Langton Capital – 2022-03-03 – Entain, Coca Cola HBC, industry sales, inflation, delivery, footfall & other:
Entain, Coca Cola HBC, industry sales, inflation, delivery, footfall & other:A DAY IN THE LIFE: Finally, after all these years, I’ve worked out what it’s all about. You should a) work out what’s important and then b) do it. But, before I could even sit back and smugly contemplate the success that is (or maybe was) going to be heaped upon me, execution raised its ugly head and I began to wonder how, why, when, what, where and all the rest and, all of a sudden, success was no longer so firmly nailed on. And then I considered that I wasn’t living in a vacuum. Even if I could work out the how, why, when, what and where’s that would lead to inevitable triumph, competitor and adversary action might rob me of my prize. Even though I still didn’t know what it was, of course, but, at that point, the sun sank below the yardarm and I thought that a visit to the pub would do as an interim measure. I was following the South Park, underpants principle. Just replace underpants with ‘go to the pub’. Here it is for those who haven’t seen it before. On to the news: LANGTON EMAIL: The Free Email is now written in short form. Full stories are in the Premium Email. Reply to this email if you would like to upgrade. See Twitter for in-day comment. Let us know if you would like an example of the Premium Email or to comment on the new format. Prices for the Premium, unchanged for 2yrs, are £295 for one subscription, £495 for multiple, both plus VAT. Reply to this email to order & request invoice. Or sign up for easy in, easy out monthly option HERE GENERAL THOUGHTS: INFLATION & HOW TO PASS IT ON… Client copy. INFLATION & COMPANY RESULTS… We sent this out to clients yesterday and prompted something of a debate. Here it is repeated for wider circulation. Feedback welcome. Langton got its bean-counting badge back in the days when inflation was last a major problem. True, the accountancy profession got around to producing guides to best practise just as it was squeezed out of the system – and the measures were redundant almost as soon as they were introduced – but inflation is again raising its ugly head. It threatens to distort financial statements and here we pose a few questions (that haven’t needed to be seriously asked for a few decades). • See premium. Reply to this email to upgrade. PUBS & RESTAURANTS: Industry sales: S4 Labour reports that ‘hospitality sales figures during February increased by 4% when compared to the same month in 2020.’ It says, however, that it is ‘important to note that, in February 2020, there were some declines in sales due to public anxiety surrounding Covid.’ It says that ‘sites based within London experienced lower sales than February 2020. Both wet and dry-led sales declined by 8% and 7% respectively.’ • See premium. Reply to this email to upgrade. Share price movements: Some sharp movements yesterday, not all on the upside despite the stronger market. Higher oil price are threatening to increase travel industry costs. Compass and Saga were up 4% and Intercontinental Hotels & Whitbread were up 5%. Fallers included Cineworld, Revolution Bars, Fever Tree and Hotel Chocolat (all down 4%), Hostmore (down 5%), Coca Cola HBC (down 6%) and DP Eurasia, whose markets are Turkey and Russia down 15%. Delivery: Lumina’s UK Foodservice Delivery Market Report 2022 suggests that delivery ‘as been established as a legacy of the pandemic, prompting operators to develop unique delivery propositions’. It says ‘ pub and bar delivery availability has increased by +25% year on year, to just under half of brands. Contemporary fast food brands including Five Guys and Tortilla have partnered with Deliveroo Editions and German Doner Kebab has expanded its dark kitchen presence.’ • See premium. Reply to this email to upgrade. Mobility stats: The latest Bloomberg Pret Index reports that ‘governments across much of the world are lifting Covid-19 restrictions and beginning to move past the pandemic. Yet in Hong Kong, the crisis is deepening.’ It says ‘last week, Pret A Manger Ltd. transactions in Hong Kong fell to below a quarter of pre-pandemic levels – by far the lowest in at least a year.’ Prominent coffee and hospitality businesses are working together to build a shared platform to tackle major industry issues, the Global Coffee Institute. The body will look at issues including Covid-19, sustainability, diversity, and staffing. Participants include Costa Coffee, Eversys, Alpro, JDE, Nestlé, Matthew Algie, Gruppo Cimbali, and Brita. COMPANY & OTHER NEWS: Coca Cola HBC updates on trading, suspends guidance. Coca Cola HBC has updated on trading saying ‘we remain in constant contact with our people in Ukraine and Russia and are doing everything we can to support them.’ It says ‘we temporarily stopped production at our plant in Kyiv on the 24th of February and evacuated our employees.’ The company adds that ‘in the last week the situation involving Ukraine and Russia has clearly developed further and faster than anticipated.’ CCH says that it is ‘still too early to quantify the impact that the evolving geopolitical crisis and many governments’ developing reactions to it will have on our business or on our full year 2022 results. Given that we generated c. 20% of 2021 volumes and EBIT from both regions, combined with the uncertainty of the duration and economic impact, we no longer believe that it is prudent to provide guidance for our group’s current financial year.’ • See premium. Reply to this email to upgrade. Burger company Wendy’s has told analysts that it plans to open 150 to 200 Reef ghost kitchen locations in 2022. It is focusing on non0traditional unit designs and ghost kitchen partnerships. Music Magpie’s shares almost halved yesterday to propel the shares up the list of awful recent IPOs. See our earlier comments on IPO performances. Operating physical shops perhaps not so easy. Amazon is to close 68 Amazon 4-star, Amazon Books and Amazon pop up branches. The MCA reports that Wahaca claims that its restructuring process in 2020 has given it a solid platform from which to grow. The Mexican-inspired restaurant group entered into a CVA which saw it close 10 sites. In the 52 weeks ended 27 June 2021, Wahaco posted turnover for the year of £17.7m (2020: £34.7m), with net profit before tax of £25.7m (2020 loss of £17m). Shaftesbury has signed the latest bakery from Danish brand, Ole & Steen, set to open in Seven Dials, in London’s West End. The new site will be Ole & Steen’s 17th in the capital. The MCA reports that Camerons Brewery director Chris Soley was feeling ‘cautiously optimistic’ after seeing an uplift in city centre workers returning to the office. Solely said ‘We do see the after-work social starting to increase and the gradual return to trading levels pre-Covid’. Punch Pubs has launched its 20th Fireside pub. The Ship in Elswick, Lancashire, has reopened following a £400k investment. Scotland’s largest trout producer, Dawnfresh Group, has entered into administration with Dawnfresh Farming Ltd being put on the market. Dawnfresh operates seven fish farms across Scotland and Northern Ireland with two Scottish processing plants. EG Group reports a strong FY and Q4 following the acquisition of Leon and Cooplands Bakery last year. Gross profit from the group’s foodservice operations increased 66.9% on a LfL basis, with growth being driven by continued customer demand for ‘to go’ and delivery offerings, as well as more favourable trading conditions. The group opened 52 new foodservice outlets in the quarter. LEISURE TRAVEL & HOTELS: Cruise companies pull Russian destinations from itineraries: Royal Caribbean has removed calls into the Russian city of St Petersburg this summer, a move also made by rival cruise lines. The company said ‘We are notifying our guests and travel partners of this decision and our new plans to visit additional Scandinavian ports in its place.’ Celebrity Cruises also joined the boycott, saying ‘With the safety of our guests and crew always our top priority, we are removing St Petersburg, Russia from upcoming itineraries, due to the current situation in Ukraine.’ Viking Cruises said ‘On 1 March we made the decision to cease all operations in Russia in 2022.’ and that it was ‘continuing to evaluate our 2023 itineraries’. In a terse statement, TUI has confirmed that Russian billionaire oligarch Alexei Mordashov has resigned from the Group’s supervisory board. The company says TUI AG announces that it has been informed that Mr. Alexey A. Mordashov, member of the Company’s Supervisory Board as a shareholder representative, has resigned from the Supervisory Board with immediate effect.’ Mr Mordashov has been sanctioned by the EU over his links to the Russian president Vladimir Putin. Mr Mordashov’s family owns 34% of TUI. Airbnb will offer free, temporary housing for up to 100,000 refugees from Ukraine, saying details about how to support the initiative will be shared in the near future. The boss of Ryanair, Michael O’Leary, said most airlines will find the coming year ‘very difficult’ as the price of the international oil benchmark Brent crude rose to over $111 per barrel on Wednesday. O’Leary said ‘We have hedged out about 80% of our fuel needs out to March 2023. So for this summer, and for the rest of this year, we’ll still be able to pass on low oil prices and low fares to our customers because we have a very strong fuel hedging position’. Accor has signed The Municipal Hotel Liverpool – MGallery, Mercure Paignton and ibis Styles Paignton in a partnership with developer Fragrance Group. The hotels represent a combined 470 rooms. OTHER LEISURE: Entain has reported full year numbers saying that it turned in a ‘strong 2021 performance demonstrating strength of our diversified growth model and global platform.’ The company says it saw ‘strong growth across the Group with NGR up 7% (8%cc) in the year.’ It reports underlying EBITDA of £882m vs £843m last year with diluted EPS of 44.7p vs 15.6p last year. The company says it ‘has not proposed a final dividend for FY2021. Recognising the importance of dividends to shareholders alongside our capital allocation priorities in supporting the Group’s growth strategy, the Board continue to keep the recommencement of the payment of dividends under on-going review.’ • See premium. Reply to this email to upgrade. Netflix has said it has paused all future projects and acquisitions from Russia. H&M has said it is to temporarily suspend all sales in Russia. It joins a list including Chelsea, TUI, Apple, Jaguar, BP, Shell, Maersk and many others that have taken action post the Russian invasion of Ukraine. Roman Abramovich is reported to have offered Chelsea to a Swiss billionaire. Separately, Sky reports that Mr Abramovich has ‘slapped a £3bn price tag’ on the football club and appointed advisers at The Raine Group to issue letters to prospective bidders. Mr Abramovich has owned Chelsea since 2003. As Sky points out, his money has been put to effective use and, under his ownership, Chelsea have won the Champions League twice, the Premier League and FA Cup five times and a significant number of other trophies. EQL Fitness has launched a £1.2m investment round to help expand its operations. The company launched CrossFit Putney in 2019, and plans to open a second site in the Wembley Centre in 2022. Manchester United reports net debt of £495m on 31 December 2021, up from £456m the year prior. The accounts show that a sizeable proportion of the debt increase derived from a fall in broadcasting revenues – £22.3m (20.5%) less was earned in the last quarter. There was also a £2.6m decrease in sponsorship money after the end of the club’s training kit contract, though there was revenue growth of 7.3%. FINANCE & MARKETS: The Nationwide Building Society yesterday reported that house price inflation hit 12.6% in the year to end-February, up from 11.2% in the year to Jan. Sterling up at $1.3407 and €1.2075. Oil price sharply up by around $7 at $116.84. UK 10yr gilt yield partially recovered at up 14bps to 1.26%. World markets better yesterday. London set to open up by around 5pts as at 7am. RETAIL WITH NICK BUBB: • See premium. Reply to this email to upgrade. |
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