JDW Q3 update, Flutter, Starbucks, US Q1 numbers, footfall etc.:

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JD WETHERSPOON – Q3 TRADING UPDATE:

JD Wetherspoon has today updated on Q3 trading and our comments thereon are set out below:

Headline numbers:

• JDW reports that ‘for the 13 weeks to 24 April 2022 like-for-like sales decreased by 4.0%, in comparison with the same period in FY19. Year-to-date like-for-like sales have decreased by 6.2%.’

• At the H1 stage, JDW reported LfL sales down 11.8%, It said that LfL sales were down by 12.4% in the first four weeks of H2 but also commented that, for the three weeks to 13 March, they were only some 2.6% lower.

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PUBS & RESTAURANTS:

Cost of living crisis:

PM Boris Johnson has insisted in a TV interview that his Government is doing “everything we can” to help with the cost-of-living crisis.’ However, he goes on to say that this isn’t much because any intervention that isn’t accompanied by increased production is likely to make the economy’s inflationary problem worse.

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Inflation:

Union members at the post office are striking in a dispute over pay. CWU members were offered a 2% rise and a e£250 lump sum. The CWU says this is ‘an insult to these key workers’ and adds that, as ‘the cost-of-living crisis mounts, working people across the country are facing stark realities.’

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Footfall:

Springboard has updated on footfall saying that, in week 17 (to 30 April), it was up 29.5% on last year but down 17.5% on the same week in 2019. Footfall was up 0.7% week-on-week. Short term numbers will be impacted by the weather & by the timing of Easter.

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Other news:

Foodservice analyst Peter Backman reports that a ‘trinity of changes is pressuring the foodservice sector.’ He says that ‘Working from Home, Travel and Delivery’ are causing many operators to have a fundamental rethink of their businesses.

The BRC has reported that shop prices increased last month at their fastest rate in more than a decade.

UK Hospitality, responding to the Department for Education’s consultation into Post-16 Qualifications At Level 2 And Below, has said that it ‘believes it is essential to simplify and streamline the system. This will aid students to make informed choices from a range of options that suit their individual needs.’ The hospitality industry is a major employer of younger people, providing many of them with their first step on the employment ladder.

The World Health Organisation (WHO) has released the European rankings for obesity, with the UK coming 4th behind Israel, Malta and Turkey. The report said overweight and obesity have reached ‘epidemic proportions’ in Europe, causing an estimated more than 1.2 million deaths every year.

Retail Jobs Alliance, a coalition of retail giants including Tesco, J Sainsbury, Greggs and Waterstones, has been set up to urge the Chancellor to reform the decades-old business rates regime.

A report from Campari Group UK shows that the UK rum market saw gains of 1.7% in the on trade to January 2022 vs 2019, making it the 3rd biggest rum market globally. The growing cocktail trend has seen premium and spiced rum grow in value sales.

Research from the Institute of Economic Affairs has found that minimum unit pricing (MUP) has cost Scottish consumers almost £200m more than projected after it was introduced in 2018. Initial modelling estimated that over the first five years of MUP there would be 400 fewer alcohol-related deaths and 8,000 fewer hospital admissions, according to the Scottish Government’s website.

COMPANY NEWS:

Starbucks yesterday reported its Q2 numbers saying that global same-store sales grew 7%, led by a 4% increase in ticket sales and a 3% increase in transactions.

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Restaurant Brands, which owns Burger King & Tim Hortons, has reported Q1 numbers saying that ‘we saw a sequential improvement in the contribution of digital sales to overall sales across all brands in their home markets, including Tim Hortons Canada reaching over 36% of systemwide sales.’

Molson Coors reports Q1 net sales up 16.7% due to positive net pricing, favourable sales mix and financial volume growth. Income before taxes grew by 37.5% to $173.7m, with underlying income before income taxes of $83.5m. Fewer on-premise restrictions led to significant growth in European markets on the strength of flagship brands like Carling.

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Remy Cointreau reports FY sales up 27.3% to €1.3bn for the year ended 31 March, in line with expectations. The group said higher marketing and communication spending and a tougher comparison base in H2 meant that FY profits will be driven solely by first-half growth. Remy Cointreau predicted a strong Q1 of the new fiscal year, despite lockdowns in China.

Campari reports Q1 net sales of €534.8m up 34.4% YoY and up 43.7% on Q1 2019. Adjusted EBITDA rose 53.7% YoY to €134.7m, up 52.5% on Q1 2019. CEO Bob Kunze-Concewitz said a strong on-premise recovery in Europe had driven sales but flagged that ‘volatility and uncertainty remain due to the ongoing pandemic and geopolitical tensions.’

BrewDog co-founder James Watt has tweeted what he says is huge news for the company. He reports that the company is to make available £100 million of staff share awards and reports further expansion under a ‘radical blueprint’.

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Leisure and retail property specialists Drake & Co report that they are ‘delighted to have acted on behalf of Young & Co to acquire “off-market” The Bedford Arms in Chenies, close to Amersham, Watford, Beaconsfield and Gerrards Cross.’ It adds ‘the Bedford Arms is a stunning country pub with 18 bedrooms and was previously run by the same family for 20 years. The pub will be a superb addition to Young & Co Brewery PLC’s growing premium managed pub portfolio.’

Inception Group has tweeted that it is opening Mr Fogg’s Apothecary ‘located on Brook Street opposite the iconic Claridge’s hotel.’ It says ‘the elegant new Victorian Apothecary will transport guests into Phileas’ wonderfully eccentric world. Follow a majestic grand staircase leading down to an impressive long bar, stocked to the rafters with his extensive apothecary collection. Here, Mr Fogg’s Apothecary team will prescribe, formulate, measure out and dispense the perfect cocktail serves, with precise weighing scales at hand.’

MCA reports that 200 Degrees Coffee plans to expand in the North West, growing on its current estate of 16 sites. The chain is targeting destination retail outlets, following the success of their locations within the McArthur Glenn Group.

Hawksmoor will end its nationwide At Home meal kit business which it launched during the first lockdown in 2020. Hawksmoor steaks will continue to be available for retail via online supermarket Ocado.

Revolutions Brewing has won the Overall Champion award in the SIBA North East Independent Beer Awards. Its winning entry was ‘Swoon’, a 4.5% Chocolate Fudge Milk Stout.

Zepto, an instant grocery startup, has raised $200m in a new financing round led by Y Combinator Continuity. The Series D round valued the Mumbai-headquartered startup at about $900m, up from $570m in its December Series C.

HOLIDAYS & LEISURE TRAVEL:

Travelodge has commented on a continued pick-up in demand from business travellers for its rooms. It says that January sales were affected by Omicron but the impact has been short lived. It says that the recovery in bookings in February was good and says it was “almost immediately ahead of 2019 levels”.

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Travelodge PLUS represents the company’s ‘Budget Plus’ offer.

• Premier Inn has a similar product. We have mentioned previously that such ‘facility creep’ seems to regularly open gaps in the market below budget operators. Tune and EasyHotel have been recent competitors able to take advantage of such premiumisation.

Julia Lo Bue-Said, CEO of the Advantage Travel Partnership, has said that travel demand has “soared” recently. She says ‘whilst we’re in recovery phase it’s clear our industry has a long journey ahead.’ She adds that the industry faces further ‘significant challenges.’

P&O Ferries has resumed its cross-Channel ferry service for passengers some six weeks after the company dismissed almost 800 seafarers without notice on March 17.

Britannia Hotels, which has been voted Britain’s worst hotel chain on a number of occasions, has cut almost a third of its employees as it reported losses or near £10m.

Holiday parks operator Park Holidays UK has taken on two new sites, one in Scotland and the other in Cornwall.

MGM Resorts has reported Q1 numbers saying that sales bounced back after a slow start to Q1 as a result of the Omicron variant. MGM expects convention room business to reach 90% of 2019 levels by the end of this year.

Airbnb has reported Q1 results ahead of estimates saying that revenue rose to $1.51bn with adjusted EBITDA of $229m. The group’s shares rose by 6.5% in after-hours trading.

OTHER LEISURE:

Cineworld has updated on its legal action vs Regal Entertainment saying that it has ‘approached the Regal Litigation Parties to engage in discussions in relation to a further rescheduling of the Group’s payment obligations under the Unsecured Facility Agreement.

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Flutter Entertainment has updated on Q1. CEO Peter Jackson says ‘Flutter delivered a positive Q1 performance with revenue growth of 6%.’ He says ‘in the US we had another exciting quarter’ and says ‘outside of the US, our business performed well, adapting to the evolving regulatory and trading environment and reflecting the benefits of our global diversification.’ Flutter says ‘in the UK and Ireland we launched several new products in the quarter.’ He says ‘with our enlarged recreational customer base, winning position in the US and ongoing focus on sustainable growth, our business remains well placed for the future.’

FINANCE & MARKETS:

Markit yesterday released manufacturing PMI numbers for the UK showing a ‘mild growth acceleration’ from 55.2 in March to 55.8 in April. The flash reading was 55.3.

Manufacturers pointed to good new business intake and reduced delivery delays. Markit says ‘the outlook also remained positive, with almost 55% of companies expecting output to rise over the coming year. However, the overall degree of confidence slumped to a 16-month low.’

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Euro PMI numbers looked reasonable earlier in the week in themselves but Markit comments that ‘production trends look set to worsen. Future output expectations remain very subdued by historical standards, and the slowdown in new order growth is indicative of factory output across the eurozone falling in the coming months given existing inventory levels… Sharp price rises will meanwhile put further downward pressure on demand.’

Sterling weaker at $1.248 and €1.1864. Oil price down a shade at $106.14. UK10yr gilt yield up 5bps at 1.95%. World markets broadly better yesterday and London set to open up around 8pts as at 6.45am.

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