Consumer spending, Games Workshop, Vianet, holiday bookings etc.:

A DAY IN THE LIFE:

There are good things to spend your money on. Charity, bling, holidays etc and then there are the other areas in which spending is somewhat joyless and is only undertaken to prevent you from sinking into the metaphoric mire.

Sometimes the literal mire as well as busted septic tanks and leaking pipes under your grass fall into the latter category.

And, unlike holiday snaps, you don’t put pictures of mended fences at the bottom of the garden in your photograph album. Yeah, you don’t want your dog getting out to savage the bin lorry and chase the postie’s van but it feels like a negative rather than a positive spend.

Similarly, replacing the boiler might cost more than two or three long weekend city breaks, but it doesn’t feel as good.

Still, enough of that. On to the news:

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PUBS & RESTAURANTS:

Bumps on the road. Quite large ones.

Foodservice analyst Peter Backman cautions that higher bills (and risks) in the form of ‘increased VAT, removal of protection form landlords, higher minimum wages’ will need to be paid from April. Both employers’ and employees’ NIC payments will also go up from that date.

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Make UK has reported that Brexit has raised costs for industry according to two thirds of its members polled recently.

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The direction of travel (re regulations).

PM Boris Johnson is reported to be preparing a long-term plan to manage Covid without economic and social restrictions. This should be announced around March. Michael Gove told the TV circuit yesterday morning (when he wasn’t stuck in a lift at the BBC) that people must learn to “live with Covid.”

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Dealing with the unvaccinated. The Djokovic saga (along with President Macron’s comments re the benefits of annoying the unvaccinated) has highlighted just how the approach to those who decline vaccinations whilst piggy-backing off the herd immunity provided when others do get vaccinated is evolving.

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The consumer:

Data on consumer spending for December from Barclaycard shows that spending was up 12.2% on pre-pandemic levels, though this was largely down to spending in supermarkets and on fuel. Barclays says ‘spending on essential items grew 13.7 per cent, boosted by supermarket shopping and fuel spend…yet some sectors, including clothing and department stores, saw slower growth due to concerns around the rise of Covid-19.’ It adds that ‘the hospitality sector also took a hit as festive gatherings were cancelled, and more Brits isolated or chose to stay at home.’

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The British Retail consortium has reported that the spread of Omicron and associated restrictions held back consumer spending last month. In its monthly report, the BRC says that retail sales were up 2.1% in December vs the same month last year. This was down on the 5% growth of November and significantly lower than the 9.9% growth for full year 2021.

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PM Boris Johnson has said he is “looking at” ways to reduce the impact of rising fuel prices on household energy bills. Labour has proposed removing VAT on bills for a year and levying a windfall tax on North Sea oil and gas producers.

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Discounting:

It’s January, the ‘worst’ day of the year (the third Monday of the month) isn’t far off, it’s dark and gloomy outside & spending in pubs isn’t what it was around Christmas. All of which means (as it does every year) that this month is a tricky one from which to draw conclusions. That said, M&B’s Vintage Inns is selectively offering 40% off mains every day this week including Friday.

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Trading:

UHY Hacker Young reports that the UK’s top restaurant groups experienced losses of £673m in the year to September 2021, up 174% on the year prior. Peter Kubik, partner at UHY Hacker Young said ‘Many restaurants are struggling to pass on increased food and wage costs to customers which is putting margins back under pressure. Omicron is just the latest set-back for an industry hit hard in the last two years’.

Unvaccinated workers at Ikea could receive the minimum Statutory Sick Pay (SSP) of £96.35 a week if required to self isolate. Average wages at Ikea are between about £400 and £450, depending on location and staff get enhanced sick pay.

UKHospitality has backed plans to extend licensing hours in England and Wales to 1am for this year’s Platinum Jubilee. Kate Nicholls, CEO, said ‘That vital extra trading time for venues will make an enormous difference, and go some way to helping them recover from the devastating effects of coronavirus.’

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Perhaps pushing on an open door, the Night Time Industries Association (NTIA) has called on the government to consider reducing the self-isolation period for workers. Michael Kill, CEO, said ‘We are already seeing an unprecedented level of the workforce and businesses struggling to survive. May I remind the government that jobs will be lost, if businesses do not survive’.

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COMPANY & OTHER NEWS:

Vianet Group has announced that it has signed a ‘significant new contract for its fast-growing Smart Machines Division’ with Lavazza Professional UK Limited. The company says ‘whilst not having a material impact on the current financial year, this is a financially significant new three-year contract for Vianet. It includes a commitment to provide Vianet’s services to 3,000 units in Lavazza Professional UK’s managed estate and gives Vianet preferred supplier access to a further 10,000 machines in Lavazza Professional UK’s direct estate providing coffee solutions to vending operators and end-users.

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A second Starbucks store in Buffalo, New York, is reported to have unionised.

Stonegate has acquired the remaining 25% stake in Hippo Inns that it did not already own, reports Propel. Stonegate Group is reported to have agreed to purchase the remaining 25% share of Hippo Inns, the 12-strong, London-based pub venture, from Rupert Clevely and Ian Edward for an undisclosed sum. Mr Clevely will remain a consultant to the company for two years.

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Argentinian steak restaurant Gaucho is reported set to open in Newcastle city centre.

Fuller, Smith & Turner has launched new healthcare benefits for its employees as it looks to improve its pay and benefits.

Patty & Bun plans to open a new site in Clapham early this year, offering 35 covers inside and 10 outside. The site will be Patty & Bun’s ninth location in London, and is located adjacent to Northcote Records.  

Research conducted by FirstPort has found that more  Brits would prefer to live near a Greggs than a Waitrose. The study also reveals that Tesco is the shop most respondents would like to live near, with Boots in second position, followed closely by Sainsbury’s and Aldi.

Wilko plans to close 15 stores this year, placing 300 jobs at risk according to the GMB trade union. Springboard showed a 6% decline in footfall in the last week.

LEISURE TRAVEL & HOTELS:

Holiday Extras estimates that Covid-19 rules account for a third of the holidays lost during the pandemic, warning that continued travel curbs will still deter holidaymakers. Its research stated that 45 million of the 129 million trips lost to the pandemic were lost to the ‘bureaucracy and restrictive travel rules implemented by the government’.

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Cirium, an aviation analytics firm, reports that December was the busiest month in 2021 for flights, with 2.43 million, but also saw the most cancellations for a decade. Between December 24, 2021, and January 3, 2022, more than 59,000 flights were cancelled, driven by Omicron and adverse winter weather.

G Adventures says the pandemic has catalysed change in the way in which people travel, with more consumers seeking responsible travel choices. Bruce Poon Tip, founder of G Adventures, said ‘data tells us they have become more purposeful and intentional about how and why they are travelling, where they are going, and are recognising the positive impact travel can have on local communities’.

Royal Caribbean International  has cancelled sailings on four ships, saying the cancellations were  ‘a result of the ongoing Covid-related circumstances around the world, and in an abundance of caution’.

Shares in cruise ship company Genting Hong Kong have been suspended on the HK stock exchange. The company owns Genting Cruise Lines. The company says the suspension is ‘pending the release of an announcement.’

OTHER LEISURE:

Games Workshop has reported H1 numbers saying revenue rose to £191.5m (from £186.8m) with PBT of £88.2m vs £91.6m. CEO Kevin Rountree says ‘we are on the front foot and confident in our ability to continue to deliver our strategy. Our commitment to focus on real cash returns and return on capital continues to deliver honest and consistent returns to our owners. We will continue to try our best. In the period reported, we have delivered just that.’

He says ‘we have proven once again that the Warhammer hobby creates exciting experiences and allows people around the world to come together and have some fun. We continue to focus on making the best miniatures in the world and to document and deliver an exciting operational plan. The company has also announced a 65p per share dividend in order to ‘distribute surplus cash’.

Flutter has announced that its purchase of Tombola has now completed.

FINANCE & MARKETS:

Barclaycard comments on the consumer’s view of the economy saying ‘the wider economic picture is encouraging consumers to be more cautious with their discretionary spending, as 43 per cent suggest they expect rising inflation to affect their household budgeting. However, some have a more positive outlook, as 36 per cent say they expect the British public and businesses to adapt and thrive, despite the likely challenges of the year ahead.’

Barclaycard concludes ‘while consumer card spending levels are up on 2019, December was a mixed picture for retail, hospitality and leisure, as restrictions to tackle the spread of Omicron started to take effect. More Brits were either isolating or choosing to stay at home due to the new variant, which hampered face-to-face retailers as well as hospitality and leisure outlets.’ It says that ‘bright spots’ included DIY whilst leisure spend was under pressure.

Markets yesterday were focused once again on the US 10yr bond yield. With inflation now at 40yr highs, two or maybe three Fed rate rises are anticipated this year.

Writing in The Telegraph, economist Roger Bootle has predicted that a house price correction is on the cards if interest rates keep rising.

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Bitcoin has fallen below $40,000 to hit its level since August.

Sterling stronger at $1.3596 and €1.199. Oil price lower at $81.27. UK 10yr gilt yield up 1bp at 1.19%. World markets mixed to down yesterday with London set to open up around 16pts as at 7am.

RETAIL WITH NICK BUBB:

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