JDW, Wahaca, Rank, OTB, Ten Ent., 19 July, WFH, labour etc.:

A DAY IN THE LIFE:

Many times I have thanked my lucky stars that ‘turning it off and back on again’ usually does the trick with most things technical.

Because, whilst the above could be referred to as Plan A, there is often no Plan B in the Brumby household or the Langton office.

Or, rather, there is a Plan B, but it consists simply of swearing, shouting, hair-pulling, crying and breaking down or, if the time on the 24hr clock is into double figures, of drinking until either the problem goes away or, well, Plan B has to be repeated.

Anyway, Plan A worked yesterday when my laptop denied that it had a hard drive and stated, categorically, that everything I had ever uploaded to the cloud was no longer there.

So, should we get through to the final, we’ll be facing Italy. On to the news:

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JD WETHERSPOON – FULL YEAR TRADING UPDATE:

JD Wetherspoon has updated on full year trading and our comments thereon are set out below:

Headline numbers:

• JDW reports that ‘as at 4 July 2021, 850 Wetherspoon pubs were open, out of a total of 860. Most of the closed pubs are at airports.’

• It says during outdoor trading (12 April and 16 May), ‘about 500 pubs were opened, and like-for-like* bar and food sales were minus 49.0%.’

• It adds ‘like-for-like sales from 17 May to 4 July, when pubs were fully open, were minus 14.6%.’

• Further comment. See premium email

PRIVATE COMPANY ACCOUNTS – OAXACA (TRADING AS WAHACA):

Oaxaca, which trades as the more recognisable Wahaca, has reported numbers for the year to 28 June 2020 to Companies House. Whilst the numbers are quite historic, the accounts and the audit report were signed on 27 May 2021, meaning that the comments therein are a little more contemporary. Our comments are set out below:

• Further comment. See premium email

PUBS & RESTAURANTS:

Trading:

• Small mercies that cost nothing. Downing Street has confirmed that pubs will be allowed to stay open later for Sunday’s Euro 2020 final, with premises able to stay open for an extra 45 minutes until 11.15pm. Pubs will also be allowed to stay open for events such as royal weddings.

• The CEO of Greene King, Nick Mackenzie, has welcomed the ‘possibility of profitable trading for the first time since March last year’ as restrictions are set to ease on 19 July. Mackenzie called on the Government to support the sector with business rates and duty reform and to tackle short term issues around recruitment.

• The British Beer & Pub Association predicts that England fans will buy 6.8 million pints on Wednesday when the national team plays Denmark in its semi-final of the Euros. It says ‘this is more than during England’s quarter-final match against Ukraine, as the feel good factor continues to spread amongst fans of the Three Lions with the squad progressing through the tournament.’ The BBPA says that, ‘if restrictions had been lifted already…this would have been nearer 12 million pints, showing the huge impact restrictions have had on the viability of the sector.’ The BBPA says ‘if the team goes on to win, a final at Wembley awaits, which would be a huge boost to our pubs and the nation.’

Proposed 19 July changes:

• Responding to proposed changes in the rules on 19 July, some industry leaders have suggested they do not go far enough whilst others have said they will keep some rules in place.

• Further comment. See premium email

Working from home:

• The Bank of England is to ask staff to come into the office for one day a week from September. My goodness. COO Joanna Place says the bank plans to encourage more flexible working after the pandemic. Staff said that they would like to continue working from home at least two days a week. Perhaps they would, wouldn’t they?

• Further comment. See premium email

Labour issues:

• Sajid Javid has confirmed that from 16 August people who are fully vaccinated will not have to self-isolate if they have close contact with a positive coronavirus case. Contacts will instead be advised to take a PCR test as soon as possible. Younger hospitality staff will start having second jabs about a month from now (on the sample of one, a c25yrs old, who’s second jab is 14 August. Walk-in centres may be somewhat faster off the mark). See Loungers’ comments above.

• UKH says the ‘announcement doesn’t go far enough, quickly enough. The sector is experiencing severe staff shortages, compounded massively by the absence of team members who have been told to isolate despite not having shared shifts with colleagues who tested positive.’ It says ‘introducing a test to release system for fully vaccinated people from the middle of next month not only fails to recognise the carnage the current system is causing hospitality and the wider economy, but also significantly discriminates against a huge proportion of our workforce. Around 60% of our staff are aged between 15-34 and the vast majority will not have had the opportunity to receive both jabs by the 16th August.’

• Further comment. See premium email

Company & other news:

• Fulham Shore owned brand Franco Manca is to open on Baker Street in London. Solicitors are believed to have been instructed on more than half a dozen other sites, which should come on line before the group’s year-end next March. Other locations are believed to include St. Albans, Blackheath, Bishops Stortford, Cardiff & Cheltenham. York, whilst on the radar, is at the other end of the alphabet.

• Mark Selby, co-founder of Wahaca, expects the restaurant chain to make a swift recovery after undergoing a CVA which saw the closure of 12 restaurants last year. The CVA also saw lenders and shareholders write off £25m in debt and inject a further £5m into the business. See comment on private companies above.

• Legal & General has cautioned that Wm Morrison could be taken over by a private equity for the “wrong reasons,” saying that the US buyout firm that has agreed to buy the Yorkshire-based retailer could strip assets, punish suppliers and financially engineer the retailer’s balance sheet in order to create returns. Legal & General says potential buyers should not buy Morrisons to take advantage of a possibly undervalued property portfolio, to load it up with debt, or to cut its tax bill. This may well be wishful thinking.

• With the triple lock still apparently in place, old age pensions are due to rise by 8% this year (see finance & markets). Whether ethical or sensible or not, this should benefit the grey pound and the venues in which it is spent.

• Friska, a Bristol-founded healthy fast food chain, has been sold by administrators to a third party. The chain operated eight sites across Bristol, three in Manchester and one in Birmingham.

• The Telegraph write that ministers are warning that high streets may never fully recover from Covid-19. Luke Hall, the minister for regional growth and local government, said Covid-19 had been the “largest, most synchronised shot to the economy, our social lives and the high street in living memory” and a full recovery could be impossible. Some one in seven shops across the UK are currently vacant.

HOTELS & LEISURE TRAVEL:

British exports. Some up, some down:

• The Majorca Daily Bulletin reports that a crackdown on gatherings in four areas of Majorca and Ibiza is being imposed after a surge in Covid cases. Capacity limits of 100 indoors and 200 outdoors are being imposed, with the number of people per table being reduced to 6 indoors and 10 outdoors.

• Spain’s ministry for industry, energy and tourism reports UK arrivals to Spain in May were down 97.4% compared to 2019 to just 51,155. Arrivals from Germany were down by more than two thirds to 338,408.

Other travel news:

• On the Beach Group reports that it has successfully completed its placing. It has placed 7.9m shares at 330p each to raise gross proceeds of approximately £26.0 million. The Placing Price represents a discount of approximately 5.0% to the closing share price of 347.5 pence on 6 July 2021.

• Further comment. See premium email

• The World Travel & Tourism Council reports that the European travel sector fell by 51.4% to €987bn in 2020, its second biggest economic collapse. Despite this, Europe remained the top global region for international visitor spending.

• STR has reported that the Euros have been drawing in crowds but “hoteliers in the city [London] say it’s still a far cry from the massive demand spikes they would have seen in more typical circumstances.” It quotes the 361-room Hilton London Wembley as saying its property had seen some additional business on the night of the England-Germany game but that “it was not fantastic.”

• Balpa pilots union has demanded Rishi Sunak ‘makes good on his promise’ to protect jobs by issuing a sector-specific extension to furlough as it argues travel is ‘the only sector remaining in lockdown’. Balpa’s letter states that aviation has faced ‘18 months of heavy losses’ and that international travel is still crippled by regulations and a lack of public confidence.

• Thackeray Estates plans to regenerate the Queen Victoria Street and Friar Street area in Reading have been approved. The plans for the Grade II-listed buildings include a market square and an aparthotel.

• Esken Ltd, formally known as Stobart Group, has sold 30% of its stake in London Southend Airport to CGIOF River in a deal worth £125m. The partnership will also see CGI contribute to the development of the airport going forward.  

• Heathrow is to trial fast-track lanes for fully-vaccinated arrivals in partnership with British Airways and Virgin Atlantic.

OTHER LEISURE:

• Rank Group has updated on its banking facilities saying it is ‘pleased to announce that it has signed a new two year £25m Revolving Credit Facility agreement with Lloyds Bank plc.’ It adds that ‘the facility provides the Group with additional liquidity and the opportunity, when we are confident that the Group is delivering sustainable positive cashflows, to accelerate investment in the Group’s transformation plan.’ Rank says ‘the new facility is subject to the same financial covenant waiver and associated conditions, including a quarterly minimum £50m cash and available facilities test, that are in place across the Group’s other bank facility agreements’ and it is ‘in addition to the Group’s existing £55m RCF and the remaining £108.4m term loan.’

• Ten Entertainment Group has updated on H1 trading saying that it has seen an ‘excellent customer response since reopening, driving like-for-like sales growth’ alongside ‘a return to cash generation and profitability.’ The company says all 46 centres across the UK reopened safely on 17 May with over 650,000 visits and they saw 22.5% like-for-like sales growth in the first six weeks of opening compared to 2019. The company says it has ‘returned to profit and cash generation’ and adds its ‘cash position is secure, with over £23m of liquidity headroom.’

• Further comment. See premium email

• Mid-market private equity investor Livingbridge has invested in World of Books, a UK online re-seller of second-hand books.

FINANCE & MARKETS:

• Markit has reported its UK Construction PMI for June saying that it has risen to 66.3 from 64.2 in May. Any number over 50.0 is indicative of growth. Markit says ‘sharp increases in business activity were seen across all three main areas of the construction sector monitored by the survey.’ It says ‘June data signalled another rapid increase in UK construction output as housing, commercial and civil engineering activity all expanded at a brisk pace.’ This is the fastest rate of increase in 24yrs.

• Further comment. See premium email

• The state pension is set to rise by 8% from April next year. The OBR says this will cost the Treasury (AKA the taxpayer) some £3bn per annum more than previously expected.

• City AM reports that London businesses took more than £16bn in taxpayer money through the government’s two largest Covid-19 support schemes. This is broadly in line with numbers nationwide.

• The FT reports PE house KKR is to set up specialist team to buy distressed assets in the UK from their existing owners.

• The OBR reports that there is an “increasingly risky” situation developing due to high levels of debt.

• Further comment. See premium email

• Inflation. Samsung has said that its quarterly profits will rise by 53% amid a global chip shortage. Prices have risen sharply. Heading the other way, oil prices tumbled yesterday after OPEC producers failed to agree a volume for supply increase.

• Sterling down at $1.3801 and €1.1672. Oil price lower at $74.63. UK 10yr gilt yield sharply lower at 0.63% (down 9bps). World markets down yesterday but London set to open up by around 15pts as at 7am.

RETAIL WITH NICK BUBB:

• Nick is taking a well-earned break. He’s back on Monday.

TRADING STATEMENTS & EVENTS:

Upcoming results are set out below:

• 5 Jul 21 Markit Services PMI

• 7 Jul 21 JD Wetherspoon pre-close FY trading update

• 7 Jul 21 Ten Entertainment H1 trading update

• 8 Jul 21 Fuller’s FY numbers

• 8 Jul 21 Jet2 FY numbers

• 13 Jul 21 Pepsi Q2 numbers

• 14 Jul 21 DP Eurasia H1 trading update

• 20 Jul 21 Young & Co AGM

• 21 Jul 21 Loungers FY numbers

• 21 Jul 21 Nichols H1 numbers

• 23 Jul 21 Premier Foods AGM & Q1 update

• 27 Jul 21 Campari H1 numbers

• 27 Jul 21 Games Workshop FY numbers

• 28 Jul 21 Marston’s Q3 trading update

• 30 Jul 21 DPP AGM

• 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

• 2 Sept 21 Jet2 AGM

• 22 Sept 21 Ten Entertainment H1 numbers

• 1 Oct 21 JW Wetherspoon

• 22 Oct 21 Intercontinental Hotels Q3 numbers

• 26 Oct 21 Campari Q3 numbers

• 8 Dec 21 TUI FY numbers

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