Langton Capital – 2021-07-20 – Nightclubs, government review, YNGA, AG Barr, Fevertree etc.:
Nightclubs, government review, YNGA, AG Barr, Fevertree etc.:A DAY IN THE LIFE: I think that one of the most important buttons on Word or Excel or Google Sheets or whatever is the backward arrow. That is the ‘undo’ button which, if truth be known, has saved all of us, particularly at stupid-o’clock in the morning, from accidentally deleting pages and pages of work, whole columns from spreadsheets and the like and its cousin, the process by which you can retrieve entire documents (that is the version before you did something so utterly stupid as to ruin the whole thing), is also a veritable life-saver. So, to that unsung geek somewhere who dreamt up these anti-idiot devices, I can only say a heartfelt thankyou and, in the full knowledge that I will never meet them, I can offer them a slap up meal, bubbly included, should our paths ever cross. On to the news: ADVERTISE WITH US: Langton’s free email now carries adverts. 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Or sign up for easy in, easy out monthly option: GOVERNMENT STUDY ON IMPACT OF COVID ON HOSPITALITY: Government comment: • In a statement of the blooming obvious, HMG says ‘hospitality has been hit hard by the coronavirus (COVID-19) pandemic and the impact has been uneven; bars and clubs have fared the worst, but campsites had a relatively better year than the rest of the sector.’ • It says ‘consumer spending on hospitality started to increase in May 2021 but remains at less than 70% of pre-pandemic levels; a similar picture is seen in turnover – in May this remained one-quarter lower than 2019 levels.’ • The government says ‘confidence of business survival in the hospitality sector started to increase in May 2021 but remains below the all-sector level.’ • Some 81% of hospitality businesses were closed in spring 2020 but ‘only’ domr 54% in the early 2021 lockdown. • Further comment, see premium email Industry response: • A study published by the ONS on the impact of COVID-19 on the hospitality sector in the UK has found that consumer spending on hospitality, which includes pubs, remains at less than 70% of pre-pandemic levels. The BBPA said the findings are further evidence of just how hard the hospitality sector, including beer and pubs, have been hit by COVID-19 lockdowns and restrictions, and that investment is now needed in the sector. • Emma McClarkin, CEO of the BBPA, said ‘The numbers are clear – more investment is needed now for our sector so it can play a leading role in building society and the economy back better. The Government must do this by reforming VAT, Beer Duty and Business Rates by which pubs and other hospitality businesses are greatly overtaxed.’ • SIBA CEO James Calder said the ONS study showed ‘ the continued toll on our struggling pubs and brewers devastated by the Covid-19 pandemic… the sector needs further flexibility on VAT, beer duty and other tax debts to make it through the recovery.’ • UKH adds its comments saying that ‘these figures from the ONS highlight how the pandemic has uniquely hit the hospitality sector and it’s devastating consequences for businesses across all parts of the market.’ • Further comment, see premium email YOUNG & CO – AGM & Q1 TRADING UPDATE: The group says… We are pleased to report that trading has continued to be ahead of the board’s expectations following publication of our full year results on 20 May 2021…’ Young & Co has updated on trading for the period between its year end and its AGM (today) and our comments on the transaction are set out below: Company comment: • Chairman Stephen Goodyear will later today tell the group’s AGM that ‘we are pleased to report that trading has continued to be ahead of the board’s expectations following publication of our full year results on 20 May 2021.’ • Further comment, see premium email PUBS & RESTAURANTS: Double jabs needed for nightclubs: • There has been an immediate and heartfelt outcry against the decision by the government to require nightclub visitors to have Covid passports from the end of September. They were open for less than a day before being hit by this latest news. First, it is not clear if other ‘crowded’ venues will be covered – and what does ‘crowded’ mean, does it extend to a busy chip shop? – and second, it is decried as unfair that the venues are to be singled out. Cheltenham is admittedly outside, but it’s not clear if opera houses, cinemas and the like will be covered. The government has been accused of rushing the news. Presumably the fine print, if there is any, is to follow. • Industry reaction. Michael Kill of the Night Time Industries Association says ‘the announcement from the prime minister that COVID passports will be made mandatory for nightclubs in September comes after his health secretary said only one week ago that they would not be compulsory. What an absolute shambles.’ He says ‘leaving aside the fact that this is yet another chaotic U-turn that will leave nightclubs who have been planning for reopening for months will now have to make more changes to the way they operate – this is still a bad idea.’
• Sacha Lord, Manchester’s night time economy adviser says the whole thing is a ‘surprise’ and CEO of Rekom (was Deltic & before that Luminar) says ‘younger guests are 95% of our customers – they won’t be fully vaccinated [by September]. We won’t be requiring them, otherwise we won’t have anyone in.’ UKH adds ‘this announcement comes as a hammer blow on a day when nightclubs, a sector that has been closed by the Government for 16 months, were finally given hope that they could start to trade viably and make progress toward rebuilding and paying off accrued debts.’ It says ‘Covid passports will be a costly burden that run the risk of creating flashpoints between staff and customers, as well as raising potential issues with equalities legislation and the handling of customer data. As recently as last week the Government asked us to work with them on a voluntary scheme, so this new • Further comment, see premium email Working from home: • The government has said that it hopes and expects the return to the office to be gradual and early evidence is suggesting that this may be the case. • Further comment: Or, at least, the ‘nobody going back yet’ bit may be correct. Whether the ‘they will go back eventually’ bit follows is as yet unknown. Sky reports on empty commuter trains. The hot weather probably did nothing to encourage people to give up their gardens for sweaty commuter trains. PwC tells Sky that around 10% of its UK staff are back in the office. This number is edging up. PwC says this ‘shows the direction of travel but actually we haven’t seen a big influx of people coming back into the office.’ Separately, Zoom is doubling down and yesterday announce the $14.7bn (£10.7bn) acquisition of Five9 in order to expand the size of its offering. Pindemic & staff shortages: • Iceland CEO Richard Walker said some of their 1,000 UK stores had been forced to close by the NHS app ‘pinging’ staff with orders to self-isolate as supermarkets and pubs face a ‘pingdemic’. Greene King CEO Nick Mackenzie has said that he has been forced to close 33 pubs in the last seven days owing to shortages. • Robert Jenrick has said that the NHS app could be desensitised shortly. • Further comment, see premium email • Foodservice analyst Peter Backman comments on the labour shortage conundrum saying that difficulties in recruiting staff are evident in the UK, the US and in Australia. In the UK, it is being blamed on Brexit and the exodus of Eastern Europeans. But this isn’t an issue in the US or in Australia. The US ‘blames’ it partly on the “$2,000 payments to people thrown out of work” – but this isn’t a feature in the UK or Australia. And Australia doesn’t have much of an excuse at all. • NRN in the US reports that Delaware has become the 9th state in the US to raise the minimum wage to £15 per hour. Trading: • Lloyds Bank has suggested that spending in pubs and restaurants was up 52% during Euro 2020 (played in 2021) versus 2019. This is not entirely in accord with other industry studies, not least the Tracker, which we reported on yesterday. Lloyds says ‘the feel good factor from Euro 2020 clearly provided the perfect platform for consumers to spend some of their lockdown savings. Whether people were buying food and drink for a night in with the football, or at their local pub soaking up the atmosphere, spending soared above levels seen in 2019. Many will hope that the consumer confidence seen in spending power throughout the tournament carries through the rest of the summer months.’ • The Morning Advertiser has polled readers and finds that 45% ‘have said they will continue with table service beyond next week and the relaxation of Covid-secure trading measures. Oakman Group has said it will retain table service and JDW has said that it will still encourage the use of its app – but it will not discourage ordering and drinking at the bar. City Pub Group will retain table service. • Picking on Scarborough, Yorkshire, the Guardian says that staycations will be strong this year. However, as we have mentioned before, a convoy can only move at the speed of its slowest ship and, if staff cannot afford to live in resort, venues will either have to shut or bus in workers at extra cost. The Guardian says ‘tourists are fuelling record bookings but severe staff shortages due to Brexit and workers self-isolating have kept many hospitality firms closed.’ • Further comment, see premium email
• On a similar theme, Pragma Consulting considers the ‘rise of staycations, local city breaks and weekend retreats to other parts of the country’ and says that, as a growing market, a number of trends are becoming apparent. It says there are new developments being announced saying the ‘rise in demand from UK residents is providing a platform from which leisure/holiday brands and operators can increase their presence and offerings within less notable parts of the country.’ It points to expansion announcements from Center Parcs and also from theme park owners and other players. It also says that ‘complementary offerings’ should be an area of growth – leisure venues in or around existing tourist hotspots or destinations – and adds that ‘beauty spots such as Cornwall, the Cotswolds and the Scottish Highlands as well as historic cities such as London and Edinburgh, rarely fail to attract • Further comment, see premium email • The move to ‘freedom’ coincided with a very sharp drop on the markets yesterday. This was a global phenomenon, however, and not UK specific but, in this country, scenes of younger revellers partying hard from 00.01 yesterday morning, presumably until after the sun came up, does seem at odds with the somewhat downbeat mood emanating from the markets. City AM reports ‘dancefloors across England were packed with pandemic partygoers at midnight as Covid rules eased in the country.’ It says ‘thousands of clubbers queued for sell-out venue events on Sunday July 18 to celebrate the lifting of restrictions that came into force this morning.’ • Further comment, see premium email Company & other news: • Upgraded expectations at AG Barr. The company has updated on trading saying that ‘at our full year results on 30 March 2021 we communicated that the business was in strong financial health, with our brands and business poised for growth on a like for like basis.’ It adds that ‘trading since then has been better than anticipated, driven by a combination of factors, some Covid related, including customer restocking, in the hospitality sector in particular, and some associated with underlying brand momentum, such as the positive performance of recent innovation launches.’ The company says ‘as such we now expect profit for the current 53-week financial year, to the end of January 2022, to be slightly ahead of the performance delivered in the 52-week year prior to Covid (2019/20 Profit before tax : £37.4m).’ • Fever-Tree has updated on H1 trading saying that UK sales are up 4% and total sales are up 39% (against soft comps). The co says it ‘delivered strong sales growth across all its key markets in the first half of FY21 as the On-Trade gradually re-opened during the second quarter and Off-Trade sales remained very encouraging. Revenue growth of 39% on a constant currency basis was ahead of the Board’s expectations despite the comparable levels of COVID restrictions present in the first half of FY21 compared to the first half of FY20. However, challenges surrounding global logistics cost pressures have progressively impacted the Group’s margins.’ • Fever-Tree CEO Tim Warrillow says the company ‘made significant progress in the first half of 2021, delivering a strong revenue performance.’ He says ‘our performance in the On-Trade as it has reopened has been encouraging in all our markets and our performance in the Off-Trade has also remained strong, with sales far exceeding pre-COVID levels in the UK, US, across Europe, and the Rest of the World.’ Margins are down, ‘impacted by global logistics disruption’ but, despite this, ‘we remain confident as ever in the strength of our business model and the opportunity to improve margins as we cycle out of the current period of COVID disruption.’ • Virgin Wines UK has updated saying ‘the financial year finished positively with strong levels of customer demand in May and June. Revenue and EBITDA for FY21 are now anticipated to be marginally higher than previous expectations.’ CEO Jay Wright says ‘we finish FY21 in excellent shape and in a stronger position than ever to continue our growth. Whilst we will all be watching with interest consumer trends that may develop over the coming year, we have seen nothing but encouraging signs over recent months that the customers we have acquired are staying loyal, our subscription schemes are as robust as ever and that our ability to attract new customers at a competitive cost per recruit remains.’ • Cask Marque is launching a social media campaign to drive footfall into pubs and ensure they re-engage with cask. Cask has struggled since reopening due to not being able to vertically drink, pubs having a reduced range and reduced staff knowledge about the beers. • Co-founder of D&D London, Des Gunewardena, believes the big opening for hospitality will now come in September, instead of 19 July, saying ‘Our bookings are up [for this] week, but only modestly’. • Stonegate pub company is suing three insurers for losses it suffered during the pandemic, seeking £845m in a claim filed at London’s High Court against MS Amlin, Liberty Mutual Insurance Europe and Zurich. Various Eateries, which owns the Strada restaurant chain and the Coppa Club, has also filed a £16.3m lawsuit against its insurer Allianz in a dispute over its business interruption policy. • Fountain Beverage Co has commenced a multi-million-pound investment campaign to raise awareness of the hard seltzer drinks category amongst target consumers. The alcohol infused sparkling water, Hard Seltzer, has grown rapidly since its arrival to the UK market in August 2020. • Soho Street Cocktails is raising new funding as the startup aims to expand, selling pre-mixed, cocktail pouches, which allow bars and restaurants to improve serve consistency, reduce service time and make industry leading margins. HOTELS & LEISURE TRAVEL NEWS: • With the loosening of restrictions, Jet2.com and Jet2holidays have recommenced flights and holidays to amber list destinations. Steve Heapy, chief executive of Jet2.com and Jet2holidays, said ‘there is enormous pent-up demand from holidaymakers looking to get away this summer, so it is fantastic to see full aircraft taking customers away to their favourite sunshine destinations.’ • TUI has also said it is planning to restart operations to more destinations on the amber list over the next week. It says ‘we are continually reviewing our holiday programme and cancellations in line with government updates every three weeks.’ TUI has said ‘we won’t take any customers to red destinations or those which require quarantine on arrival, unless this can be foregone by a Covid test.’ In a move aimed at building confidence, it says ‘if we need to cancel holidays because of updated government guidance, or after reviewing our holiday programme, we will contact customers and aim to give at least seven days’ advance notice. These customers can request a full cash refund, or change to a later date or alternative holiday with a booking incentive.’ • Arrivals from France must still quarantine for 10 days even if they are fully vaccinated, according to the UK government. The restrictions have been placed on travellers from France due to ‘the persistent presence of cases in France of the beta variant, which was first identified in South Africa’. • The authorities in the US have issued their highest warnings against travel to the UK due to a rising number of Covid-19 cases. It says ‘if you must travel to the United Kingdom, make sure you are fully vaccinated before travel.’ The State Department is blunter, saying ‘do not travel to the United Kingdom due to Covid-19.’ • Joe Biden has hinted that an announcement on the lifting of travel restrictions from Europe may be made soon. The President said ‘ I’ll be able to answer that question within the next several days. I’m waiting to hear from our folks in our Covid team as to when that should be done.’ • Mactaggart Family & Partners has acquired the location and project for Resident Hotels, The Resident Edinburgh, set to open in 2024. The 166-room property will take the group’s UK portfolio up to six hotels. OTHER LEISURE: • Tencent will acquire British game developer Sumo for $1.27bn. Shareholders in Sheffield-based Sumo will get 513 pence in cash per share, a 43% premium to the last price and valuing the company at £919m. FINANCE & MARKETS: • Sterling weaker at $1.367 and €1.1596. Oil price sharply lower at $68.78. UK 10yr gilt yield similarly sharply lower at 0.55% (down 8bps) on gapping down in expectations for recovery. Markets much lower yesterday but Far East steadied & London set to open some 29 points up as at 7am . RETAIL WITH NICK BUBB: • Further comment, see premium email TRADING STATEMENTS & EVENTS: Upcoming results are set out below: • 13 Jul 21 Pepsi Q2 numbers • 13 Jul 21 DP Poland Q2 update & presentation • 14 Jul 21 DP Eurasia H1 trading update • 15 Jul 21 Just Eat Takeaway H1 trading update • 19 Jul 21 Compoir AGM • 20 Jul 21 Young & Co AGM • 20 Jul 21 Fevertree trading update • 20 Jul 21 AG Barr ad hoc trading update • 21 Jul 21 Loungers FY numbers • 21 Jul 21 Nichols H1 numbers • 22 Jul 21 Britvic Q3 update • 23 Jul 21 Premier Foods AGM & Q1 update • 23 Jul 21 GfK UK Consumer Confidence numbers • 27 Jul 21 Campari H1 numbers • 27 Jul 21 Games Workshop FY numbers • 27 Jul 21 Starbucks Q3 numbers • 28 Jul 21 Marston’s Q3 trading update • 29 Jul 21 Molson Coors Q2 numbers • 29 Jul 21 YUM Q2 numbers • 29 Jul 21 Texas Roadhouse Q2 numbers • 30 Jul 21 DPP AGM • 3 Aug 21 Domino’s Pizza H1 numbers • 3 Aug 21 AG Barr H1 trading update • 5 Aug 21 Bank of England MPC meeting • 10 Aug 21 Intercontinental Hotels H1 numbers • 11 Aug 21 Deliveroo H1 numbers • 11 Aug 21 Hostelworld H1 numbers • 12 Aug 21 TUI Q3 numbers • 18 Aug 21 Carlsberg H1 numbers • 19 Aug 21 Rank FY numbers • 2 Sept 21 Jet2 AGM • 22 Sept 21 Ten Entertainment H1 numbers • 1 Oct 21 JW Wetherspoon • 22 Oct 21 Intercontinental Hotels Q3 numbers • 26 Oct 21 Campari Q3 numbers • 24 Nov 21 Britvic FY 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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