Langton Capital – 2021-05-18 – Britvic, DPEU, supply chains, overseas holidays, Hollywood, ESC etc.:
Britvic, DPEU, supply chains, overseas holidays, Hollywood, ESC etc.:
A DAY IN THE LIFE:
Bit busy with meetings yesterday and today. On to the news:
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THE ELEPHANTS IN THE ROOM:
• In the UK, if not in large parts of the wider world, Covid may be past its worst (in the absence of malign variants, that is).
• There are justifiable caveats, but it makes sense to look to the future, ask what the new normal will look like, etc.
• On the balance of probabilities:
o There is some pent up demand.
o Supply (the number of outlets) will be reduced and,
o There will be limited overseas travel this year meaning that it should be a good year for staycations.
• Which is great. But there are some elephants in the room. We’ll consider over the next few days (and not in any particular order of importance):
a) Labour shortages,
b) Cost and price inflation
c) Accrued debt (banks, bonds, landlord, VAT, supplier etc) and,
d) Other issues (supply chain problems etc)
SUPPLY CHAIN PROBLEMS & OTHER: See premium email.
PUBS & RESTAURANTS:
• Day One: English hospitality venues have reopened for indoor trade. Feedback is coming in but, given that it’s one day and the weather was variable (generally cool with periodic torrential showers), we do not yet have much of an indication as to how things are going. Marston’s and M&B report H1 numbers tomorrow and Young & Co report full year’s numbers on Thursday. All three companies will doubtless be pushed for updates.
• Indian variant. There are concerns that the variant B.1.617.2, which is “more transmissible than the previous one” (presumably the Kent variant), has the capacity to spoil the party but, as yet, there is little data and plentiful speculation. The spectre of local lockdowns has been raised. This would be unwelcome but, if it helped prevent a wider lockdown or slippage in the un-lockdown timetable, it may be the lesser of two evils.
• Langton comment: See premium email
• Non-governmental calls for caution. The Guardian quotes former director of the Wellcome Trust, Prof Sir Mark Walport, as saying that people ‘should ignore Monday’s easing of lockdown and avoid socialising indoors in pubs and restaurants to prevent the new Covid-19 variant first detected in India sparking a third wave of the disease.’ Although not an official position, this is reminiscent of the ‘non-closure but closure’ stance that the government took (when it said don’t go to pubs but didn’t order them to close) in the middle of March last year. Sky News quotes the professor as saying, when asked should you hold back from going inside a pub, ‘for the moment, yes.’ The BMA amongst others has also advised people to meet outdoors rather than indoors for the time being.
• The BBC reports Springboard as saying there was no surge onto the High Street yesterday. This is a) very early to comment and b) any single day will be greatly impacted by the weather. The BBC says ‘so far, at least, the relaxation of the rules does not seem to have benefitted retailers by persuading more shoppers through the door.’
• Langton comment: See premium email
• This is getting more acute. We hear chefs are in short supply. Staff, who may have returned to their country of origin during furlough, are not coming back in sufficient numbers to match demand. Recruitment firm and the CIPD say employers wish to bring on new staff at the fastest rate in eight years. But they say there has been a fall in the numbers of EU workers. Wage inflation may not be inevitable but it is certainly possible.
• Langton comment: See premium email
Working from home:
• There may be a drift back to the office going on but staffing levels in traditional offices may not get back to prior levels. The ONS says that 25.9% – or 8.4 million people – were working from home recently compared with 12.4% in 2019. This does not include people on furlough – as they are not permitted to undertake work. Sky says ‘the data showed that 46.4% of people employed in London said they worked at home at some point in 2020.’
Other covid and company news:
• New Look Landlords have won leave to appeal to the Supreme Court over their treatment in the CVA. The landlords had been seeking to overturn the CVA, which saw the switch to turnover rent “fundamentally rewrite” the leasing agreements (in their opinion). This has a read across to a number of operators considering a similar course of action.
• DP Eurasia has updated on trading for the four months ended 30 April 2021 saying that ‘Significant System Sales Growth [has been] Achieved.’ The company reports that system sales in the period were up by 65% to 469m TRY. The number of stores has risen from 757 to 776. Growth of 49% was achieved group-wide with 62% in Turkey and 13% in Russia. Online delivery system sales are now at 77.3%. CEO Aslan Saranga says ‘the first four months of 2021 have been very encouraging.’ There will be no change to group expectations for the full year. Langton comment: See premium email
• Britvic plc has reported H1 numbers to end-March saying that revenue fell by 6.3% to £617.1m and EBIT fell by 15.4% to £60.1m on an adjusted basis. The group says that PAT fell by 14.7% to £33.2m. EPS was 15.2p and the group is reinstating its H1 dividend with a reported pay-out of 6.5p. Langton comment: See premium email
• Operators in Glasgow have reacted with frustration to the decision to keep the city in Level 3 of Scotland’s five-tier system.
• Foodservice analyst Peter Backman comments on what early pandemic trends have persisted. He mentions (as having persisted) contactless ordering and payment, sanitiser stations, online menus, physical menus being wiped down after each use and surface cleaning several times an hour.
• Manchester night-time economy advisor Sacha Lord was ‘punched and attacked over his views on the reopening of hospitality’ he has said in a tweet.
• Constellation Brands has bought a minority stake in Donae Burston’s La Fête du Rosé for an undisclosed sum
• Morrison’s has said that it invested £16m into in-store cafe upgrades ahead of reopening yesterday. on Monday. It says the money has been spent on updating the decor across all 406 of its cafés, refreshing the menu, introducing new technology, and increasing Covid safety measures.
HOTELS & LEISURE TRAVEL:
• Foreign holidays (basically to Portugal) are now legal. There are plenty of stories re 6am getaways with some airlines, such as British Airways and Ryanair suggesting that confidence is returning. The government has cautioned that travel “will be different this summer.” Holidaymakers have been told to expect longer border checks.
• Matt Hancock has maintained that people “should not travel to amber countries.” He told parliament there must be “an exceptional reason” for travel to an amber list destination and “people should not travel for a holiday”. He added ‘we will assess countries that might go on to the green list every three weeks. If a country is not on the green list you should not be travelling there unless you have an exceptional reason.’
• Langton comment: See premium email
• The EU is expected to approve the use of ‘vaccine passports’ to allow visitors to enter into Europe. The Telegraph reports that a final decision will be made this Thursday.
• Sky News reports that PE house CVC Capital is in talks about a takeover of Away Resorts, the holiday park operator, with sites such as Whitecliff Bay on the Isle of Wight and Sandy Balls in the New Forest. The company caters for around 200,000 holidaymakers in a ‘normal’ year.
• PPHE announced yesterday that ‘its free float has marginally decreased to be below the required threshold for FTSE UK All-Share index inclusion of greater than 50%. The Company estimates that its current free float as of the date of this announcement is approximately 47%.’ The company says it ‘would like to express its continued efforts to, and focus on, satisfying the FTSE All-Share eligibility criteria and accordingly will review options available to achieve this.’
• Amazon is reported to be in talks to buy MGM Studios for $9bn. The sale would add content to Amazon’s Prime streaming service. The BBC has been unable to get a comment from either company.
• US telecoms company AT&T Inc is reported set to spin off its entertainment assets into a new venture. Assets will include with cable programming company Discovery, HBO and other channels acquired via the Time Warner purchase only some three years ago. AT&T said the new business would have a content library of nearly 200,000 hours of “iconic programming” bringing together the likes of HBO, Warner Bros, Discovery, DC Comics, CNN, Cartoon Network, HGTV, Food Network, and Eurosport.
• Escape Hunt has reported full year numbers to end-December saying that, as a result of the various lock-downs, revenue fell to £2.7m from £4.9m in the prior year. The EBIDTDA loss was reduced to £1.4m (2019: loss £1.7m) ‘despite COVID-19 restrictions.’ The company says it saw more than ‘25% like-for-like sales growth on a 12 week rolling basis in the two months prior to lockdown.’ The group operating loss was £6.4m (2019: loss £5.9m). Langton comment: See premium email
FINANCE & MARKETS:
• Sterling mixed at $1.4169 and €1.1648. Oil higher at $69.72. UK 10yr gilt yield unchanged at 0.87%. World markets broadly lower yesterday but heading better. London set to open up around 50pts.
RETAIL WITH NICK BUBB:
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TRADING STATEMENTS & EVENTS:
Upcoming results are set out below:
• 17 May 21 Hollywood Bowl H1 numbers
• 18 May 21 Britvic H1 numbers
• 18 May 21 Escape Hunt FY numbers
• 18 May 21 DP Eurasia trading update
• 19 May 21 Marston’s H1 numbers
• 19 May 21 Premier Foods FY numbers
• Est 19 May 21 M&B H1 numbers
• 19 May 21 UK ONS inflation data
• 20 May 21 Young & Co FY numbers
• 20 May 21 Fevertree AGM
• 20 May 21 888 AGM
• 21 May 21 GfK consumer confidence numbers
• 25 May 21 Restaurant Group AGM
• 25 May 21 Shaftesbury H1 numbers
• 26 May 21 C&C FY numbers
• 26 May 21 Playtech AGM
• 3 Jun 21 New River full year numbers
• 8 Jun 21 DP Eurasia AGM
• Est 13 Jun 21 Barclaycard Consumer Spending report
• 15 Jun 21 Vianet full year numbers
• 24 Jun 21 Bank of England MPC meeting
• 13 Jul 21 Pepsi Q2 numbers
• 23 Jul 21 Premier Foods Q1 update
• 27 Jul 21 Campari H1 numbers
• 3 Aug 21 Domino’s Pizza 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
• 19 Aug 21 Rank FY numbers
• 22 Oct 21 Intercontinental Hotels Q3 numbers
• 26 Oct 21 Campari Q3 numbers
• 8 Dec 21 TUI FY numbers
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