Langton Capital – 2021-08-26 – PREMIUM – Staff & product, Gregg’s, WFH, Covid Passports, Hawthorn, CCL etc.:
Staff & product, Gregg’s, WFH, Covid Passports, Hawthorn, CCL etc.:
PREMIUM EMAIL – PLEASE DO NOT FORWARD:
A DAY IN THE LIFE:
Our rural idyll (actually, think brown-field, edge of town site, kind of where shopping trolleys go to die or where you might find the city’s used tyre dump – an estate agent, I am not) has, over the last few years, been surrounded by 500 new homes that a) we knew were coming but b) somehow hoped wouldn’t.
But they did come and, alongside their making of the area somewhat safer – better lit and less likely to be the scene of car burnings after one of the local ram raids or car chases – we’ve been invaded by cats that regularly tussle with the foxes, hiss at the squirrels (but do little useful) and evade our increasingly arthritic dog when they’re not skulking around like mini-tigers and killing birds.
Nobody told them, of course, that they should turn of their kill switch, which made me think.
There’s about one cat in the country for every seven people. At three people to the house, we have some 1,500 new neighbours and maybe 200 new cats. Which has come as a bit of a jolt to the local avian population because, if the cats kill one bird a week each – and spend the rest of the week licking their paws and looking smug – that’s maybe 10,000 birds coming to a sticky end every year that might not otherwise have done so.
Only they would, of course, because that’s what life in the wild is like. It starts bad, gets worse and then you die. A bit like this season for Hull City. On to the news:
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PUBS & RESTAURANTS:
Supply shortages (labour & goods):
• KFC, Nando’s and McDonald’s have already been mentioned and the search is clearly on for further examples of companies and industries that have been hit by supply shortages. Yesterday and overnight there have been comments from Iceland, Gregg’s and a number of pub companies. Christmas is said to be ‘at risk’. If we can’t get frozen turkeys moving around the country, it could be a roast turnip with a boiled turnip side for Christmas lunch. That’s if the farms can get the staff, that is.
• Further comment: You could just say ‘everyone’ is being impacted by stock shortages, of course, but that wouldn’t be as much fun as finding emotive examples. If there’s anything a certain type of journalist, our current PM, for example, have learned, it’s that a good story tends to trump facts.
• Richard Walker of Iceland has told Radio Four that Christmas could be at risk from the supply chain crisis. He says HGV drivers must be added to the government’s ‘skilled worker’ list quickly. Iceland is short of 100 drivers and it is thought that the UK is short of 100,000.
• Fast moving lines. Iceland says that it is now being impacted ‘daily’ and this despite the pingdemic abating and infection numbers flat-lining. It adds that fast-moving lines such as bread are being cancelled at around 100 stores a day. Iceland says that, even if EU drivers were allowed in tomorrow, it would be a minimum of six weeks or so before they made any impact. And higher wages may need to be paid to attract such staff as they would be (presumably) giving up secure jobs to take up positions in the UK that could be taken away at some point in the future.
• Politics Home has reported that Gregg’s has also been hit by supply chain disruption that has impacted some chicken-based products. Whoever sourced the story has had to make do with chicken. They must have been looking for a sausage roll, vegan roll or steak bake headline.
• Greene King has commented on distribution problems in Scotland and City Pub Group is reported to be running short of Prosecco. Chance for ‘lack of fizz’ or ‘going flat’ headlines re sales, there. City Pub Group’s chairman Clive Watson has told the FT ‘people are focusing on chicken and milk because it’s topical. The big worry is the staff and the construction bottlenecks.’ He says a shortage of labour ‘has already held up our plans for opening new pubs. We can’t open a new pub [in Swansea] until late September, which means we will totally miss the season.’
• Disaggregating the impact between the pandemic (which should abate) and Brexit (which will not) could be difficult. Certainly some other countries are seeing supply problems and a shortage of labour has been reported regularly in many parts of the US hospitality industry. In its Q1 Earnings Conference Call, Constellation Brands CEO William Newlands said his company was seeing ‘global supply chain logistics issues, including shipping delays and transport interruptions.’ Brown Forman (Jack Daniel’s) in the US has also made reference to a lack of trucking capacity. Brown Forman says it (and the whole drinks industry) is ‘at the mercy of the supply chain somewhat in this as things work out.’
• Further comment: Working hard to point the finger might be fruitless at this stage. Ultimately, it will matter, because some causes will linger and others, hopefully, will go away. To get an international perspective, we may have to wait for comment from global spirits and beer companies, as they are in a better position to compare markets, the one with the other.
• The government has said that supply chain problems faced by businesses are ‘short-term perturbations’ and they are capable of self-correcting. Lord Grimstone, the investment minister, has dismissed warnings of disruption to supply chains and shortages as “short-term perturbations” that businesses are capable of “self-correcting”.
• Further comment: As The Telegraph reports, Lord Grimstone is head of the Government’s Office for Investment, said the pipeline of potential investors was as “busy as I’ve ever known it” following major investments from carmakers Nissan and Stellantis, the Vauxhall owner, as well as commodities trader Glencore. He says that it ‘was always going to be the case there would be some short-term disruption associated with Brexit and with coming out of Covid … it’s not stopping people investing, because they see this as a temporary phenomenon, which will correct over time. ‘ He says ‘these things aren’t putting investors off because you’re seeing a whole flood of people looking to invest in the UK at the moment … the climate for business in the UK has never been better.’
Working from home:
• The jury is very much out as to how this will land but Premier Foods has become the latest employer to say that office staff will be allowed to work wherever they want to going forward. Some 800 staff will be impacted in the group’s St Albans head office, as well as its Manchester, Lutterworth, Southampton, and High Wycombe locations. The company’s HR department says ‘work is a verb, not a place, and whether it’s for a team meeting or just personal preference, our office remains open for anyone who wants to use it.’
To jab or not to jab:
• Pressures, subtle and not so subtle, are being put on people to get vaccinated. Thfce covid passport to visit nightclubs in this country (though contested) is rather subtle, whereas Walt Disney World in Florida has reached an agreement with its largest union that all staff will have a Covid jab. The decision reached means that any union member who refuses to be vaccinated without a medical reason or a religious belief will lose their job. They will ‘retain positive rehire status.’ Meanwhile, Delta Airlines in the US has said it will only pay sick pay to staff who have been double-jabbed. It will also impose a $200 per month charge on employees who are unvaccinated in order to ‘address the financial risk the decision to not vaccinate is creating for our company.’
• The NTIA that over 15,000 letters have been sent to constituency MPs opposing Covid passports. The NTIA says it is ‘working tirelessly with other trade bodies’ to have plans to introduce passports to visit nightclubs scrapped. It says ‘at some point in the next four weeks the Government will take this policy to a vote within the Commons, it is important we galvanise support from MP’s across parties against this measure, to ensure that we have the best chance of winning the vote when it reaches the House of Commons.’
• In calling for an extension of the furlough scheme, 5% VAT and business rates relief, it could be worth considering that local councils are now, according to union Unison, facing a £3.1bn funding shortfall.
• In the US, Technomics’ Crisis on the Front Lines Multi Client Study reports that he labour crisis is not a temporary situation, the employment value proposition has changed and that independent restaurants are viewed more positively than chains as employers.
• Supply Chain Drive reports that drinks and raw material shortages are beginning to impact the US with out-of-stock products becoming increasingly prevalent across the industry.
• Just when you thought it was safe to go back into the pub. The FSA reports that some snacks made by Tayto Group at its factory in Bolton, Greater Manchester, have been linked to a salmonella outbreak. Nearly 200 people have fallen ill and 12 are reported to have been hospitalised after suffering salmonella poisoning linked to pork scratchings.
• Hawthorn has launched a managed brand, Proper Pubs. The company says ‘consisting of around 20% of the Hawthorn estate, Proper Pubs are wet-led community pubs, focused on providing a great range of drinks at good value prices, with entertainment offerings for the whole community.’ It adds that ‘Proper Pubs is run by Director of Managed Operations, Mark Brooke, who joined Hawthorn last year having previously been responsible for growing Beacon in the Ei Group from 165 pubs to 300 pubs, operating in the wet-led, value-driven market.’
• Further comment: Whilst there is no short term likelihood of a brewery, Hawthorn is adopting an integrated model that is familiar across the industry. Whilst concentration or focus may sometimes come into fashion, the integrated model has the advantage that pubs can be moved from one model to the other. This is more often from managed to tenanted, though it is by no means uncommon that pubs move in the opposite direction. Hawthorn says its ‘Proper Pubs CAPEX programme will continue, with investment in refurbishments and renovations across the portfolio, in order to help Operators grow their business and maintain a high standard for the community.’
• The FTSE has ruled that Just Eat should change its nationality from the UK to the Netherlands, meaning that the company will be kicked out of the FTSE 100 index.
• The Access Group has acquired Omnifi and its Orderbee Mobile Order and Pay technology. The firm says that adding Orderbee to the Access hospitality software suite will enable customers to order in seconds after they arrive.
• An international investment consortium backed by Edinburgh Woollen Mill’s CEO Steve Simpson has bought Peacocks out of administration.
HOTELS & LEISURE TRAVEL NEWS:
• The Telegraph reports Cignpost as saying that only 0.4% of holidaymakers travelling overseas are testing positive for Covid on their return. It says that single vaccinated travellers were twice as likely to test positive, at 0.8% of arrivals. Non-vaccinated holidaymakers were between one and 1.2%.
• Carnival’s luxury brand Seabourn has said that it ‘continues to work with various global government and port officials to develop plans for a full return to cruising.’ It says it ‘has updated the restart of one of its remaining ships, Seabourn Sojourn, to open in time for the summer season in the Mediterranean on June 6, 2022.’ Carnival adds ‘the revised restart date means the brand is cancelling the 2022 145-day World Cruise on Seabourn Sojourn, which was originally scheduled to depart on January 11, 2022 from Los Angeles.’
• Meanwhile, the company’s Holland America Line ship has said holidaymakers ‘can anticipate a restart date of May 2022 for Volendam and Zaandam.’ The company says ‘we have been diligently planning and preparing to move our ships back into service, and after an extremely successful restart in Alaska and Europe we are thrilled to have return-to-service dates for Volendam and Zaandam.’
• STR reports that 73% of travellers in North America have booked or taken a trip in 2021, with the figure standing at 75% in the UK. Chris Klauda, senior director of market insights at STR, said ‘The U.K. was locked down until the end of the spring. And yet, by the end of July, two-thirds had booked and/or taken a trip. … So once they were able to travel, they were out’.
• The Guardian reports that British travellers are facing difficulties proving their vaccination status in several European countries owing to delays linking the NHS Covid pass to the EU’s centralised certification system.
• Gatwick is considering using its northern runway for routine use, in a move which the airport says would secure the hub’s long-term growth, create 18,400 extra jobs and generate £1.5 billion for the region by 2038.
• The Rank Group reports that Bill Floydd, the Group’s Chief Financial Officer, ‘has tendered his resignation in order to take up the role of Chief Financial Officer at Watches of Switzerland Group PLC. The Board will shortly begin a search for Bill’s successor and it is anticipated that Bill will leave the Group at the end of 2021.’ CEO John O’Reilly says ‘Bill has been an excellent CFO since joining Rank shortly after I joined in 2018 and I will be sad to see him go. He has helped secure the Group’s liquidity and future through the pandemic and will leave Rank in excellent financial shape. I wish Bill all the very best with his next venture and look forward to securing his replacement over the coming months.’
FINANCE & MARKETS:
• Union Unison reports that local councils have a £3.1bn funding black hole. The union says that jobs and services could be cut as a result.
• The CBI has reported that the services sector is seeing strong growth, but businesses are uncertain about the outlook. The CBI found a net balance of 32 per cent of businesses believed that trade had risen in the three months to August.
• Sterling up at $1.3756 and €1.1692. Oil higher at $71.81. UK 10yr gilt yield up 6bps at 0.60%. World markets mixed yesterday with London set to open around 21pts down as at 7am.
• UK car production fell to its lowest July total since 1956, reports the Society of Motor Manufacturers and Traders. The running total for 2021, however, is running up around 20% on last year but is still around 29% down on 2019. The SMMT says ‘while the impact of the ‘pingdemic’ will lessen as self-isolation rules change, the worldwide shortage of semiconductors shows little sign of abating.’
RETAIL WITH NICK BUBB:
• Nick is on a well-earned break. Back after the Bank Holiday.