New variant sell-off, AG Barr, inflation, Black Friday, travel & other:

A DAY IN THE LIFE:

So, we had a bit of snow over the weekend and, probably shortly after you read this, I’ll be finding out if it’s caused disruption on the railways.

Let’s hope it hasn’t as it’s a busy week and I could do to get down to London without any hassle, if at all possible. And, after the Mighty Hull City recorded their fourth victory on the trot to power up to sixth bottom in the Championship, it would be a shame to spoil the upbeat mood.

Btw I put this Tweet out on Friday, I promise it’s true: ‘I remembered Sajid Javid saying he wouldn’t wear a mask on quiet trains, even if asked. He’s changed his tune. On a lighter note, I Googled ‘Sajid Javid doesn’t wear…’ looking for the quote & it auto-filled ‘a bra’, ‘a wig’ and then ‘trousers.’ Something he’s not telling us??’

Anyway some things, the weather and the various descendants of British Rail, are no doubt sent to try us. On to the news:

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FRIDAY LEISURE SELL OFF:

It was a terrible day on the markets for most leisure companies on Friday. This, understandably, on the back of news that the Omicron variant was reported to be the most differentiated (from the original Wuhan virus) that we had seen and that travel and other restrictions were to be reimposed.

Moves in the UK were swiftly followed by action in the US and the EU. Health Secretary Sajid Javid, who said earlier this year that he wouldn’t wear a mask on quiet trains even if he was asked to do so, says we are ‘nowhere near’ reintroducing social distancing legislation. So that’s OK then.

Snapshot:

• We would have expected travel to be hit more than general leisure and for leisure itself to suffer more than the market. This is broadly what happened.

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PUBS & RESTAURANTS:

Inflation:

A reported global shortage of fertilisers is being blamed for driving up food prices. Yara International says higher gas prices were pushing up fertiliser costs and were consequently impacting food prices worldwide.

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Black Friday (the sales event rather than the bloodshed in the financial markets) was a noisy affair and for some it is still going on. But some observers suggest that initial figures were good for online sales but not so good for face-to-face payments. The announcements re the omicron variant on Thursday evening probably did little to persuade would-be shoppers to get out of the house.

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Big ticked spending under some pressure. It’s a little historic but nonetheless interesting to note that furniture retailer ScS said at its AGM on Friday that LfL sales were running down 10.6% against strong comps last year. It says ‘the group has seen a reduction in store footfall and conversion with consumers spending less on big ticket discretionary purchases. This appears to be driven by a change in behaviour with consumers shopping earlier for Christmas when compared with previous years.’

Roxanne, which is billed as the world’s first Hip Hop speakeasy, is to open in London’s Shoreditch next February.

COMPANY & OTHER NEWS:

AG Barr has updated on full year profits saying that they are ‘now anticipated to be ahead of current market expectations.’ It says ‘the positive trading momentum reported at our interim results in September has continued and sales have grown ahead of our expectations, across both our Barr Soft Drinks and Funkin business units.’

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CGA reports that drink sales rose 1% above pre-pandemic levels in the week to 20 November. Jonathan Jones, CGA’s managing director, UK and Ireland said ‘Pubs, bars and restaurants face a host of operational and cost pressures, and consumer confidence remains fragile, but we can be quietly confident that many people will be ready to spend in the On Premise over Christmas’.

Separately, CGA in a new survey reveals how people in the Republic and Northern Ireland are interacting with pubs, bars and restaurants, showing that younger consumers have been quicker to return to venues, and remain positive about eating and drinking out.

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The Telegraph reports that Gail’s parent company Bread Holdings has said pre-tax profits for the year to February were £4.4m, up from £3.5m in the prior year. It reports that the higher returns came despite a 27pc drop in sales to £84.5m as lockdowns forced the closure of wholesale customers such as hotels and restaurants. The company said sales were underpinned by new deals with several supermarkets and delivery apps as well as its own website. The Telegraph reports that ‘a controlling stake in Bread Holdings was recently sold by the former Patisserie Valerie chairman Luke Johnson’s Risk Capital Partners to the private equity firm Bain for £200m earlier this year.’

The Times reports that West Berkshire Brewery ‘is on the brink of falling into administration’.

Make UK has reported that s “perfect storm” is developing for UK manufacturers of rising costs and increased levels of debt.

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Per the MCA, Boparan has launched self-service Carluccio’s coffee machines across 20 Sainsbury’s Local stores.

South Korea coffee chain A Twosome Place has been acquired by US PE house The Carlyle Group for an undisclosed sum. Hong Kong-based Anchor Equity Partners acquired it from CJ Foodville Co in 2018 for $422m.

The EU’s average recycling rate for glass packaging grew to a record rate of 78%. Multi-stakeholder stewardship partnership Close the Glass Loop has set goals to achieve a post-consumer glass container collection target of 90% by 2030.

The MCA reports that the UK operator of Shake Shack restaurants, has posted a loss of £7.5m.

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LEISURE TRAVEL & HOTELS:

What a difference a day makes – per Travel Weekly agents reported significantly higher holiday spend by consumers with November described as one of the best trading months in more than two years. But the impact from fears over the Omicron variant is yet to be seen. Travel shares were amongst the worst performers in the UK market on Friday.

All arrivals into the UK will need to take a PCR test and self-isolate until they have received a negative result under the regulations announced on Friday. The measures, which are said to be ‘temporary’, will put a damper on inbound travel as a chunk of nay holiday or business trip will be spent in isolation. The measures are said to be ‘targeted and proportionate’ and they are ‘precautionary’. Scotland, Wales and Northern Ireland have separate but similar rules.

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Sky reports that the owner of Butlin’s is ‘preparing to put it up for sale amid a boom in British staycations, sparking a potential bidding frenzy for the country’s best-known chain of holiday camps.’ It says Bourne Leisure, which also owns Haven and Warner Leisure Hotels, recently picked investment bankers to conduct an auction of Butlin’s next year. Bourne recently sold a majority stake in itself to PE house Blackstone.

Portugal is tightening Covid-19 restrictions as case numbers are rising – with arrivals by air being required to take a PCR or a rapid antigen test, 72 hours or 48 hours respectively before departure from December 1.

BA is reported to have temporarily suspended flights to and from Hong Kong after a crew member tested positive for COVID-19.

There are reportedly long delays for people receiving their passports from delivery company TNT, with the company apologising for the ‘inconvenience caused’.

STR reports UK hotel occupancy down in October 2021 from 72% in September to 71% in October. UK average room rates have reduced slightly in October, down to £98 from £100 in September. RevPAR was down to £69 in October 2021, significantly up from £27 in 2020, but still well behind pre-pandemic levels of £78.

A study from Essential Living showed that London has one of the lowest costing Uber services in the world, placing 24th on a list of 38 major cities. The  average 3km (1.8 miles) taxi ride across London costing £6.61, however surge charging can increase this be 150% to £16.56. 

OTHER LEISURE:

Hollywood Bowl is reported to be nearing completion of its £2.4m entertainment centre at Resorts World in Birmingham, set to open December 10. The site will feature 17 state of the art bowling lanes.

FINANCE & MARKETS:

The sell-off across financial markets on Friday may have reduced the likelihood of an interest rate rise on 16 Dec. Given its recent stance, it is possible – perhaps probable – that the Bank of England will stay its hand until it knows a little more about the impact of the Omicron variant on the UK economy.

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Sterling mixed at $1.3338 and €1.1818. Oil price lower over the weekend (but higher this morning) at $75.51. UK 10yr gilt yield sharply lower as interest rate rise fears recede at 0.81% (down 15bps). World markets terrible on Friday but London set to open up around 101pts as at 7am.

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