Domino’s, Tasty, Gregg’s, NWF, commodities, footfall & other:

A DAY IN THE LIFE:

I recently moved some furniture around in the home office and, as it was hot work, it was some time – months, in fact – before I realised that much of it was now rebuilt in front of the radiator and that this would have consequences when the weather got a little colder.

Indeed, such has been the heat-soaking capacity of the Ikea pine planks that what I now have is a cold room and a hot cupboard and, whilst I can’t speak for the cupboard, I don’t think that really suits either of us.

Worse still, the cupboards are part of a fragile, already top-heavy and possible dangerous structure such that any attempt to move a bit of it could have disastrous consequences. At any one moment, it’s easier to put another pullover on than it is to deconstruct the thing so here we are, frost on the ground outside, fingerless mitts at the ready and little sight of any change on the horizon. On to the news:

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GENERAL THOUGHTS: COMMODITY PRICES…

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CONSUMER SQUEEZE & INFLATION:

Intro:

The good news just keeps on coming. The average residential rent in the UK has passed £1,000 per month to stand at £1,069 in February, reports Home Let. Rents vary between Greater London where the rose by 11.8% year on year, at £1,757 and the south-west, where rents were £999 a month. Petrol and diesel prices have hit new highs with diesel now £1.61 per litre. The AA points out that a year ago, it was 127.25p a litre.

Inflation:

TUC boss Frances O’Grady has said that workers can beat the squeeze if they organise and use the tightness in the labour market to force through inflation-busting – or at least inflation-equalling – pay rises. She points to the 11-week long dispute that Unite has had with B&Q. The employer offered 4% and the union managed to force 6.7%, backdated to July. The union suggests that with bonus payments, this will be the equivalent of a 10.75% rise.

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Food supplies (and cost):

Yara International, one of the world’s biggest fertiliser companies, has said that the war in Ukraine will deliver a shock to the global supply and cost of food. Yara’s boss, Svein Tore Holsether, has warned ‘Half the world’s population gets food as a result of fertilisers… and if that’s removed from the field for some crops, [the yield] will drop by 50%’. Russia produces enormous amounts of nutrients, like potash and phosphate – key ingredients in fertilisers.

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China’s agriculture minister has reported that its winter wheat crop could be the ‘worst in history’, with a survey finding that wheat was down by more than 20 percentage points. It comes as wheat prices surge to a 14-year high, following the conflict between Russia and Ukraine, which together account for approximately 29% of global wheat exports. 

PUBS & RESTAURANTS:

Barclaycard spending report:

Barclaycard has reported that UK consumer spending strengthened in February as mobility improved, offices reopened and hospitality revenues picked up. it does, however, say that the cost of living crisis is starting to hit households’ confidence.

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Footfall:

Springboard has updated on footfall saying that its High St Index shows footfall up 135.7% on this time last year (during Lockdown 2.0) and down 19.2% on 2019. The latter is a more realistic measure. Springboard says the footfall is down 4.2%, week on week.

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Discounting:

M&B brands Stonehouse Pizza, Toby and Carvery are offering 50% off mains until 10 March. This is a limited and short dated offer but moves in this direction need watching.

Other industry news:

The Institute for Economic Affairs says the government is consulting on a proposal for an online sales tax, with the aim of using the tax to reduce business rates and ‘rebalance the tax system’. However, such a tax also raises boundary issues such as click-and-collect sales, orders placed by phone or email, goods which are delivered over national frontiers, and even takeaway food deliveries. The Treasury document also notes the potential opportunities for fraud.

CGA data shows that total sales of Whisky were down 43.5% in January 2022 when compared with the same period in 2019, with the moving annual total (MAT) sales value falling from £1,017.7m to £574.9m.

Pressure continues to build on food and drink companies to pull out of Russia due to its invasion of Ukraine. McDonald’s and Coca-Cola have been silent whilst many other operators have made the move. Exiting (or even suspending) operations in Russia is easier for some companies than it is for others.

COMPANY NEWS:

Domino’s FY numbers for ‘transformational year’:

Domino’s Pizza Group has reported full year numbers for the 52wks to 26 December, saying that system sales were up 11.2% at £1.5bn with underlying PBT up 12.5% at £119.9m and underlying EPS up 11.5% at 20.3p. The company says that debt rose by 16.2% to £200m. The full year dividend is up by 7.7% at 9.8p.

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Gregg’s – good news, more openings, hefty dividend.

Gregg’s has reported full year numbers for the 52wks to 1 Jan saying that total sales were up 5.3% at £1.23bn with company managed store LfL sales down 3.3% on 2019 levels. The group says it generated profits of £145.6m in the year (2020: loss £13.7m, 2019: £108.3m profit) and says that diluted earnings were 114.3p against 85.0p in 2019. The group is to pay a full year dividend of 57p (2020: nil, 2019: 11.9p). A special dividend of 40p per share has also been declared.

Gregg’s opened 131 new shops in the year (103 net) and it now has 2,181 shops. From this year, the group will target 150 net new shops per year ‘with the potential for at least 3,000 shops in the UK over time.’ Gregg’s says it has a ‘plan to extend late opening to 500 shops in year ahead, offering core menu plus hot food trials.’

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Tasty. Good when open but mentions ‘pent-up demand’ abating & concerns over cost, consumer confidence, Ukraine etc.

Tasty has updated on full year trading saying revenues in the year were up 44% on the prior year ‘driven by strong sales post re-opening despite weaker trading for the peak December period than anticipated, due to the onset of the Omicron variant.’ The co says that ‘2021 revenue represented 78% of the Company’s 2019 revenues of £44.6m despite fewer operating sites.’ It says ‘adjusted EBITDA is expected to be approximately £8.0m (2020: £2.7m)’ and adds that ‘cash at the year-end was £11.0m. After allowing for deferred HMRC payments, creditors and bank loan our net cash position was approximately £6.8m.’

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Mission Mars has opened the Albert Schloss, Liverpool, creating 200 jobs as part of an overall £3m investment.

C&C Group has announced a new sales and distribution agreement with Moët Hennessy in Scotland. C&C GB will sell Moët Hennessy UK’s full portfolio of products through their existing distribution businesses in Scotland.

NWF Group, which is a specialist distributor of fuel, food and feed across the UK, has updated on trading saying that ‘we now anticipate full year results will be significantly ahead of the Board’s previous expectations.’ The group has been boosted by fuel demand and by strong feed prices.

More than 500 pubs have signed up to the World’s Biggest Pub Quiz, running from 9-15 May. PubAid is organising the event to raise money for charities including Shelter.

LEISURE TRAVEL & HOTELS:

Airbnb is suspending operations in Russia and Belarus due to the crisis in Ukraine. The company is also offering free short-term housing to 100,000 refugees fleeing Ukraine.

FINANCE & MARKETS:

The Halifax reports that house prices rose at fastest annual pace since 2007 in February. It says prices were up 10.8%, year on year.

Sterling weaker at $1.311 and €1,207. Oil price slightly off yesterday’s highs at $127.75. UK 10yr gilt yield up 7bps at 1.30%. World markets down yesterday. London set to open down 91pts as at 7.20am.

RETAIL WITH NICK BUBB:

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