Current trading, indoor reopening, Wales, prices rising, WFH trends etc.:

A DAY IN THE LIFE:

Thanks go to the couple of readers who pointed out that, in not mowing the untidy wasteland a.k.a. its lawn this May, Langton was in step with the National Trust’s No Mow in May campaign, which seems to be aimed at providing bees and other stinging insects and pests with something to eat.

Our compliance is accidental, of course, but this represents a happy collision between sloth and virtue and, as our mower’s busted in any case, with necessity.

So what’s not to like? We can wear our dandelions, sedge grass, thistles and other weeds like a badge of honour and, putting cynicism to one side, the National Trust is on the money when it says that there are interesting things growing in your lawn that don’t get much of a look in if you keep cutting off their heads.

Triffids, for example, but anyway, time’s short so, without further ado, let’s move on to the news:

ADVERTISE WITH US:

Langton’s free email now carries adverts. See front page of website for today’s copy & contact us for further details.

CHANGED EMAIL FORMAT:

The Premium Email is unchanged. The Free Email is written and pre-sent the evening before. It may not include breaking stories nor Langton comment. See Twitter for in-day comment. Let us know if you would like an example of the Premium Email.

Prices: £295 for one subscription, £495 for multiple, both plus VAT. Or sign up for easy in, easy out monthly option:

HERE

PRIVATE COMPANY ACCOUNTS:

Accounts to end-March 2020, the period covered in the accounts reported to Companies House recently by a number of operators, are interesting if the comments contained therein refer to the Covid-19 pandemic but, if they do not, they have been well and truly overtaken by events. Here we look (very briefly) at Rosa’s London (to 29 March 2020). See premium email.

PUBS & RESTAURANTS:

Current trading:

• Sales down (due to weather). S4 Labour reports that ‘hospitality sales continued their decline last week, sliding 23% compared to the previous week.’ It says ‘drink sales plunged 25.3% week on week, indicating that the public’s appetite for outside drinking was washed away by the inclement weather. S4’s Richard Hartley says ‘this level of decline shows just how difficult it is to run a hospitality business in these conditions. The weather was awful and goes a long way to explaining this data, but for another week, the 70% of operators who are significantly down on 2019 will have their eyes firmly on May the 17th, when they can protect their guest from our unpredictable weather, give their team more hours and increase their capacity to get profitable again.’

Indoor opening:

• PM Boris Johnson yesterday confirmed that pubs & restaurants would be able to serve customers indoors from next Monday. Trade bodies had jumped the gun somewhat, with the BBPA saying ‘this is another important step on the road to freedom and the recovery of our sector. We know Brits cannot wait to get back inside a warm pub. However, inside opening with restrictions is still not enough to secure the survival of pubs. We need them to be fully reopened without any restrictions at all from June 21st to survive and trade viably.’ SIBA CEO James Calder said, ahead of the announcement, ‘publicans and brewers across England will today be able to let out a sigh of relief when the Prime Minister confirms pubs will be allowed to open indoors from 17th May.’

• Langton comment: See premium email.

• Mr Johnson said ‘this unlocking amounts to a very considerable step on the road back to normality and I am confident that we will be able to go further.’ In response, UKH CEO Kate Nicholls said the announcement was a “much welcome” and added ‘there is a huge sense of relief within the sector, in particular for the six in 10 venues that were not able to reopen over recent weeks due to a lack of outdoor space.’ Ms Nicholls cautioned ‘however, with significant restrictions still in place, this is a psychological opening rather than an economic one, with the profitability of the sector still a huge issue. This is why sticking to the roadmap and the removal of all restrictions by 21 June is absolutely crucial.’

• Ms Nicholls says ‘hospitality, as it emerges from restrictions, is still in a fragile state and continued government support will be critical to ensuring the sector is rejuvenated and plays a full role in the wider economic recovery.’ CAMRA says that pubs ‘aren’t out of the woods yet’ and adds ‘distancing and table service-only restrictions will still mean many pubs can’t operate at full capacity with many continuing to struggle to make ends meet as a result.’

Lack of clarity in Wales:

• The Welsh Beer & Pub Association has written to newly re-elected First Minister of Wales, Mark Drakeford, asking for more financial support and a clearer roadmap out of lockdown. The letter thanks the Welsh Government for its financial support but points out that there are not restart grants in the principality in the same way that there are in England and Scotland. CEO of the WBPA Emma McClarkin says ‘over the last year, Welsh pubs and brewers have faced the biggest threat to their existence in our history. Billions in trade has been lost and worse, countless livelihoods and community hubs have fallen by the wayside.’ She adds ‘as we face what we hope is the final hurdle of this crisis, we urge the First Minister to take the action required in the early days of his new administration to set our pubs and brewers on the right track for recovery.’

Selling prices on the up:

• Despite the reduction in VAT on food and soft drinks, the MA reports on comments from Lumina Intelligence that 48% of hospitality leaders responding to a recent survey said that they had put their selling prices up. Lumina reports that 63% of operators had had problems with their supply chain and 44% of operators believe that they can operate at a profit when indoor trade (in England at least) is allowed from next Monday.

• Langton comment: See premium email.

Other covid-related issues:

• Working from home. The debate here continues. VSA’s Andrew Monk told BBC Radio Five recently that, as they would miss out on normal workplace interactions, staff working from home should expect to gradually lose ground on those working from the office. This may not be an issue for some staff but, when bonus time (or redundancy time) comes around, this could be a different story. Meanwhile City AM reports that 26% of UK businesses will either close, downsize or consolidate their offices in the coming months, as companies move to hybrid working models. Quoting research from You Gov, it says ‘53% of businesses plan to offer more flexible or remote working policies, while 30 per cent are expecting employees in the office between one and three days per week.’

• Langton comment: See premium email.

• Vaccinations & variants. Damned if you do, damned if you don’t. No offence intended to Portugal, but the government has been criticised for leaving the majority of countries that holidaymakers would like to travel too off its green list. As we have mentioned previously, this does, however, achieve the goal of ‘allowing’ travel whilst not exactly ‘encouraging’ it. Comments from Grant Shapps and others re queues at border controls could also dampen demand. meanwhile, the Guardian quotes Professor Martin Hibberd, of the London School of Hygiene and Tropical Medicine, as saying ‘while in the UK, we look forward to less disease and fewer restrictions, this is not the case in most of the world. Indeed, for many countries infections are likely to come in waves for at least another year and perhaps longer. As a result, imports [of new variants] are likely to become an increasingly
important part of new transmissions circulating within the UK. We should develop an effective strategy to cope with the competing desires to allow international travel, while keeping circulating virus in the UK to a minimum.’

• Langton comment: See premium email.

• Delivery. Foodservice analyst Peter Backman points to likely slower growth when he highlights the fact that some 85,000 of a potential 105,000 hospitality sites in the UK that could use delivery, are already doing so. He says ‘room for growth by adding new outlets to delivery platforms is becoming very limited. Of course, you can add in new outlets that weren’t formerly part of the delivery universe, dark kitchens especially, and new entrants into delivery (such as workplace kitchens, hotels etc). But against that must be set those restaurants that, for one reason or another, will never do delivery. So 80% penetration seems about right.’

• Langton comment: See premium email.

• Getting things in perspective. Hospitality has had it tough. The big operators are burning £20m, £30m plus – but spare a moment to consider British Airways’ parent IAG. The company has said it is burning through £178m of cash a WEEK and it has told its staff, with whom it is in dispute, that it does not have “an absolute right to exist.” More than half a billion quid a month? That must really hurt. BA says ‘despite our best efforts the amount of flying we will be doing this summer will be limited and fiercely competed.’

Company & other news:

• The City Pub Group, which has 45 pubs and four development sites in London, the south of England & Wales, has reported full year numbers to end-December saying that it has seen ‘significant investment in our pubs to optimise them for outdoor trading and take advantage of the strong pent-up demand and expected boom in staycations.’ The group says revenue was down from £60.0m to £25.8m, with an adjusted EBITDA loss of £800k (profit last year of £9.1m) and an adjusted loss of £5.1m against a profit last year of £5.3m.

• Langton comment. See premium email.

• Revolution Bars Group, which has 66 premium bars, trading under the Revolution and Revolucion de Cuba brands, updates and says it ‘welcomes the comments by the Prime Minister, Boris Johnson on 10 May 2021 in relation to the Roadmap for England, further easing restrictions to allow indoor trading of our bars on 17 May 2021 and confirming that the Roadmap remains on track for a return to restriction free trading on 21 June 2021.’ It says it has recommenced trading already in 20 bars and adds ‘since that date [of outdoor reopening], a further five bars have opened outdoor space including those as permitted by the relaxation of restrictions in Scotland, Wales and Northern Ireland.’

• Langton comment. See premium email.

• Writing in the US, Restaurant Dive says that ‘McDonald’s employees in 15 cities are planning to strike on May 19, a day before the company’s annual shareholder meeting.’ The online journal says ‘the strike comes as the restaurant industry faces a massive labour shortage. McDonald’s is one of several chains that have facilitated hiring events in a bid to add thousands of employees as the segment begins to recover from the COVID-19 pandemic.’

• Langton comment: See premium email.

• Drinks Business reports that the major brewers have put big money into the market for hard seltzers. It says sales therein have risen by 600% in the last two years and adds that the category is now estimated to be worth €4.5 billion.

• Hogs Back Brewery is to brew its Three Hogs beer for this year’s Euro football championship. The beer was first brewed for the 2016 event.

• Non-alcoholic drinks brand Lyre’s has raised £100m in its latest funding round

HOTELS & LEISURE TRAVEL:

• Traffic lights. Complaints and grudging acceptance seems to be the order of the day.

• Marriott has reported Q1 numbers saying that LfL systemwide constant dollar RevPAR declined 46.3% in the period versus the same quarter last year. Nonetheless, CEO Tony Capuano says ‘we were pleased to see demand improve meaningfully [sequentially though not against a year ago] during the first quarter.’ Marriott’s CEO says ‘as vaccines roll out around the world and government restrictions ease, I am optimistic that demand will continue to strengthen. We have seen signs that there is a significant amount of pent-up demand, regardless of trip purpose.’

IN YESTERDAY’S PREMIUM EMAIL:

Gregg’s trading update:

• Gregg’s has updated on trading saying that it has seen a strong recovery in sales levels following the easing of restrictions. It says that its two year LFL in latest eight-weeks was down only 3.9% ‘with positive two-year LFL since non-essential retail reopened’. It says that its two year LFL for first 18 weeks was down 13.5%. Gregg’s says delivery is now available from 800 shops with delivery sales up to 8.2 per cent of company-managed shop sales in the most recent eight weeks. The group has opened 34 new shops in the first 18 weeks of this year with 11 closures. Gregg’s says that ‘considerable uncertainty remains but profits for the year could be around 2019 levels, materially higher than the Board’s previous expectation.’

• Gregg’s concludes ‘sales have recovered well in recent weeks as out-of-home activity levels have increased, albeit in the absence of competition from indoor seated catering operators.’ It says ‘if restrictions continue to ease in line with current plans then we now expect our overall sales performance for the year to be stronger than we had previously anticipated.  Costs have been well-controlled and the rate of cost inflation we are experiencing is in line with our plans for the year.’ The group says ‘providing guidance on the profit outcome for 2021 remains difficult given the uncertainties surrounding trading conditions.  However, given our recent trading performance, the Board now believes that profits are likely to be materially higher than its previous expectation, and could be around 2019 levels in the absence of further restrictions.’

• Gregg’s shares rose to a record high on the news & the group suggests that it could be in a position to return furlough cash.

FINANCE & MARKETS:

• The NIESR reports that ‘global economic activity has rebounded from the sharp fall in the first half of last year.’ This will come as a shock to few. It says ‘the pace of economic recovery will differ across economies. GDP in the US is now expected to reach its pre-pandemic level this year, while GDP in the Euro Area is forecast to remain below its pre-pandemic level until late 2022. In contrast, GDP in China is already 8 per cent above its level at the end of 2019.’

• Concerning the UK economy, the NIESR says ‘our central forecast for UK economic growth in 2021 has been revised up to 5.7 per cent, compared to 3.4 per cent in February, with 4.5 per cent growth forecast for 2022.’ The 2021 figure is considerably lower than the Bank of England’s 7.25% estimate. Much of the difference will be timing as the Bank said that its recent upgrade was partly as a result of the economy pulling 2022 growth forward into this year.

• The Halifax reports that UK house prices last month were up 8.4% on the same month a year earlier. The Halifax says ‘the stamp duty holiday continues to add impetus to an extremely active market, magnifying the current shortage of available homes as buyers aim to take advantage of the Government scheme.’

RETAIL WITH NICK BUBB:

See premium email. 

TRADING STATEMENTS & EVENTS:

Upcoming results are set out below:

• 11 May 21 Morrison’s Q1

• 12 May 21 Compass Group H1 numbers

• 12 May 21 Stock Spirits H1 numbers

• 12 May 21 TUI H1 numbers

• 12 May 21 Just Eat AGM

• 14 May 21 Tasty AGM

• 14 May 21 Gregg’s AGM (no update expected)

• 17 May 21 Hollywood Bowl H1 numbers

• 18 May 21 Britvic H1 numbers

• 18 May 21 DP Eurasia trading update

• 19 May 21 Marston’s H1 numbers

• 19 May 21 Premier Foods FY numbers

• Est 19 May 21 M&B H1 numbers

• 20 May 21 Young & Co FY numbers

• 20 May 21 Fevertree AGM

• 20 May 21 888 AGM

• 25 May 21 Restaurant Group AGM

• 25 May 21 Shaftesbury H1 numbers

• 26 May 21 C&C FY numbers

• 26 May 21 Playtech AGM

• 3 Jun 21 New River full year numbers

• 8 Jun 21 DP Eurasia AGM

• 15 Jun 21 Vianet full year numbers

• 24 Jun 21 Bank of England MPC meeting

• 23 Jul 21 Premier Foods Q1 update

• 27 Jul 21 Campari H1 numbers

• 3 Aug 21 Domino’s Pizza H1 numbers

• 5 Aug 21 Bank of England MPC meeting

• 10 Aug 21 Intercontinental Hotels H1 numbers

• 12 Aug 21 TUI Q3 numbers

• 18 Aug 21 Carlsberg H1 numbers

• 19 Aug 21 Rank FY numbers

• 22 Oct 21 Intercontinental Hotels Q3 numbers

• 26 Oct 21 Campari Q3 numbers

• 8 Dec 21 TUI FY numbers

LANGTON CAPITAL: Made in Hull. Like all the best things. Langton Capital is a financial advisory company providing insightful views on the UK and global leisure industry and the wider consumer sector in general. Subscription to the daily email is free. Unsubscribing is painless. We provide daily off the shelf and bespoke research. We have helped with transactions, fund-raisings, disposals and other corporate issues. We have a good ear, we are impartial, independent and not half bad at what we do. If you think that we could help you or your business, drop us a line.