Langton Capital – 2021-06-08 – Trading, consumer spending, growth, staffing, delivery, WFH, hols etc.:
Trading, consumer spending, growth, staffing, delivery, WFH, hols etc.:A DAY IN THE LIFE: Langton is back in London for a spell and, whilst ‘normality’ is perhaps more relative than it is usually, a short period of walking around in the blazing sun suggests that King’s Cross is still mostly deserted, Tubes are quiet and footfall, though building, is low. But the number of street people and Chuggers is perhaps running at 150% of 2019 levels. Maybe that’s a lead-indicator, let’s hope so. Anyway, that’s not at all like the delightful (not to say twee and vaguely Hot Fuzz-like – where the neighbours ring the police if you don’t have ‘your man’ cut your grass weekly) Yorkshire villages that we spent much of last week driving and walking around. We were in Osmotherley but does anyone know Yarm? Surrounded on three sides by Country Durham, it’s a bit of a find. Langton did audit work up there in Stockton, Stokesley and the like) when Adam was a lad and remembers the town, twinned with Eaglescliffe and Egglescliffe (I kid you not) just on the other side of the river. And, nearer to our dear home town of Hull, Londesborough? The kind of village where there’s no parking on pain of death and they put bulls in the surrounding fields to stop you walking there. No pub, but pretty. And, talking about the North East, just how many calories are there in a Chicken Parmo? There must be four thousand. It’s like a pizza with every topping you can think of and double cheese – but then the base is a flattened chicken breast or two (or maybe three), instead of dough. Anyway, enough of that. 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: PUBS & RESTAURANTS: Trading:
• Insolvency specialist Cork Gully has suggested that the number of business failures could be elevated once government support is withdrawn, before returning to normal, pre-covid levels in the year to March 2023. In the near term and the recent past, the accountant points out that the number of insolvencies was 52.6% lower in Q1 this year compared with last. There were some 307 insolvencies in the hospitality industry in the UK in Q1. In April, some 128 insolvencies are thought to have taken place, a rise on earlier monthly numbers. Interpreting the data and looking forward, Cork Gully says that ‘two peaks in the numbers of insolvencies are expected in July and October, caused by the end of the temporary measures contained in the Corporate Insolvency and Governance Act 2020 on 30 June, and the end of the CJRS on 30 September. In July, we forecast 222 hospitality insolvencies (68.1% • Langton comment: See premium email • Lumina Intelligence has said that the UK eating out market should have made a full recovery by the end of 2022. It says that the UK eating out market will grow by 33.4% in 2021, to £63.6bn. The market should increase in size by a further 44.5% in 2022 to exceed its previous peak in terms of size (£91.3bn in 2019). The forecast (in common with all forecasts) is very dependent on its inputs. Lumina says ‘with all restrictions on the hospitality sector set to end in June, attention now turns to market recovery.’ It says ‘in the interim, we will see slight polarisation between channels, with on-the-go and relatively low-ticket solutions well placed to continue to capitalise on demand for takeaway, as well as combat any recessionary trading.’ • Langton comment: See premium email • Barclaycard’s latest consumer spending report suggests that spending rose by 7.8% in May versus the same month two years ago. It says this is the highest rate of growth recorded since the start of the pandemic. It says that spending on both essential and non-essential products rose as footfall increased. Spending in supermarkets rose by 17.7% and by 25.5% on resorts and accommodation. It reports that spending in restaurants and bars rose from last year but were still down on 2019 by 53% in the case of restaurants and by 19.4% in the case of bars. • Langton comment: See premium email • The British Institute of Innkeeping released yesterday the results of its latest survey of members showing that ‘74% of survey respondents are trading at less than 75% when compared to 2019 figures with trading restrictions, meaning they are loss-making or break even at best – not a sustainable position for any business.’ The BII says that ‘staffing continues to be one of the main challenges, with 53% saying they cannot recruit enough staff to cope with the additional workload created by Covid restrictions, and 35% say they have lost staff as soon as they have returned from furlough.’ • The BII also covers the debt position, saying that ‘to enable their survival over the course of the pandemic and the months of closures for their pubs, nearly 60% [of respondents] have had to take a Bounce Back loan to survive and 24% still have unpaid rent debt that they are now also facing.’ It says ‘almost 50% have pandemic specific debts of over £20k per pub and despite using their reserves, in many cases using their savings and borrowing from their own pensions, half of these have debts of between £40k and £80k per pub.’ • Langton comment: See premium email • In the US. Investment analyst Jefferies says that casual-dining chains are poised for “golden years” of growth in market share and LfL sales. This because a number of operators have failed and the pie will be shared out across survivors. The same will likely be the case in the UK. Staffing: • London. Union Unite has said that the staff shortage in the London hospitality industry is “largely a self-inflicted crisis of the industry’s own creation.” It points to low pay and zero hours contracts (rather than Brexit & Covid) as the main causes of the shortfall in staff numbers. This seems a bit of a stretch. Unite does say ‘many furloughed workers went back to their country of origin and have decided not to come back’. So far, so good. But it goes on to say ‘…to a sector which previously treated them so badly.’ • Langton comment: See premium email • The Telegraph reports that ‘labour shortages are spilling into the retail sector’. Sadly, reduced demand could take care of that problem. The same solution, hopefully, is not likely for hospitality. • In the US, the Bureau of Labour Stats says that food and drink venues added 186,000 jobs in May. This is the fifth month of growth. The jobs market Stateside is tightening and some commentators have suggested the ‘crisis’ is due to benefits being provided by the state. Delivery. • Langton comment: See premium email Demand (working from home): • Apple CEO Tim Cook has told staff that, by September, they should be working at least three days a week in the office. The BBC reports that ‘staff are demanding more flexibility, according to an internal letter obtained by news site The Verge.’ • The BBC reports the Centre for Cities as saying that the five-day office week could become the norm again within two years. This is all well and good but operators depending on commuters to buy coffee, sandwiches and a drink after work may not be able to last that long. • Langton comment: See premium email Company & other news: • The Restaurant Group has announced that chair Debbie Hewitt is to step down from the board and leave the company at the end of the year. CEO Andy Hornby says ‘I would like to thank Debbie for the significant contribution that she has made to the business. She is a proactive Chairman who has built and led a high-quality Board and proactively engaged with all stakeholders throughout her tenure.’ • Nightcap has updated on sales saying it is seeing ‘strong trading despite restrictions.’ The company says sales ‘for the three full weeks since the reopening of indoor hospitality, being 17 May to 6 June 2021 inclusive, saw growth of 92% when compared to Group revenues recorded in the equivalent weeks in the calendar year 2019 (16 of the 19 premium bars had been established and were open at that time) and a 53% growth when compared to Group revenues on a like for like basis for the same time frame. The strong sales performance since re-opening is significantly ahead of the Board’s expectations, given that the bars have restricted capacity due to social distancing requirements.’ • Langton comment: See premium email
• Remy Cointreau has reported that profitability during its financial year to end-March 2021 was ‘close to all-time highs’ and says that it is increasingly confident in its guidance. In the year to end March 2021, Rémy Cointreau posted sales of €1,010.2 million, up 1.8% on an organic basis (at constant currency) and down 1.4% on a reported basis. The company says ‘this performance demonstrates the Group’s resilience amid the Covid-19 pandemic.’ Re the outlook, the company says ‘in a still fragile and uncertain public health, economic and geopolitical environment, the Rémy Cointreau Group has emerged stronger from the Covid-19 crisis. For financial year 2021/22, the Group is confident in its ability to continue to win market share in the exceptional spirits sector. In particular, the Group is anticipating an excellent start to its financial year, underpinned by very favourable base • Brand Finance has released its estimates as to the world’s most valuable spirits brands and beer brands. Corona heads beers, followed by Heineken, Budweiser and Victoria and Chinese brands dominate the spirits category with Moutai, Wulianove and Yanghe in numbers one, two and three positions respectively. Jack Daniels is no6 and Johnnie Walker is no10. • Boxpark is to open a site in Bristol. • UKH CEO Kate Nicholls has said that the government risks ‘”long Covid for the economy, if you’re not very careful”. • See comments on customer credit notes re travel below. Thankfully this isn’t much of a problem for domestic foodservice outlets (although hotels, some wedding and event planners etc will have held customers’ money over – and, quite possibly, they will have spent it). • Cain International-owned Prezzo is to open its first site since 2018. The site is in Islington, North London. • The latest IWSR Drinks Market Analysis report suggests that ready-to-drink products will be bigger than wine in the US shortly. • Surrey-based Hogs Back Brewery is offering drinkers a free pint of Three Hogs, its beer specially brewed for the Euros, if the England squad lift the nation’s spirits by reaching the tournament final in July. HOTELS & LEISURE TRAVEL: Traffic lights: • These matter as a poll of more than 5,000 UK adults undertaken by You Gov has found that 43% of respondents ‘definitely would not’ go on holiday to a destination that moved from the government’s green list to amber. Only 5% said that they ‘definitely would’ go on holiday to a country that moved in the opposite direction. Sky amongst other media outlets reports ‘furious’ Britons returning in a hurry from Portugal in order to miss its move to Amber (as this would involve a period of personal quarantining). Whether this leads to consumers taking ‘revenge’ UK breaks remains to be seen. Implications & complicating factors: • The Guardian reports ‘more tourists are scrapping plans for this year – and saving up for a bigger trip in 2022.’ It blames uncertainty. Travel Weekly quotes Blue Bay Travel as saying some holidaymakers are already booking 2023 trips. • Staycation demand is likely to be buoyed. Accommodation may sell out and day trips may be a big part of many families’ summer plans. This will be positive for the UK’s hotels, pubs & restaurants. • It takes two to tango. You may be allowed to visit some destinations – but they won’t let you in. Similarly, both Spain and France have moved to ease access for Brits but, as both destinations remain on the amber list, travel to them is meant to be only for emergency reasons or for work. • Carnival Cruise Line has confirmed that it plans to re-commence US ops from Texas early next month. Other travel news: • You Gov reports that around 851k would-be travellers in the UK are currently holding credit notes totalling £781.5 million. • Langton comment: See premium email • Travelodge officially opened seven new UK hotels yesterday. • US journal Destination Analyst reports ‘fuelled by feelings that the worst of the virus is behind us, a pandemic record-breaking 80% of American travellers now say that they are ready to travel.’ OTHER LEISURE: • Tech Crunch points out that Facebook is buying Unit 2 Games. • Google has been fined €220m by French authorities for the abuse of its advertising power. FINANCE & MARKETS: • Accountant BDO reports that UK business confidence in May was at its highest level since June 2014. Business optimism (hopefully) leads to investment, jobs, consumer confidence and spending in roughly that order. • The Halifax has reported that UK house prices rose by 9.5% in the year to May. It says ‘there’s greater demand for larger properties with more space.’ RETAIL WITH NICK BUBB: • See premium email TRADING STATEMENTS & EVENTS: Upcoming results are set out below: • 8 Jun 21 DP Eurasia AGM • Est 13 Jun 21 Barclaycard Consumer Spending report • 15 Jun 21 Vianet full year numbers • 15 Jun 21 On the Beach H1 numbers • 22 Jun 21 Coca Cola HBC AGM • 24 Jun 21 Bank of England MPC meeting • 8 Jul 21 Fuller’s FY numbers • 13 Jul 21 Pepsi Q2 numbers • 23 Jul 21 Premier Foods AGM & Q1 update • 27 Jul 21 Campari H1 numbers • 27 Jul 21 Games Workshop FY 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. |
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