Langton Capital – 2021-05-07 – R rate, draft beer, football, service sector, insolvencies & other:
R rate, draft beer, football, service sector, insolvencies & other:
A DAY IN THE LIFE:
When I was a young broker, I overheard some older colleagues consoling themselves that weight gain was inevitable and that, no matter how hard you try, you put on about a stone a decade.
Replete with the arrogance of youth, I dismissed that as nonsense but, as the years progressed – and although Covid temporarily knocked me back about a stone – I have come to realise that it’s pretty much true.
Hence, I realised that I would have to start cutting things out. Either that or let my trousers out and the first to go were beetroot, gruel & prunes. That was quite easy. Dog biscuits I gave up without effort and sprouts, turnip and kale were next on the list.
And then it got trickier. Chocolate, sweets, peanuts & crisps met with some resistance and food in all its other genres I’m finding hard to forego and, when it gets to beer, I’ll have to draw a line.
Anyway, what would you give up? Sprouts, pickled herring, cabbage? On to the news:
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PUBS & RESTAURANTS:
• The NIESR has estimated the R rate in England as between 0.85 and 1.00 in the period to 4 May. It says the numbers in Northern Ireland, Wales and Scotland are in ranges between 0.8 and 1.05. It says ‘hospital admissions and deaths due to Covid-19 continue their steady decline hinting at the success of the vaccination programme whilst social mobility restrictions have been gradually eased.’
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• Draft ale. Cask Marque has reported that cask ale has been the ‘most-missed’ drink across UK pubgoers during and coming out of lockdown. The drink is not easily replicated at home. Cask Marque says that 23% of respondents to a survey it has undertaken say that cask ale was the beverage they were most looking forward to when pubs re-opened. Cask Marque’s Paul Nunny says ‘there’s evidence to show that some outlets rowed back on their cask offering last summer, thinking that playing it safe with a small set of permanent brands was the best way to go. In fact, the exact opposite is true and pubs and bars need to present their guests with a good balance of household name favourites and a rotation of varied and interesting offerings from smaller or local breweries.’
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Company & other news:
• Football. With an all-English Champion’s League final in the offing, KAM Media and MatchPint turn their attention to the international game. They have teamed up to suggest that ‘6.9 million UK adults intend to watch the postponed UEFA European Football Championships in a pub or bar.’ Some ‘56% of UK adults intend to watch at least one of the Euros matches on TV, with 13% of UK adults intending to watch at least one match in a pub or bar.’ KAM says ‘we’ve been getting accustomed to spending our ‘entertainment’ time at home over the last 12 months. However, one of the things that people have found most difficult to replicate is the atmosphere for a ‘night out’. It’s this unique combination of environment and ambiance that makes the pub so special. When you throw live sport into this mix, and ‘big occasion’ live sport for that matter, you really hit the sweet spot.’
• Food waste. Caffe Nero and Too Good to Go report they have combined to save 50,000 meals from going to waste. The partnership means that Too Good To Go app users can prevent unsold food from going to waste across the Caffè Nero UK estate. Gerry Ford comments ‘we produce very little food waste per store each day, and finding a suitable home for what we do produce can be a challenge. Partnering with Too Good To Go was a solution which allows us to further minimise our waste and also benefit customers.’
• Allergens. Fourth has produced a report into allergens following ‘a significant rise in the prevalence of food allergies over recent years, with peanut allergy recorded as having affected 0.4% of the population in 1997, more than tripling to affecting 1.4% of the population in 2008, a figure that continues to grow.’ Fourth says ‘as we cautiously look ahead to a restriction-free world, the importance of tackling the allergens challenge enters the fray once more, with the upcoming Natasha’s Law legislation reinforcing the immediacy and importance of the issue.’
• Service sector in general. Markit has updated on the Services PMI for the UK in April saying that ‘the performance of the UK service sector strengthened again during April, driven by sharp increases in business and consumer spending.’ It says ‘confidence in the sustainability of the recovery was also reflected in greater staff hiring, with employment growth accelerating to its fastest since October 2015.’ The number for the month was 61.0 in April, up from 56.3 in March and the highest since October 2013.’
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• Insolvencies & failures: Cork Gullly is relatively upbeat. It believes there could be spikes in failure rates but no longer term impacts. It says that ‘the number of business failures is set to return to near pre-pandemic levels during 2022 as the postponed insolvencies unwind over the next 12 months with no excess failures predicted as a result of the pandemic. There will however be two peaks in numbers of insolvencies in July and October 2021, caused by the end of the temporary support measures, as businesses have to resume debt repayments. Some businesses which have been just about hanging on financially are likely to fail as soon as the support measures are removed.’
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• Coffee shop operator Notes: Music & Coffee Ltd has produced micro accounts (with no P&L) for the year to 30 June 2020. The period, which covers the beginning of the Covid pandemic, shows that retained losses increased during the year by £450k to £3.1m. Shareholders’ funds are now (or at least were at the end of June, last) a negative £616k.
• Papa John’s is reported set to open nine further restaurants under franchise in the north west of England via franchisees Richard McElroy and Chris Makin.
• Dine Brands in the US, which owns Applebee’s and IHOP, has said that takeout and delivery are here to stay at full-service restaurants. It says ‘Americans, now that they are increasingly vaccinated, with capacity restrictions being lifted across the country, with good weather, with a strong economy, people are returning to restaurants.’
• Next, which often knows what it is talking about, has suggested that the post-lockdown sales surge would be “short-lived”.
• US burger company Shake Shack has announced first quarter numbers saying that total revenue increased 8.5%, to $155.3 million. See premium email for detail.
• Papa John’s International has also reported Q1 numbers saying these are its seventh straight quarter of growth. See premium email for detail.
HOTELS & LEISURE TRAVEL:
• Intercontinental Hotels Group has reported Q1 numbers saying that it has seen an ‘improvement in demand within the first quarter, led by the Americas and Greater China.’ See premium email for detail.
• TripAdvisor in the US has reported a Q1 loss of $0.39 per share versus consensus estimates of a loss of $0.31. See premium email for detail.
• Desire to travel. We’ll find out about the legal ability to travel when the government gives us more detail on its traffic lights but, for the moment, it looks as though the desire to travel is there. The European Travel Commission says that 56% of Europeans are willing to travel by the end of August. It cautions, however, ‘while vaccination programmes provide a boost, the outlook remains mixed, with the latest forecasts estimating that international arrivals to Europe will remain 46% below 2019 levels in 2021, with a full recovery not expected until 2024.’
• TUI is to offer £20 Covid tests to green destinations reports the TTG.
• STR reports that ‘U.S. hotel occupancy remained relatively flat compared with the previous week’ in the week to 1 May. It says occupancy was 57.1% and ADR was $108.80 to give REVPAR of $62.13. STR says ‘while the overall weekly data was stagnant, weekend occupancy rose modestly and came in above 70% for the fourth straight week.’
• US brand owner Hilton has reported Q1 numbers saying that REVPAR globally in the quarter was down 38.4% on 2020. In the US, it was down 37% against last year and down 50% against 2019. Europe RevPAR fell 76% year over year and 82% versus 2019. In China RevPAR increased 64% year over year. The company says ‘with the slope of recovery we’re on, I’d probably be on the earlier end of that since we have a little more visibility.’ Hilton adds ‘while recovery varies by region and country, we can see the light at the end of the tunnel in the U.S. … and as a result, we’re seeing a significant lift in forward bookings and occupancy, which is now around 60%, as well as lengthening booking windows.’
• Norwegian Cruise Line Holdings has reported a Q1 loss of $1.2bn. It says, however, that said future bookings are “strong”. The company says ‘as a result of the Covid-19 pandemic, while the company cannot estimate the impact on its business, financial condition or near- or longer-term financial or operational results with certainty, it will report a net loss for the second quarter ending June 30, 2021 and expects to report a net loss until the company is able to resume regular voyages.’
• IATA has said that global air traffic in March was down 67.2% on the same month in 2019. It had been down by 74.9% in February.
IN YESTERDAY’S PREMIUM:
• Anheuser-Busch InBev has reported Q1 numbers saying ‘our business is off to a very strong start in 2021. We delivered top-line ahead of pre-pandemic levels, as beer volumes were up by 2.8% versus 1Q19 with healthy revenue per hl growth.
• Puttshack has announced it has completed a growth capital round of $60 million led by Promethean Investments.
• Virgin Wines UK plc has updated on trading to date for the year ending 30 June 2021 saying ‘the strong levels of customer demand experienced in the first half of the Company’s financial year have been maintained in the second half of FY21.’
• Carnival has announced that it will commence cruising once again from Greece from 15 August.
• Uber has had to set aside $600m to resolve “historical claims” relating to its private hire drivers in the UK after it lost a legal battle over their employment rights.
FINANCE & MARKETS:
• The Bank of England has kept interest rates and its QE policy on hold. It has reported that the UK economy should grow at its fastest rate in more than 70 years in 2021 as Covid-19 restrictions are lifted. Growth of 7.25% is expected.
• The Bank says Covid has hit spending, incomes and jobs in the UK. It is maintaining its 2% target rate for inflation.
• See UK Services PMI comment under Pubs & Restaurants above. The Eurozone April composite PMI was 53.8, slightly ahead of the flash figure and the strongest rate of expansion since July 20.
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