Recovery Tracker, chicken, labour, Carlsberg, Rank Group etc.:

A DAY IN THE LIFE:

Like many people, I take my surroundings for granted but, after having been in London (on and off) for over thirty years, I decided earlier this week to walk around with my eyes open for a while, to see what all the tourists (when they are here) are always ooooing and aaaahing at.

But, as with a diver coming up from the deep, I decided to do it slowly, with a series of one or two mile walks. I’m only a couple of walks in but, my goodness, there’s a lot to see.

Of course, there are the obvious things that even I have noticed over the decades such as the Tower of London, Tower Bridge, St Paul’s etc but there’s so much besides and, but for the 1666 fire, Herman Goering’s flyboys and the 1960s planners, there’d be so much more.

Did east of Bank first, with its warren of alleys south of Cornhill and the Barbican & Smithfield yesterday, where St Bart’s church has managed to evade my attention for a third of a century and the number of pubs tucked away down alleyways is legion.

Any suggestions welcome. Maybe one to three miles, an hour to an hour and a half.

So, after a thrilling (and rather misleading) four-one victory on the first day of the season, recent results suggest that Hull City is choosing to beat the crowds and has started its relegation battle early.

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PUBS & RESTAURANTS:

Trading:

• The Lloyds Bank UK Recovery Tracker suggests that output for UK food & drink businesses fell in July due to product supply and staff shortages. The Recovery Index fell from 60.5 in June to 45.6 in July. Any number below 50.0 indicates a reduction in output. Lloyds says ‘businesses in the services sector saw costs rise at an unprecedented rate since the services input prices index began in July 1996.’ It says ‘as the economy edges back towards pre-pandemic GDP levels, there will understandably be less capacity for such rapid and out-sized gains’ and adds that ‘pipeline issues represent early indicators of the potentially broader inflationary pressures to come. While UK annual CPI inflation slowed in July, this will likely prove a temporary respite, particularly if businesses continue to face further price pressures.’

Supply – units:

• Hot Dinners suggests that the number of restaurants opening in London will rise this year with a “particularly strong” autumn pipeline. Expansion against 2020 numbers is hardly surprising. Hot Dinners says there could over 200 new openings this year versus 137 in 2020. It says that trading this month in central London has been stronger than anticipated. The Evening Standard says this was driven by the easing of self-isolation rules and a hopeful winding down in the pingdemic.

Supply – labour:

• The ONS has said that there are currently 117,000 job vacancies in the accommodation and food service sector, up sevenfold on the 16,000 in the same (May to July) period in 2020. The lockdown was more severe in the July-end quarter last year than it is thus. However, even smoothed for that, the labour shortages feel somewhat more acute.

• Disaggregating the above between Brexit, the pingdemic and allegedly cushy furlough payments delaying a desire to return to work has been virtually impossible. However, as the pingdemic should end for double-jabbed individuals and the furlough scheme ends next month, it should be more straightforward shortly.

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Supply – product:

• Feedback following yesterday’s comments on the Unite drivers strike suggests that the impact is being felt already as operators try to buy forward. Shortages are being exacerbated by this increase in hospitality demand. packaged and long-dated products are being impacted.

• Lynx Purchasing has said that problems with the supply of chicken will shortly be felt by the hospitality industry.

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• The Telegraph has reported on a number of supply chain operators as saying the shortages that caused Nando’s to shut a number of restaurants will continue for some time. It says ministers have failed ‘to heed repeated warnings that the Brexit fallout, EU worker rules and logistics problems would continue to hit food supply.’ The paper said a day earlier that Brexit was not to blame for the shortages. It quotes Avara Foods, one of the country’s largest chicken suppliers to supermarkets and restaurants, as saying that Britain’s workforce had been “severely depleted as a result of Brexit” and that this was “causing stress on UK supply chains in multiple sectors”.

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Other news:

• See Travel section below for how leisure stocks in the US have given back a lot of the gains relative to the market that they have made since good vaccine news became more established around November last year.

• Inflation. See Finance & Markets.

• Demand. Rail fares to rise, suck money out of pockets (including mine). See Travel below.

Company news:

• Nando’s says it hopes to have all its restaurants reopened from Saturday after around 50 outlets were shut because of chicken shortages. The company tweeted ‘the UK food industry has been experiencing disruption across its supply chain in recent weeks due to staff shortages and Covid isolations, and a number of our restaurants have been impacted.’ It adds ‘however, since Monday, a team of our brilliant Nandocas have been supporting our key suppliers onsite – working in partnership to help get things moving again, and this has already had a positive impact on affected restaurants.’

• Further comment: See premium email.

• Darwin & Wallace has appointed Mark Crowther, former CEO of Liberation Group, as a non-executive director and Patrick Wilson as non-executive chairman, as it looks to capitalise on its strong performance coming out of the pandemic, per Companies House documents. The MCA reports that MD Mel Marriott says ‘we took the opportunity to reflect, as many companies have, on what we are going to need, the skill sets and advice and support to go forward and take advantage of the strong position we are in.’ She adds ‘we are really lucky to have the likes of Mark and Patrick joining us.’ Outgoing chairman John Connell founded and funded the company some nine years ago.

• Carlsberg yesterday reported 2% organic growth in beer volumes from before pandemic in Q2 this year. It says that sales were helped by the hot weather, Euro 2020 and the reopening of bars across Europe. The CEO has said that he expects higher commodity costs next year.

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• MasterChef winner Sven Hanson Britt is looking to open a debut restaurant in London this autumn after a crowdfunding campaign.

HOTELS & LEISURE TRAVEL NEWS:

• The Biden administration in the US is set require mask wearing on airplanes, in trains and on buses through to the end of this year.

• Moody’s reports that Hyatt Hotels Corporation’s purchase of Apple Leisure Group is credit positive for Hyatt ‘because it increases its managed/franchised portfolio by 33,000 rooms focused in the fast-growing all-inclusive segment, reduces its reliance on its owned portfolio and increases its earnings generated from leisure travel.’

• STR reports that they US hotel industry pushed room rates to nine-month highs in July. Occupancy was down 5.5% on 2019 with room rate, at $143.30, up 5.5% and REVPAR up 0.2%. STR says ‘when adjusted for inflation, the ADR and RevPAR levels were lower than the all-time highs recorded in 2019. On an absolute basis, occupancy was the highest for any month since August 2019.’

• FTI Consulting says that Europe’s airlines have by and large avoided bankruptcy thanks to taxpayer, shareholder and bank support but it says the ‘sector may be at a tipping point’. It says ‘airlines in Europe have implemented only moderate fleet cuts’ and says more may follow. FTI says carriers are still burning cash and warns ‘the perfect storm in Europe’s aviation is yet to come.’

• Bloomberg reports that travel stocks have given back all of their relative stock market gains made in the period since ‘Vaccine Monday last November, when Pfizer Inc. announced its successful trial results.’ It says ‘hotels, resorts and cruise lines are doing a little better, but are also in a slump that has lasted since March.’

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• The July inflation measure (see comment below) is normally used to set the following year’s rail fare increases. This has come in (the RPI not the CPI) at a hefty 3.8% – the highest for ten years.

OTHER LEISURE:

• The Rank Group has reported full year numbers to end-June saying that net gaming revenue fell by 48% to £329.6m in the year with an operating loss of £92.0m and a loss after tax of £72.0m. On an underlying basis, the group says that revenue was down 50% at £288.2m with an underlying operating loss of £67.0m against an underlying operating profit of £48.4m in the prior year. The underlying loss per share was 20.3p compared with an underlying profit per share of 6.7p in 2020.

• Rank says ‘with 79% of Group revenue being derived from our venues businesses, closures imposed in the Government’s response to the pandemic amounting to 59% of available operating days together with capacity constraints, reduced opening hours and other restrictions during the year have had a material impact on the Group, resulting in underlying LFL NGR down 50% on the prior year and an underlying LFL operating loss of £67.0m.’

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FINANCE & MARKETS:

• Headline UK CPI fell from 2.5% in the year to June to 2.0% in the year to July. This came as something of a surprise. A drop had been expected, but maybe to 2.3%. The Bank of England’s target is 2.0£.

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• The ONS reports that UK house prices hit a new record high in June with the average house now costing £266,000, up by £31,000 or 13.2% on the same month last year. Prices rose most rapidly in the north.

• Due to the trade border now being effectively in the middle of the Irish Sea, the Irish Central Statistics Office has reported that exports from Ireland to GB (excluding NI) rose by 20% whilst exports from GB to Ireland fell by 32%.

• The government is set to break its manifesto promise to older voters that it would maintain the pensions triple lock.

• Scotland’s public sector deficit is reported to have more than doubled last year to £36.2bn. It stands at an annual 22.4% of GDP compared to 14.2% for the UK as a whole.

• Sterling mixed yesterday at $1.3721 and €1.1748. Oil down at $67.37. UK 10yr gilt yield unchanged at 0.57%. World markets broadly down yesterday with the UK set to open down around 67pts as at 7am.

RETAIL WITH NICK BUBB:

• Nick is on a well-earned break. Back after the Bank Holiday.

TRADING STATEMENTS & EVENTS:

Upcoming results are set out below:

• 17 Aug 21 Fulham Shore FY results

• 17 Aug 21 Just Eat Takeaway.com H1 numbers

• 18 Aug 21 Carlsberg H1 numbers

• 19 Aug 21 Rank FY numbers

• 1 Sept 21 PPHE H1 numbers

• 2 Sept 21 Jet2 AGM

• 9 Sept 21 Gear4Music AGM

• 15 Sept 21 Restaurant Group H1 numbers

• 21 Sept 21 Compass Group full year update

• 22 Sept 21 Ten Entertainment H1 numbers

• 23 Sept 21 Playtech H1 numbers

• 1 Oct 21 JW Wetherspoon

• 5 Oct 21 Gregg’s Q3 update

• 13 Oct 21 Marston’s FY trading update

• 22 Oct 21 Intercontinental Hotels Q3 numbers

• 26 Oct 21 Campari Q3 numbers

• 23 Nov 21 Compass Group FY numbers

• 24 Nov 21 Britvic FY numbers

• 30 Nov 21 Marston’s FY numbers

• 8 Dec 21 TUI FY numbers

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