘we anticipate for the financial year end March 2021 the Group will report an adjusted operating loss in the region of £0.7m and c. £1.1m of operational cash generation.’
• Vianet chairman James Dickson says the group is ‘in an excellent position to benefit from the increased demand for data insight and contactless solutions as the economy recovers.’ He says ‘although there have been unprecedented business challenges, the Board is very confident that as the restrictions ease, we have implemented the correct measures enabling the Group to capitalise on the momentum we had generated before this global crisis and to take advantage of the exciting growth opportunities which lie ahead.’
HOTELS & LEISURE TRAVEL:
• Easy Jet boss Johan Lundgren has said he thinks Euro destinations such as Spain, Italy, Greece and Portugal will be on the government’s “green” list it is confirmed next month. This could be wishful thinking. when foreign travel resumes next month. Meanwhile, Heathrow has said that long queues caused by Covid checks are becoming “untenable”. It says some queues are up to 6hrs. Put this alongside the Easy Jet comments and you have the makings of an ongoing problem.
• Travel Weekly reports industry leaders as saying any 17 May reopening of international travel is likely to be ‘soft’. Jet2 has jumped the gun and won’t be flying until late June. Some leaders are concerned that working capital swings will work against them in the start-up phase.
• Easy Jet says it could make losses of between £690 million and £730 million over the winter.
• The government has been accused of aiming to restrict international travel by the use of expensive tests, quarantining and long queues at airports. Aviation minister Robert Courts says this is not the case.
• Five year old fitness company Tempo is reported to have closed a $220m Series C financing round in the US.
FINANCE & MARKETS:
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RETAIL WITH NICK BUBB:
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TRADING STATEMENTS & EVENTS:
Upcoming results are set out below:
• 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
• 27 Apr 21 Starbucks Q1 numbers
• 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
• 5 May 21 Ten Entertainment AGM
• 6 May 21 Bank of England MPC meeting
• 7 May 21 Intercontinental Hotels Q1 numbers
• Est 9 May 21 Barclaycard Consumer Spending (Apr)
• 10 May 21 Marriott Q1 numbers
• 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
• 25 May 21 Shaftesbury H1 numbers
• 26 May 21 C&C FY numbers
• 3 Jun 21 New River full year numbers
• 15 Jun 21 Vianet full year 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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