Spring Statement, current trading, F & Chips, P&O, Playtech, GAW & other:

A DAY IN THE LIFE:

Bit busy, what, with the Budget and all. On to the news:

LANGTON EMAIL:

The Free Email is now written in short form. Extended versions of many 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

THE SPRING BUDGET:

See also ‘The Consumer’ below.

From the hospitality industry’s point of view:

It appears that virtually all Covid financial protections will, as had been previously been reported, be stripped away from next week. Mr Sunak declined to extend the 12.5% rate of VAT on non-alcoholic drinks & food. It has been government policy to put the rate back to 20% next week since the early days of the pandemic. This has nevertheless been greeted negatively by the industry, which says, in a nutshell, that it is a missed opportunity, could delay or prevent recovery and will cost jobs.

Industry reaction.

UK Hospitality says the absence of an extension is a disappointment and a missed opportunity. Its CEO, Kate Nicholls, says ‘this is a real setback for thousands of UK hospitality businesses still suffering the devastating effects of Covid, and facing a tidal wave of rising costs. For many businesses, the removal of the lifeline of a lower rate of VAT might prove fatal. For a heavily, disproportionately taxed sector a return to 20% dashes the hopes that many businesses could begin to recoup some of the losses of the last two years.’

• See premium. Reply to this email to upgrade.

The BBPA says ‘we are very disappointed that the Chancellor decided not to extend the 12.5% rate of VAT for hospitality.’ CEO Emma McClarkin says ‘the sector remains on a knife-edge as it emerges from the pandemic.’ She says ‘the coming months could be some of the hardest yet for our pubs and brewers.’

• See premium. Reply to this email to upgrade.

The BII also says it is ‘hugely disappointed.’ It says ‘whilst the increased boundaries for National Insurance contributions will help workers in our sector and consumers alike, the measures are nowhere near enough to ensure the future growth that our pubs will need to begin their recovery in earnest.’

• See premium. Reply to this email to upgrade.

Alix Partners says ‘this is a significant moment for hospitality and leisure businesses. The removal of VAT relief and the absence of other meaningful interventions today by the Chancellor means that the last vestiges of Covid support are falling away. The timing of this as companies deal with unprecedented and, by any measure, extreme cost inflation pressures, will not be lost on anyone in the sector.’

• See premium. Reply to this email to upgrade.

SIBA says ‘struggling independent brewing businesses need support now, not aspirations for the future.’ It says ‘the energy and supply crunch are an urgent and potentially devastating situation, with most small brewers seeing energy rising between two and three hundred percent – and vital business supplies, from malt to beer cans rising exponentially.’

Manchester’s night-time Czar Sacha Lord says ‘two years ago, The Chancellor said he would stand by business. Today, Hospitality didn’t need a handout, it needed a freeze in VAT.’ He says ‘more businesses will now close, creating more redundancies across the UK.’ Accountancy & advisory firm Virgate says ‘the lack of support for hospitality and leisure businesses in today’s Spring Statement perhaps speaks directly to a Chancellor under pressure to balance the books.’

THE CONSUMER:

Consumers facing the wrong sort of inflation:

The ONS yesterday reported that inflation (as measured by the CPI) was 6.2% in the UK in February, up from 5.5% in January. The makeup of the rise is unhelpful as essential goods and utility costs are rising (with more to come) and, whatever is going down in price in order to make the maths work, isn’t registering very high on consumers’ lists of needs and wants.

• See premium. Reply to this email to upgrade.

Household debt:

The Bank of England has reported that the number of UK households lumbered with large debts rose by 35% last year. It says that in September 2021 around 10% of households reported that loan & interest repayments represented a ‘heavy financial burden’.

A bit of Budget cheer:

ASDA cut the price of fuel by 6p yesterday evening. That represented the 5p cut mentioned in the Budget plus the 20% VAT that the Treasury adds to its own tax. ASDA says this ‘means that motorists will see unleaded move back below 160p and diesel to 170p.’ As Tesco would say, every little helps. It’s worth remembering this cut is only for a year. Unless extended, it will be reimposed in March next year.

See also Budget coverage above. Basically, positives = fuel duty cut & raised threshold on NIC payments. Negatives = everything else.

The market:

IGD reports that the recovery in the eating out sector is to slow and will only reach 79% of its pre-pandemic value this year. It says that ‘consumer behaviour and socioeconomic factors are slowing recovery and driving disparity’ and adds that ‘QSR is the driving force behind market growth.’ It says ‘restaurants and Pubs will continue to recover but pace will slow’ and adds that the ‘focus on customer experience, investment in technology and mitigating costs will support recovery.’

• See premium. Reply to this email to upgrade.

PUBS & RESTAURANTS:

The UK’s fish & chip shops will shortly come under pressure due to supply issues (maybe as much as a third of our white fish comes from Russian trawlers) and cost increases (fish, chips & labour) as well as the need to reimpose VAT at 20%.

Sasha Lord has said he is ‘concerned for the North. At a time when we are supposed to be levelling up, we are only seeing the divide between rich and poor widen.’ Lord says that hospitality is traditionally a large employer of younger workers. He says ‘our industry needs to stay afloat in order to keep providing these work opportunities and I fear for the survival of many businesses.’

Spirits producer British Honey Company, whose shares are quoted on the Aquis market, has reported that it has raised just over £500k in a placing of its shares with existing institutional investors. It says the ‘net proceeds of the Fundraise, amounting to £0.475 million, will be used for general working capital purposes to drive product expansion to service the Company’s customer base and to support the exciting growth prospects of the Company.’

• See premium. Reply to this email to upgrade.

The UK is to remove 25% tariffs on US whiskey imports in June.

COMPANY NEWS:

The MCA reports that Itsu has appointed Greg Thorp as group CFO.

Oche is to open a £3 million darts themed restaurant and pub in Edinburgh in what will be its first move into the UK.

Nestle is pulling KitKat and Nesquik out of Russia. It will still sell essential foods.

Krush Global, which trades as Crussh, has reported full year numbers to end-March 2021 to Companies’ House. The company reports a loss before tax of £2.3m (2020: loss £1.9m) on revenues down from £14.1m to £3.0m.

• See premium. Reply to this email to upgrade.

McColl’s Retail Group has announced the resignation of CEO Jonathan Miller. It says ‘the search to appoint a new CEO is in progress and the Board is confident of concluding that search successfully in the near future.’ Mr Miller had been with the company for over 30yrs.

HOLIDAYS & LEISURE TRAVEL:

Research by BVA BDRC has found that 80% of holidaymakers had already booked a domestic stay, or were highly likely to do so. the study concludes that domestic breaks are here to stay.

PM Boris Johnson told PMQ in the House of Commons yesterday that P&O ‘appeared to have broken the law’ when it sacked 800 UK staff and replaced them with foreign workers on less than the UK minimum wage. The Department for Transport later reportedly acknowledged that there had been a change in the law that the PM referred to. Chief executive Peter Hebblethwaite will appear before the Department for Transport and Business, Energy and Industrial Strategy joint committee later today.

OTHER LEISURE:

Playtech has reported full year numbers to end-December saying revenue had risen by 12% to €1.2bn with adjusted EBITDA of €317m, up 25% on last year. The group says it has made an ‘excellent performance to start 2022.’ CEO Mor Weizer says ‘our full year results demonstrate the quality of Playtech’s technology and the momentum across the Group.’

Games Workshop has updated on trading, saying ‘trading in the three months to the end of February 2022 has been in line with expectations.’ It says that ‘the Board has today declared a dividend of 70 pence per share, in line with the Company’s policy of distributing truly surplus cash.’ GAW points out that ‘including this dividend, total dividends declared in the year so far are £2.35 per share (2020/21: £1.85).’ it says ‘the Company intends to issue a full year trading update for the year to 29 May 2022 in June 2022.’

A study by Gamble Aware has suggested that perhaps as many as 1.4m people are being harmed by their gambling habits.

Sky News reports that an affiliate of Elliott Management is to put money into property developer Nick Candy’s offer for Chelsea. Potential buyers are being asked to make binding commitments on future spending. Sky quotes on ‘insider’ as saying ‘they [the sellers] want guarantees about future capital funding for the club and stadium, and cash on the balance sheet, so that they can be certain they are picking the best future owner of Chelsea.’

The UK and Republic of Ireland FAs have submitted a joint expression of interest in hosting the European Championships in 2028.

YouTube is to start streaming free TV shows with adverts.

FINANCE & MARKETS:

The OBR says that UK economic growth this year will be 3.8% (previous forecast 6.0%) with 1.8% next year.

Re the Budget, the BCC says ‘the Spring Statement falls short of the action businesses needed to see today.’ It says the statement ‘was a missed opportunity to rebuild and renew the economy and ensure business has the resilience to weather the uncertain and volatile times ahead.’

Commenting on yesterday’s inflation data, the BCC says ‘this inflationary surge will intensify in the coming months as the energy price cap rise, the reversal of the hospitality VAT cut and upward pressure on energy and commodity prices from Russia’s invasion of Ukraine, lifts inflation above 8%.’

One interesting fact from the chancellor, public debt interest charges have quadrupled in a year.

Sterling down a little at $1.3186 and €1.2009. Oil up around $6 at $122.05. UK 10yr gilt yield down 5bps at 1.85%. World markets down yesterday but London set to open up around 10pts as at 7am.

RETAIL WITH NICK BUBB:

• See premium. Reply to this email to upgrade.