Langton Capital – 2021-09-10 – Fulham Shore, vaccine passports, WFH, inflation, rent arrears etc.:
Fulham Shore, vaccine passports, WFH, inflation, rent arrears etc.:
A DAY IN THE LIFE:
I braved shorts yesterday.
And it wasn’t some ‘shouting at the sky’ defiance that drove it. And nor the chance to show off my scrawny legs but rather the hope that, as the weather forecast had suggested, there would be some sunshine amidst the showers.
And there was, of course, but to call the downpours ‘showers’ was a bit timid because, though I’ve never stood below the plughole in a swimming pool when it’s been pulled out, I would imagine yesterday was very like that and we won’t need to be worrying about watering the garden for a little while.
Still, 20 plus degrees and sunshine has to be grabbed when you see it in September. Long trousers today. Have a good weekend and on to the news:
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FULHAM SHORE TRADING UPDATE:
• Fulham Shore, owner of the Franco Manca and The Real Greek chains of restaurants has updated on trading saying that ‘since the Group’s Final Results announced on 17th August 2021 Group revenues have continued to grow.’ It says that ‘in the three completed weeks since (up to 5 September 2021), Group revenues for all restaurants have increased 27% compared to the equivalent period in the 2019 calendar year.’
City and West End improved.
• FUL says ‘this represents a marked acceleration from the 8% average increase for the eight weeks ended 15 August 2021 announced in the Final Results. The Group’s 17 restaurants that are located in the West End of London and city centre office locations, although still down on 2019 levels, have, in these three weeks, continued to see a week-by-week improvement in footfall and revenues as tourists and office workers have started to return.
• During the financial year to date (year end is March), the company has opened two Franco Manca and its 20th The Real Greek in Norwich. This unit ‘has opened with strong trading serving an enthusiastic local audience’ and it takes the total number of restaurants operated by the Group to 75.
• The group is on site in two new sites (Blackheath & Baker Street) and says ‘15 more potential sites are in solicitors’ hands for both Franco Manca and The Real Greek.’
AGM on 29 Sept:
• The group says that it will provide a further, more detailed, update at its AGM on 29 Sept. This will cover the first six months of the current year.
• Chairman David Page says ‘we are very encouraged by the accelerating revenue growth trends during recent weeks despite continued challenging trading conditions. This reflects the popularity and relevance of both Franco Manca and The Real Greek, underpinned by their great food and fantastic value.’
• The chairman says ‘we continue to see a number of exciting growth opportunities and are on course to open 10 locations during the current financial year, with more than 150 additional sites in our medium-term plans.’
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PUBS & RESTAURANTS:
Vaccine passports and vaccinations:
• The Scottish Parliament yesterday voted to require people going to nightclubs and many other large events to have vaccine passports from 1 October. There is little further detail at this point. The proposals were pushed through by the SNP and the Greens and opposed by the Conservatives, Labour and Liberal Democrats. Similar rules – though there is no certainty – could be brought in for England, also from the beginning of next month. People who have had two vaccines in Scotland can download or get a paper copy of a certificate with a QR code. The Scottish Hospitality Group tweets ‘we have had NO substantive “consultation” in any way, with speed and urgency being used by government as a lever to push through a scheme with no basis in evidence.’
• Not happy. UK Hospitality Scotland Executive Director Leon Thompson commented that yesterday’s vote ‘whilst expected, is still extremely disappointing. The Scottish Government has not listened and now our businesses face just three weeks in which to prepare for a policy that will put further economic and resourcing pressures on them. The Scottish Government has not consulted with hospitality, it has not produced any credible plans for the introduction of passports and it has not even defined what a nightclub is. This leaves many businesses fearful that they will fall within scope of this legislation and concerned about the open-ended costs they might now face.’ It says ‘UK Hospitality Scotland will continue to push for solutions to ensure the worst effects of this policy are mitigated, so our members can continue to work towards recovery.’
• Considering vaccine passports, the Independent give space to Alistair Carmichael, the Liberal Democrat spokesperson on home affairs, who says that the government should provide business with detail and should ‘fix a date for a definitive vote in parliament’. He says ‘time is running out’ and says ‘we cannot lose sight of the fact that an ID scheme of this kind opens the door to a major change in the relationship between the citizen and the state.’ Carmichael points out that nightclubs, for example, are already open and trading and questions ‘how are such venues deemed safe in September but dens of disease in October? If they are safe today then we have to ask what the government expects to change between now and the end of the month.’
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• Morrison’s has told the Guardian it is taking measures to limit “biblical costs” imposed by the pandemic. It says it could withhold sick pay for those who are not vaccinated. CEO David Potts says ‘the cut to sick pay will not apply to workers who have not yet had a chance to receive two doses of a Covid vaccine, or those who have any symptoms.’ Meanwhile in the US, president Joe Biden has said that American companies with more than 100 employees should ensure their staff are vaccinated against coronavirus or tested weekly.
Working from home:
• The Telegraph features Andrew Bailey’s recent comments, saying that ‘Britain needs millions of people to come back to the workforce to fill huge vacancies created since society reopened.’
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• The MCA reports that City centre-based operators have reported a pick-up in trade this week as workers return to offices.
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• Goldman Sachs is to drop social distancing in its London office from Monday. The bank also will stop the free canteen food that it has been offering staff to date. It hopes this will help the recovery of local cafés and restaurant. The bank employs 6,000 people in the UK. About half have come into the office this week, up from about a third in the summer.
Furlough & labour issues:
• The Resolution Foundation reports that by the end of July, 1.6 million people were still on furlough, the lowest level since the start of the pandemic and 340,000 fewer than a month earlier. At the peak of the pandemic in May last year, nearly nine million people were on furlough.
• Morrisons says it expects the UK’s lorry driver shortage to push up prices this year. Transport secretary Grant Shapps said the UK must ‘stand on its own two feet’ and not rely on EU drivers.
• Costa Coffee has announced a 5% pay rise for 14,500 staff working at its company-owned stores in the UK, with the company set to recruit an additional 2,000 staff due to an increase in demand as restrictions ease. The Times points out that the news comes almost a year to the day since Costa announced up to 1,650 redundancies ‘amid a Covid-driven dearth of high street shoppers’. It said the hirings would cater for store openings and higher consumer demand and adds ‘our team members are the heart of our business and as we continue to emerge stronger from the pandemic, this 5% pay increase is one way we are able to show our thanks to them.’ The company says ‘our teams have been through the most challenging year and a half in living memory and have shown incredible passion, resilience, and commitment as they continue to serve perfectly crafted cups of Costa coffee to consumers across the
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Company & other news:
• The BRC has called on the government to close a loophole that has allowed landlords to pursue tenants for rent. The BRC says ‘while the vast majority of retailers and landlords have agreed rent payment plans, a small minority of landlords are undermining the spirit and intention of the protections and exploiting the County Court Judgement loophole.’ New legislation will protect high street firms from creditors chasing small debts. UKH says ‘this move will save thousands of businesses and jobs, and is a key step on the way to recovery for both the sector and the country.’
• The NIESR comments on its estimate for the Covid R rate saying that its estimates have been broadly accurate to date. It says ‘we forecast modest increases of new Covid-19 cases for all English regions other than South-West.’ It adds that ‘hospital admissions are forecast to increase slightly, just crossing the 1000-per-day mark in the coming week.’ The NIESR says ‘as schools return and transmission conditions change, we can expect to see an increase in cases in England due to the increased testing in schools as was observed in Scotland through the last half of August. It is reassuring that whilst trend new cases have remained high, hospital admissions due to Covid-19 have remained around 1000 per day and are only forecast to increase modestly over the next few weeks.’
• The Morning Advertiser looks at the ‘no-shows’ situation facing food pubs and quotes an operator as saying that it is “soul-destroying”. A snap poll showed that 38% of the 50 respondents did not take deposits for bookings and had no plans to do so in the future, with one in five (20%) saying they were considering taking deposits in the future. The MA quotes an operator as saying that last minute cancellations were even more of an issue than no-shows.
• Marston’s yesterday reported that CEO-designate Andrew Andrea had bought a further 20,000 shares in the company at 80.4p each.
• McDonalds will launch its first plant-based burger in select UK restaurants later this month, expanding to more than 250 locations on October 13, and is expected to subsequently roll out across the UK next year.
• Gordon Ramsay Restaurants plans to expand the group’s Bread Street brand across the UK. The group currently operates 25 London-based restaurants and holds license agreements to 11 sites in global locations. However, the company reported a loss of £5.1m for the year ended 31 August 2020.
• Liberation Group reports that it has ‘traded extremely strongly’ in its managed and tenanted pubs and inns in the UK, with LfL managed sales in the UK up +26%. The group currently operates more than 120 pubs.
• Diageo has made a minority investment in Japan’s Komasa Kanosuke Distillery, a producer of ultra-premium single-malt whiskeys. The investment will allow the Japanese distillery to expand its international sales and marketing teams.
• Boston Beer Co warned on profits yesterday, saying it now expects its full year diluted earnings to fall well below the $18 to $22 per share in a face of a sharp slowdown in the hard seltzer category. The company said ‘The market for hard seltzer products has continued to experience decelerating growth trends’.
• In the US, coffee chain Dutch Bros. Inc. announced it is seeking a $3.3 billion IPO valuation, or $18-$20 per share. The company will use the ticker BROS.
HOTELS & LEISURE TRAVEL NEWS:
• Menorca and Ibiza saw 35,691 and 75,336 UK tourist arrivals respectively in July, making the UK the largest inbound market to the islands. Balearic Islands tourism minister Iago Negueruela said ‘July 2021 arrival figures are encouraging, and we believe that August statistics will also show a positive upturn.’
• Per Travel Weekly, Joanne Dooey, president of the Scottish Passenger Agents’ Association (SPAA), expects international travel rules to be eased when ministers review the much-criticised traffic light system this month.
• EasyJet rejects a takeover approach from low-cost rival Wizz Air. The airline said the unsolicited bid undervalued the company and the unnamed suitor was now no longer interested. EasyJet also announced plans to raise £1.2bn from shareholders to help its recovery from the pandemic.
• Travel Weekly quotes operators as saying that there has been a ‘steady rise in late sales to boost cashflow over the coming months.’ It says ‘the increase in 2021 bookings is “encouraging”, they say, but not yet enough to see businesses through the quieter winter.’ This is, at least, something. Advantage Travel Partnership says ‘we are seeing a lot of late demand.’
• The British Airline Pilots’ Association says that now is not the time to remove the furlough lifeline with major global restrictions on travel still in place. As many as 51% of air transport workers were on furlough at the end of July.
• Delta Air Lines reports that the risk of exposure to Covid-19 when flying after all passengers test negative 72 hours in advance is less than 0.1%. The study showed that the average community infection rate was at 1.1% – or about one in 100 people – whereas infection rates on Covid tested flights were 0.05% or five in 10,000 passengers.
• Cineworld has reported on its litigation saying ‘further to our announcement of 14 May 2021, Cineworld is pleased to announce that it has reached agreement with the dissenting shareholders of Regal Entertainment Group with respect to the payment of judgment of their claim. Under this agreement, the Company will now pay $170 million of the Judgment to the dissenting shareholders and $92 million will be placed into an escrow account to be available to Cineworld as additional liquidity under certain circumstance. The funds in the escrow account will paid to the dissenting shareholders no later than March 31, 2022.’
FINANCE & MARKETS:
• Official statistics in German show that the UK is likely to slip out of the country’s top ten trading partners later this year for the first time in over 70yrs. Spending on British products in the first half of 2021 is down 11%. The BCC in Germany says red tape has slowed trade. It says ‘more and more small and medium-sized companies are ceasing to trade [with the UK] because of these hurdles.’
• The latest RICS housing survey showed a balance of 73 comparing prices rising with falling. The number was 79 in July. The RICS says ‘while momentum has eased relative to an exceptionally strong stretch earlier in the year, there are still many factors likely to drive a solid market going forward.’
• Sterling stronger at $1.3849 and €1.1705. Oil higher at $71.95. UK 10yr gilt yield down 2bps at 0.73%. World markets mixed yesterday but London set to open up some 28 pts higher as at 7am.
• The ECB yesterday said that it would proceed with financial stimulation but at a ‘a moderately lower pace… than in the previous two quarters.’
RETAIL WITH NICK BUBB:
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TRADING STATEMENTS & EVENTS:
Upcoming results are set out below:
• 1 Sept 21 PPHE H1 numbers
• 1 Sept 21 888 Holdings H1 numbers
• 2 Sept 21 Jet2 AGM
• 2 Sept 21 Gym Group H1 numbers
• 7 Sept 21 DP Eurasia H1 numbers
• 9 Sept 21 Gear4Music AGM
• 9 Sept 21 Morrison’s H1 numbers
• 9 Sept 21 Sportech H1 numbers
• 15 Sept 21 Restaurant Group H1 numbers
• 16 Sept 21 C&C H1 trading update
• 21 Sept 21 Compass Group full year update
• 22 Sept 21 Ten Entertainment H1 numbers
• 23 Sept 21 City Pub Group H1 numbers
• 23 Sept 21 Playtech H1 numbers
• 25 Sept 21 (est) GfK UK Consumer Confidence numbers
• 29 Sept 21 Fulham Shore AGM
• 30 Sept 21 New River investor day
• 1 Oct 21 JW Wetherspoon
• 5 Oct 21 Gregg’s Q3 update
• 6 Oct 21 Constellation Brands Q2 numbers
• 8 Oct 21 Hollywood Bowl FY update
• 13 Oct 21 Marston’s FY trading update
• 22 Oct 21 Intercontinental Hotels Q3 numbers
• 25 Oct 21 DP Poland H1 numbers
• 27 Oct 21 Chancellor’s Autumn Budget
• 26 Oct 21 Campari Q3 numbers
• 28 Oct 21 YUM Brands Q3 numbers
• 18 Nov 21 Jet2 H1 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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