DP Poland, Gear4Music, Rank Group, Tesla, Netflix & more:

A DAY IN THE LIFE:

We said yesterday that the email may be a bit terse due to admin issues (calculating our VAT, producing accounts for the FCA etc) and then proceeded to write one that was longer than usual, listen to and write about the Just Eat Q1 update and then go out to lunch.

This meant that, whilst the afternoon passed rather quickly, everything backed up a little further and the tsunami of admin rubbish just got that little bit bigger. Hence, the email really might be a little shorter today. 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

JUST EAT – Q1 WEBCAST:

Following the release of its Q1 update, Just Eat Takeaway hosted a webinar for analysts and our comments thereon are set out below. See also comments in our earlier email:

The numbers:

• Reasons for slower growth. 1) higher churn levels, 2) strong comps, 3) increased focus on profits (rather than revenues), 4) growth will be slower in Q2 but should pick up in Q3 & Q4

• Some new customers are being churned as marginal customers were picked up during the pandemic. Average transaction value is rising.

• Q – details on churn? The biggest drop is between Order One and Order Two. Older cohorts are more stable. Algorithms suggest this should abate ‘around September’.

From revenue to profit?

• Aims. Higher revenues per order, lower courier costs per order & controlled costs via automation etc.

• See premium. Reply to this email to upgrade.

DP POLAND Q1. COMMENT ON COSTS, INFLATION, UKRAINE, NEW OPENINGS…

DP Poland has updated on trading for Q1 2022. CEO Piotr Dzierżek comments ‘I am delighted to see the strong sales performance in Q1 2022, with LFL System Sales up 21% over 2021, benefitting from a strong management focus towards increased order volumes in our stores. At the end of March 2022, Poland lifted the majority of COVID-19 restrictions and we have seen a further acceleration in sales growth, with LFL System Sales up 29% in March 2022 compared to March 2021.’

The CEO says ‘we have invested in marketing to drive enhanced customer acquisition, whilst maintaining a compelling value proposition for existing customers. This has continued the strong sales growth into early April 2022.’ He adds ‘inflationary pressures have been high and persistent. We have been monitoring the situation closely and raised prices in early Q2 2022 to mitigate these pressures. As the business continues to strengthen, we have restarted our store opening programme, with two new store openings expected in Q2 2022.’ The group comments on costs, inflation, Ukraine & its new store-opening programme.

• See premium. Reply to this email to upgrade.

PUBS & RESTAURANTS:

The consumer:

GfK consumer confidence numbers are out yesterday. Confidence is likely to have taken a hit and various headlines about an energy bill “catastrophe” this winter will do little to help. Fuel poverty charity National Energy Action (NEA) has called on the government to do something material to help.

• See premium. Reply to this email to upgrade.

Market trends:

Lumina Intelligence’s Operator Data Index has suggested that the UK pub and bar sector could reach a value of £22.6bn in 2022. This would put it within 1% of its 2019 number.

• See premium. Reply to this email to upgrade.

WFH.

There have been more calls on the government to do something constructive to persuade people to get back to work. Whilst sitting on the sofa may be ‘green’ it doesn’t help transport companies, office landlords or city centre pubs, bars, restaurants, cafes and coffee shops.

• See premium. Reply to this email to upgrade.

Fake reviews will be ‘clearly illegal’ under proposed new legislation.

Austrian wine exports rose by 3.8% in 2021.

COMPANY NEWS:

Heineken yesterday reported on Q1 trading saying that it was seeing “significant” rises in costs. It said ‘we see more macroeconomic uncertainty and expect significant additional inflationary headwinds putting further pressure on our cost base. We will take additional actions including pricing to manage these challenges.’ Beer volumes in the quarter were up by 5.2%. The company expects a €400mn impairment charge as it disposes of its Russian operations.

Cameron’s Brewery returned to profit last year after recording a loss of £7.4m in the prior year.

HOLIDAYS & LEISURE TRAVEL:

BA and Virgin Atlantic are to make mask-wearing optional on transatlantic flights to the US.

The RMT says that a rail strike, threatened to be the “biggest rail strike in modern history,” could be on the cards if Network Rail goes ahead with plans to cut up to 2,500 jobs.

Glenigan’s latest construction industry intelligence report suggests that the UK ‘hotel industry continues to recover from the impact of the pandemic’ and it says ‘the hotel construction sector is preparing for a bumper period of activity with £2.5 billion-worth of projects in the development pipeline.’

STR reports that, lifted by Spring Break travel, the ‘U.S. hotel industry reported elevated performance with better indexed comparisons against 2019, according to March 2022 data.’ It says (all vs March 2019) that occupancy at 64.0% was down 6.2% on 2019 and average rate was up by 10.9%. REVPAR was up 4%. Inflation is running hot in the US and real numbers, adjusted for inflation, are somewhat less buoyant.

OTHER LEISURE:

Netflix has confirmed that it is considering a lower-priced version of its service with adverts. Company CEO Reed Hastings says it is a question of choice. He says that, whilst he isn’t drawn to ads personally, ‘I’m a bigger fan of consumer choice, and allowing consumers who would like to have a lower price and are advertising tolerant to get what they want, makes a lot of sense.’

• See premium. Reply to this email to upgrade.

The Rank Group Plc has updated on its Q3 to end-March saying that overall Net Gaming Revenue rose by 221% between Q3 2021 and Q3 2022. Revenue rose from £48.7m to £156.4m. The UK and many other markets were in lockdown in the comparative period.

Rank adds ‘the most recent comparable non-COVID-19 affected third quarter period is therefore the three months to 31 March 2019. Against that comparative period, Grosvenor venues NGR was down 14% and Mecca venues down 25%. For both our UK venues businesses there was a softness in visits at the end of the quarter consistent with the rise in new COVID-19 cases reported across the UK.’

• See premium. Reply to this email to upgrade.

Gear4music (Holdings) has updated on its full year to end-March saying that revenues fell over the period by 6% to £147.6m. Versus 2020, sales are up 23%. UK sales are up 5% but overseas sales are down by 18%. The group, which was a ‘beneficiary’ of lockdowns, believes that pre-Covid comps are the most appropriate. The group cautions on a consumer slowdown in Feb and March and edges back guidance.

• See premium. Reply to this email to upgrade.

Tesla has reported Q1 numbers showing that profits at the group rose sharply to $3.3bn for the first three months of the year. Delivery numbers were up by 68%. The company says it would have sold even more vehicles were it not for issues with the supply chain. The group’s Shanghai factory has recently had to shut due to Covid restrictions.

Apollo is reported to be considering a bid for Twitter. It may also be considering a joint approach or the provision of capital for the current approach by Elon Musk.

Toy maker Hasbro has said it will raise prices further due to soaring costs. It is pausing shipments to Russia and says this could lead to a $100m hit.

Moody’s has reported that the way in which Elon Musk’s bid for Twitter is financed (if it is successful), will determine the credit implications of the action.

• See premium. Reply to this email to upgrade.

FINANCE & MARKETS:

The European Union Chamber of Commerce says that the shutdown in Shanghai, which it expects to last for several more weeks, could be a “logistical nightmare” for manufacturers and consumers as they await the delivery of products.

Sterling mixed at $1.305 and €1.2046. Oil price lower at $108.02. UK 10yr gilt yield down 6bps at 1.92%. World markets broadly better yesterday and London set to open up by around 20pts as at 6.50am.

RETAIL WITH NICK BUBB:

• See premium. Reply to this email to upgrade.