Whitbread conf. call, McDonald’s, Nightcap, Amazon, Accor, Apple etc.:

A DAY IN THE LIFE:

Right, well, we made it to Friday and it’s a three-day weekend.

And that’s got to be a good thing because, though the weather’s a bit mixed to say the least, it’ll allow us to re-charge a bit after a week of accounts preparation, VAT calcs and the like alongside a not inconsiderable number of company announcements.

Not that it’s much quieter next week as we’ve got figures or updates from JDW, Ten Entertainment and Intercontinental Hotels along with a hatful of updates from the US as their Q1 reporting season grinds on. Over there we’ll hear from Molson Coors, Starbucks, YUM, Marriott, Shake Shack, Royal Caribbean and others.

Better move onto the news:

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WHITBREAD – FULL YEAR CONFERENCE CALL:

Following the release of its full year numbers, Whitbread hosted a webinar for analysts and our comments thereon are set out below.

Hotels – UK: Whitbread traded ‘well above’ pre-Covid levels in H2. Many of the group’s hotels were completely full over the summer last year. 

• The overall hotel market in the UK is still behind pre-Covid. But the economy segment is now around those levels. ‘International inbound’ is recovering and is around 90% of pre-Covid. WTB has 840 hotels in the UK, around twice the size of the next largest operator.

• London has lagged but it is now ahead of pre-Covid levels.

• WTB believes it can return to pre-Covid margins due to market share gains, leverage, pricing power etc.

• Q – any weakness in staycations? No. WTB thinks ‘there is a lot of demand to go around’.

• Q – pricing. Rises put in place ‘are sticking’. The average price is ‘still less than £70 per night’.

• Q – WFH? Office workers are around half of business demand (the remainder is blue-collar) & demand has picked up (except for Omicron) since September last year.

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Current trading & outlook:

• Whitbread says it will add 1,500-2,000 rooms in the UK this year and add 2,000-2,500 in Germany. The group should be break even in Germany in FY24.

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PUBS & RESTAURANTS:

Consumer confidence:

Accountant PwC reports that ‘a significant and sustained drop-off in consumer sentiment has led to the biggest one-year decline in confidence since the global financial crisis.’

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Costs – labour:

City AM quotes the ADP Research Institute as saying that workers are likely to lobby their employers for a pay rise to deal with the cost of living squeeze.

Costs – goods:

The government has put off checks on EU goods entering the UK until the end of next year.

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Return to normality.

Per CGA, London’s pubs, bars and restaurants are gradually returning towards pre-COVID-19 levels. London has moved up to eighth in CGA’s ‘vibrancy’ ranking as more office workers and tourists return to the capital.

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Social media opportunity.

Zonal reports that social media presents an opportunity for businesses in the hospitality sector to drive bookings and footfall through social media, with nearly half of social media users (48%) already using the channels to search for hospitality venues.

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Lumina Intelligence reports that as part of the government’s obesity strategy, new legislation surrounding the placement and promotional sales of High Fat Salt & Sugar (HFSS) comes into effect in October. It says that consumers are divided on the idea with 41% thinking it will help combat unhealthy eating and 30% saying it will not.

The BBPA calls for candidates to protect their community’s pubs by backing calls for fairer business rates ahead of local elections next week.  KAM Media and the British Institute of Innkeeping (BII) suggested 37% of people found their local pub became even more important to their community during the pandemic despite more than 800 pubs being forced to close.

Lumina Intelligence’s Operator Data Index shows that the UK café market is expected to grow 14.4% to £4.6bn in 2022, and reach 11,132 outlets. Branded coffee shops, cafés and dessert parlours are expected to see robust growth, with the value rising 9.5% to £3bn. Independent coffee shops and cafés, meanwhile, are expected to see growth of 25.3% this year, taking the value of the segment to £1.6bn.

COMPANY NEWS:

McDonald’s Corp has reported Q1 numbers saying that like for like sales remain positive, despite the invasion of Ukraine. The company suspended operations in Russia and Ukraine early last month. McDonald’s reported global comparable sales up 11.8% with US sites up 3.5% and the International Operated Markets segment up 20.4%. Total consolidated revenues were up by 11% (14% in constant currencies) and consolidated operating income increased 1% (3% in constant currencies).

McDonald’s results included $27 million of costs related to the continuation of employee salaries, lease and supplier payments in Russia and Ukraine along with $100 million of costs for inventory in the Company’s supply chain that may be wasted. The co reports that adjusted diluted earnings per share were $2.28, an increase of 19% (22% in constant currencies) on the same quarter last year.

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Nightcap plc has updated on Q3 trading saying that for the 14 weeks ended 3 April 2022it ‘continued its growth trajectory’ and generated net sales of £9.6 million for Q3 FY2022, resulting in a 52.7% net sales increase compared to the same period in 2019 and a 27.7% like for like increase compared to the same period in FY2019.’

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Amazon yesterday reported Q1 numbers, saying that it has made its first quarterly loss since 2015 with a result of negative $3.8bn. The co said that this was due to a write-down of $7.6bn in its electric vehicle start-up Rivian, suggesting that the core operations remained in profit. The company expects to make somewhere between negative $1bn and positive $3bn in the current quarter.

Pernod Ricard reports ‘very strong’ 9M FY22 sales of €8,407m, +18% YoY, with Q3 sales +20%. The group pointed to excellent growth in Europe with some deceleration in March notably due to impacts of conflict in Ukraine. USA at +13%, enhanced by phasing; India maintaining strong growth +19% and China +12%.

Gusto Italian appoints Scott Grimbleby as its new COO as the chain looks to open in more locations across the UK.

Sainsbury yesterday said ‘the year ahead will be impacted by significant external pressures and uncertainties, including higher operating cost inflation and cost of living pressures impacting customers’ disposable incomes.’ It says it will hold prices down where it can. This could help maintain consumers’ spending power re discretionary items and services.

HOLIDAYS & LEISURE TRAVEL:

A survey of 100 travel managers conducted by the ITM and revealed at its Accelerate conference show that 28% of travel managers expect business travel activity to return to pre-pandemic levels in the long-term, with international travel forecast to reach 45% of 2019 volumes, on average, by the year’s end and domestic trips to increase to 56%.

STR reports that occupancy across the US hotel industry in the week to 23 April was 65.8% (down 4.2pps on the same week in 2019. It says rate was 15.4% higher and REVPAR was up by 10.5%.

Accor has reported Q1 revenue of €701 million, up 85% on the same period in 2021 but still some 23% below 2019. Accor opened 26 properties during Q1 and expects to increase its room stock by 3.5% over the full year. CEO Sébastien Bazin says ‘Accor’s performance in the first quarter of 2022 confirms the clear upturn in business across all regions and the renewed momentum in tourism, food services and entertainment.’ He adds ‘these results are notably driven by our market dynamics in Europe, the Middle East and the Americas as well as the strong demand for our luxury and lifestyle hotels, and domestic travel.’

OTHER LEISURE:

Twitter reports Q1 revenue of $1.2bn, slightly below analysts’ average expectations of $1.23bn. net income was $513.3m – up from $68m a year earlier. Also during the first quarter, which ended on 31 March, the number of daily users grew to 229 million – a 16% rise. The update comes just days after agreeing to a $44bn sale to Tesla billionaire Elon Musk.

Elon Must is reported to have sold $4bn in Tesla shares. He says that he has no plans to sell any more stock.

Apple yesterday reported record quarterly revenue and profits for what is the second quarter of its financial year.

FINANCE & MARKETS:

The US economy contracted at an annualised rate of 1.4% in Q1. Markets had been looking for a small positive number of around an annualised 1.1%. With inflation rising rapidly and further interest rate rises on the cards, the possibility for a period of stagflation is a real and growing one.

Sterling weaker yesterday at $1.2492 and €1.1876. Oil price higher at $108.45. UK 10yr gilt yield up 6bps at 1.88%. World markets up yesterday & London set to open 76 points higher as at 71m.

RETAIL WITH NICK BUBB:

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