PREMIUM – Discounts, more JDW, WFH, DOM, YUM, AB InBev, Playtech etc:

A DAY IN THE LIFE:

I’ve reluctantly decided that the answer, when somebody brings you a problem sans solution, is very often ‘that sucks,’ because you can’t solve every problem and, if you try, you’ll end up worn to a stump.

But being sanguine is only good to a certain extent.

The above does bring back a comment attributed by one biographer or another to Stanley Johnson. Namely, that nothing matters much and many things don’t matter at all which, in addition to being incorrect, is also downright dangerous.

(Avoid getting on high horse alert) because, whilst getting caught out in a lie might not resonate very far, if you take the same attitude to affairs in a marriage, let alone when flying an aircraft or undertaking a medical operation, you may quickly find out that many things can matter quite a lot.

Anyway, that’s quite enough of that. Where did The Song go, I was asked yesterday. And what about a quote quiz? Maybe an industry gossip section? More on all of that maybe next week. Commis to Man City and on to the news.

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JD WETHERSPOON – Q3 CONFERENCE CALL:

Following the release of its Q3 update, JD Wetherspoon hosted a conference call for analysts and comments thereon are set out below:

Headline numbers & trends:

• JDW CEO John Hutson confirms that trading has ‘continued to sequentially improve…’

• Younger customers (Lloyds) are returning faster than their older peers. That said ‘trade is starting to come back’.

• The group is also ‘more-heavily located in larger towns & cities where a return to normality is delayed’. It similarly ‘may have a slightly older clientele’.

• Overall, the co will need sales ahead of pre-pandemic levels in order to hit pre-pandemic profit levels.

• When the co says it will ‘break even’ this year (to July), it is talking about pre-IFRS16 numbers.

• What will ‘normality’ next year look like? It would be broadly back to FY19 profits. Sales will need to be higher, maybe around £2bn.

Costs & prices:

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PUBS & RESTAURANTS:

WFH:

Looking for lead indicators here, it’s interesting to note that the latest Glenigan Construction Review suggests that ‘an industry bright spot has appeared in the first quarter of 2022 as new office construction activity picks up.’ It might be speculative development but somebody, somewhere, is betting on a return to the office (or a material programme of office upgrading by employers).

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The consumer:

Straws in the wind but interesting to see Netflix suffering from cancellations and Boohoo yesterday saying that it was seeing online shoppers return clothes at a faster rate than before the pandemic.

Delivery:

It’s a forward indicator and everything is relative but cautionary comments from Amazon – and a drop in value of warehouse properties – suggests that some may believe that the delivery boom is slowing at least and may have run most of its course. Listed warehouse operators, Segro and Tritax Big Box, fell by around 7-8% on the Amazon news.

Other news:

A menu of drinks prices in the House of Commons has gone viral. MPs charge themselves £3.55 for a pint of bitter, £4.10 for a Guinness and £4.00 for a single vodka. A spokesman for the House of Commons said drinks were not subsidised by the taxpayer. They said ‘House of Commons bars do not normally run at a loss’ and said that its prices were benchmarked with outside venues.

Lo2NoBev says that, since ‘Gordon’s 0.0% [gin] hit the market…the spirits giant [namely Diageo] has absolutely dominated the market.’

Exports of Australian wine fell 26% last year. Most of this decline was put down to the tariffs imposed by China.

COMPANY NEWS:

Domino’s has updated on Q1 trading saying that, for the 13-week period from 27 December 2021 to 27 March 2022, it has seen strong trading. It says that ‘excluding the impact of the increase in VAT, like-for-like system sales, excluding splits, grew 3.9%.’ It adds that ‘orders grew 5.5% in the quarter despite a strong comparative reflecting the stimulus to our delivery business last year from lockdown restrictions.’

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AB InBev has reported Q1 numbers saying that ‘continued momentum [has] delivered double-digit top-line growth.’ It says that ‘relentless execution of our strategy and accelerated digital transformation drove continued momentum in the first quarter, delivering an 11.1% increase in the top-line through a combination of both volume and revenue per hl growth.’ It says ‘our teams continued to meet the moment in this dynamic operating environment to deliver 7.4% EBITDA growth.’

AB InBev reports a ‘6.0% increase in combined revenues of our global brands, Budweiser, Stella Artois and Corona, outside of their respective home markets.’ It says total volume rose by 2.8%. Normalized EBITDA was up by 7.4% to 4 486 million USD with normalized EBITDA margin contraction of 115 bps to 33.9%. The figures were marginally ahead of expectations.

Dine Brands in the US has reported that in Q1 same-store sales increased 14.3% at Applebee’s and 18.1% at IHOP.

Yum! Brands yesterday reported Q1 numbers saying that it had opened 997 units in the quarter and that System Sales had risen by 8% ‘driven by 6% unit growth and 3% same-store sales growth.’ Starbucks says ‘first quarter EPS excluding Special Items was $1.05, a decrease of 1% year-over-year.’

Just Eat Takeaway.com yesterday announced that its chairman, Adriaan Nühn, will not be seeking re-election as Chairman. The chairman says it’s ‘clear that shareholders have concerns about the challenges the Company is facing. The Supervisory Board shares and understands these concerns’ and he says ‘not seeking re-election is, I believe, the best decision I can take with regard to serving the interests of the Company and its stakeholders, including its shareholders.’

Starbucks told its Q2 conference call yesterday that 90% of new stores will have a drive-thru. CEO Howard Schultz may have been referring only to US stores.

Heineken is launching Desperados Alcoholic Sparkling Water in the Netherlands.

Independent bakery chain Cornish Bakery reports that it has outperformed its market with founder Steve Grocutt adding ‘these impressive performance stats prove yet again that bakery is the new coffee shop.  We are keen to increase the estate and we would like to hear from any UK-based designer outlets that would be interested in hosting one of the fastest growing, independent bakery brands in the UK.’

The Fat Hippo is aiming to add nine new burger restaurants over the next 18 months.

Chinese restaurant Three Uncles is reported set to move beyond the quick-service market.

HOLIDAYS & LEISURE TRAVEL:

Marriott has reported Q1 numbers. It says Q1 REVPAR rose 96.5 percent, 99.1 percent in the U.S. & Canada, and 88.5 percent in international markets, compared to the 2021 first quarter. The company has resumed cash dividends. CEO Anthony Capuano says ‘during the first quarter, we saw the largest surge in global demand since the pandemic began in 2020.  Worldwide occupancy rose dramatically from 45 percent in January, impacted by the Omicron variant, to 64 percent in March, less than 10 percentage points below pre‐pandemic levels.’

Hilton Worldwide has reported Q1 numbers, missing estimates. It says demand has picked up sharply but pointed to costs also rising.

London’s Crossrail service is scheduled to open on Tuesday 24 May.

Uber has reported Q1 numbers revealing that it mad a $5.9bn loss in the quarter, mostly as a result of the write-down in the value of a number of investments. CEO Dara Khosrowshahi reports ‘our results demonstrate just how much progress we’ve made navigating out of the pandemic and how the power of our platform is differentiating our business performance.’ Revenues were up by 136%.

OTHER LEISURE:

Playtech plc has updated on trading for the first four months of 2022, saying that it ‘has continued its excellent start to the current financial year with Adjusted EBITDA (unaudited) for the first three months of more than €100 million. This positive Q1 run rate has continued through April.’

Ebay has reported Q1 numbers and updated on Q2. The company missed expectations and its shares slid by around 6% in after-hours trading. The company expects second-quarter revenue between $2.35 billion and $2.40 billion, compared with the average analyst expectation of $2.54 billion. Ebay says that the conflict in Ukraine has impacted its earnings in the UK and Germany. It says ‘those negative impacts will continue through 2022.’

Elon Musk has suggested that Twitter could levy a small fee on corporate users.

The Hippodrome Casino is to invest £3 million in opening three new dining and drinking concepts this year.

FINANCE & MARKETS:

The Bank of England is likely to increase UK interest rates by 25bps to 1.00% later today.

The US Fed has raised rates by 50bps to a range of 0.75% to 1.00%. The increase, the largest in more than two decades, was expected. Fed chairman Jerome Powell says ‘inflation is much too high and we understand the hardship it is causing.’ He says ‘we are moving expeditiously to bring it back down.’

Sterling mixed at $1.2546 and €1.1819. Oil price higher at $110.86. UK 10yr gilt yield up 3bps at 1.98%. World markets mixed but heading better yesterday. London set to open some 83pts higher as at 6.30am.

RETAIL WITH NICK BUBB:

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