JD Wetherspoon FY numbers, furlough, VAT, staff, WFH, trading etc.:

A DAY IN THE LIFE:

Grim weather. Less bad today but the wedding tomorrow could be blown into the sea.

Hum.

And I think that’s it for cutting the grass until maybe April next year. Didn’t care to get the petrol I needed in a Jerry can for the mower as I might have been lynched.0

Anyway, I’ve now got the next six months to look at the straggly grass and consider just whose fault this all is. Bit busy today so let’s move onto the news.

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JD WETHERSPOON – FULL YEAR NUMBERS:

JD Wetherspoon has today reported full year results and our comments thereon are set out below. JDW reports that sales of £772.6m, down from £1.26bn last year. It says that LfL sales are down 38.4%. The group reports a loss before tax of £154.7m (2020: loss £34.1m) and says that its operating loss for the year was £105.1m versus a profit for the year at the operating level in 2020 of £7.2m). The loss per share is 110.3p versus a loss last year of 27.6p. There is, unsurprisingly, no dividend (2020: nil). After exceptional items (which include exceptional staff costs and exceptional operating costs – net of receipts), the company is reporting a loss before tax of £194.6m (2020: loss £105.4m). At its most recent trading update, on 7 July, the company pointed out that it did not benefit from the Euros, saying ‘for the period from 17 May to 10 June, before the UEFA Euro 2020 football
tournament started, like-for-like sales were -8.1%. From 10 June to 4 July, during the tournament, like-for-like sales were -20.8%.’

Balance sheet, company comment, outlook etc.

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PUBS & RESTAURANTS:

The furlough scheme in the UK has now ended. Estimates suggest that perhaps a million employees were on the scheme as recently as yesterday (down from around 1.3m to 1.7m during August) and these staff will now either have to be paid or let go. In the first two weeks of June last year some 35% of the workforce were on furlough and up to 11.6m jobs (including those of the self-employed) were protected.

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Staff shortages. To some extent, this is the opposite problem to that posed by the ending of VAT is now (as of today) 12.5% on food & non-alcoholic drinks sold in the UK’s pubs & restaurants and a number of hospitality and tourism sector bodies have united to call for a permanent lower rate of VAT to help boost recovery. They are calling on the Chancellor to ‘keep VAT at 12.5% to help businesses rebuild post-pandemic’. The trade bodies – ‘UK Hospitality, the British Beer and Pub Association, the British Institute of Innkeeping, Tourism Alliance and the Association of Leading Visitor Attractions – are warning that unless VAT remains permanently low at 12.5%, the Government risks derailing the recovery at a time when businesses are still in survival mode.’

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WFH. Rightmove believes it has detected a mental move back to the office as it says that there has been a rise in searches for homes for sale close to commuter stations. It says that between June and August, searches for homes near Chelmsford station more than doubled.

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Contactless payment limit. Worth remembering that this goes up from £45 to £100 on 15 October. Consumers unhappy with such a chunky limit (worried about losing or having their cards stolen, for example), can set any lower limit that they wish.

Construction activity is reported to be picking up across the UK hospitality industry.

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Trading. Barclays Leisure Rediscovered report says that around nine in of ten hospitality and leisure operators are now confident about growth this year. The bank estimates the sector’s contribution to GDP will be £3.5bn higher between April and December than it was in 2019. The report suggests that customers are prepared to pay more for what they perceive to be better service and product.

The BII has said that the pub industry’s recovery is ‘under threat as supply chain issues escalate,’ CEO Steve Alton, chief executive, British Institute of Innkeeping, tells the MA that the ‘sector relies upon an effective integrated supply chain linking raw materials, manufacturing and logistics to ensure our pubs can deliver a fantastic experience for their customers.’ This is currently not functioning as well as it could nor as well as it used to.

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Lumina has said that some 67.7% of restaurant industry sales were made to dine-in customers in the 12 weeks to 11 July, compared to 18.7% ordered for delivery and 9.6% ordered for collection.

The British Takeaway Campaign has said that its industry has been excluded – or at least shown ‘very little consideration’ – in the formation of the new Hospitality Sector Council. It says the Council membership is ‘overwhelmingly focused on big, corporate chains, with little regard for the huge variety of cuisines, ethnically diverse entrepreneurs and independent business owners who make up the sector beyond London’.

The consumer. We will see the impact of the ending of the furlough scheme on unemployment shortly. In the meantime, the BBC reports that ‘a squeeze on household finances will become more acute as a new, higher energy price cap takes effect from Friday.’ It is pointing to something like 12% increases in gas prices.

COMPANY & OTHER NEWS:

JW Lees has posted an annual loss of £4.8m for the year to March 31st 2021, with turnover down 78% to just £21.3m. It says ‘this follows a profit of £1.0m in 2020 and a profit of £6.8m in 2019. The company comments ‘the last 18 months have been tough but JW Lees has survived and is now profitable again.’ JW Lees says ‘during the time that the government forced pubs to be closed JW Lees charged no rent to our Pub Partners as well as supporting the wider JW Lees family in whatever way that we could by helping teams to help to navigate the support that government was offering in the form of the Job Retention Scheme (furlough), grants, business rates relief, financial assistance and loans.’

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Tortilla Mexican Grill PLC has priced the shares in its upcoming IPO at 181 pence a share, implying a market capitalization of 70 million pounds. The company has 62 sites world-wide, 52 of which are in the U.K. It also has 10 franchised sites in the Middle East.

The National Restaurant Association in the US has reported that seventy-eight percent of restaurant operators report a decline in customer demand for indoor dining in recent weeks due to the rise of delta variant. NRN reports on the survey saying ‘sixty-three percent of operators said in August — historically one of the busiest months of the year for restaurants — volume was lower than in August 2019.’

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HOTELS & LEISURE TRAVEL NEWS:

Staycity has reported ‘the imminent opening of two London properties and another in Manchester, as well as news of an acquisition in Lisbon, Portugal.’ These will trade as Wilde Aparthotels by Staycity. The company says ‘these properties are all in great locations in both London and Manchester and are perfect for our Wilde brand. We currently operate Wilde Aparthotels in London’s Covent Garden, Edinburgh and Berlin and all have quickly become popular destinations, with our Berlin property reaching number one on TripAdvisor earlier this year and all three receiving strong reviews.’

STR reports that U.S. hotel occupancy remained relatively flat week over week in the week to 25 September, while average daily rate rose. Occupancy was 63.2%, down 11% on 2019 and room rate was down 2% leading to REVPAR down some 12.8% on 2019.

FINANCE & MARKETS:

The ONS has increased its estimate for growth in Q2 this year from an earlier stab at 4.8% to 5.5%. The ONS says ‘the economy grew more in the second quarter than previously estimated, with the latest data showing health services and the arts performing better than initially thought. The revised figures also show households have been saving less in recent years than previously thought.’

Bank of England governor Andrew Bailey has told an ECB panel that UK GDP is now unlikely to recover to pre-pandemic levels until early next year. This is a few months later than had been anticipated in August.

The Nationwide reports that house price growth slowed to just 0.1 per cent, month-on-month in September. This takes the annual rate of growth to 10% from 11% in August.

The Times reports on investor expectations re interest rates, saying ‘investors believe there is a one in three chance that the Bank of England will increase interest rates in November.’ It says the ‘probability that the Monetary Policy Committee will lift the base rate to 0.25 per cent from 0.1 per cent has risen to 38 per cent, according to market data compiled by Reuters.’

The Institute of Directors has reported that confidence across business leaders “fell off a cliff” in September due to supply and other problems in the wake of Brexit and Covid. The rating is now at its lowest level since February 2021. This matters as it will impact investment and hiring decisions.

Sterling slightly up at $1.3457 and €1.1623. Oil a tad lower at $78.19. UK 10yr gilt yield up 5bps at 1.03%. World markets lower yesterday and London set to open around 72pts lower as at 7am.

RETAIL WITH NICK BUBB:

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