Mobility, inflation, cutbacks, footfall, BOWL, SNAP & other:

A DAY IN THE LIFE:

You can be pretty sure there’s no human involved when your bank spends 95p to send you a four page letter reporting that you once again have a nil balance on a dormant account.

It seems like 100gm paper and one page, of course, is ‘intentionally left blank’ lest someone holds the letter up to the sun and is shocked by all those zeros meaning that the other two blank pages, presumably, are left blank by accident.

And then the fourth page, the money shot, has a zero opening balance, zero movements and, yes, your maths is correct, a zero closing balance.

This all, at first glance, seems a little bit wasteful.

Add in the fact that I’ve got to either shred or burn the paper and then put the envelope in the recycling, take same to the tip etc and the whole exercise seems a little odd.

Although, if you insist on believing that most people know what they’re doing, it could be a sophisticated version of the helicopter money tried early in covid, money intentionally thrown at the economy in the hope that some of it will stick. On to the news:

LANGTON EMAIL:

The Free Email is now written in short form. Extended versions of many stories are in the Premium Email. Reply to this email if you would like to upgrade.

See Twitter for in-day comment. Let us know if you would like an example of the Premium Email or to comment on the new format.

Prices for the Premium are £345 for one subscription, £595 for multiple, both plus VAT. Reply to this email to order & request invoice.

Or sign up for easy in, easy out monthly option HERE|

QUESTION OF THE WEEK?

Contributions, questions (and even more so, answers) warmly welcomed.

What will win out, premiumisation or the consumer hunt for value? Or will the market polarise between the two?

PUBS & RESTAURANTS:

Inflation & the cost of living crisis:

This is still all over the news and that isn’t likely to change for some time. Kantar data shows that grocery price inflation has now hit the highest level since May 2009, with supermarket prices up 7% over the last four weeks.

The fact that Restaurant Group and SSP both yesterday cautioned on the impact of inflation has made headlines. The Mail says ‘London-listed SSP and The Restaurant Group each updated investors on Tuesday on their plans to tackle soaring costs as the war in Ukraine exacerbates a rise in food, commodity and energy prices.’

Recessionary fears: Klarna, the Swedish buy now pay later firm, plans to cut around 700 staff as it warned of a ‘likely recession’. CEO Sebastian Siemiatkowski said ‘a tragic and unnecessary war in Ukraine unfold, a shift in consumer sentiment, a steep increase in inflation, a highly volatile stock market and a likely recession’ meant that business plans had to be changed.

Jonathan Brearley, CEO of Ofgem, has told MPs that the energy price cap is set to rise to around £2,800 in October, up from its current £1,971. He says the rise in energy prices is a ‘once in a generation event not seen since the oil crisis in the 1970s.’ Such a rise would leave a large number of consumers short of spending money.

The BBC has picked up on the suggestion that the government will announce help for families as soon as tomorrow. Channel Four, which is under the threat of privatisation, has suggested that the timing will be partly intended to deflect attention from the release of the Sue Gray report, expected today. The BBC says ‘Downing Street denied the announcement was timed to distract from Sue Gray’s report into lockdown gatherings.’

• See premium. Reply to this email to upgrade.

What are consumers cutting back on?

Meanwhile, YouGov has conducted a poll to look at just what householders are cutting back on. It says that ‘clothing tops the list, with 44% saying they had been forced to cut back on their clothing purchases since November.’

• See premium. Reply to this email to upgrade.

Working from home & other labour issues:

This is also perhaps unlikely to change (materially) anytime soon. The ONS reports that 84% of workers want to split their time between home and the office after the pandemic, with more than a third spending at least part of their time working from home this spring.,,

PwC reports that almost one in five UK workers say they are likely to change jobs in the next 12 months as they seek better pay and job satisfaction. Younger and highly skilled workers were most likely to be unhappy in their jobs or seeking a raise. Some 60% also said they would prefer to work fully or mostly from home.

• See premium. Reply to this email to upgrade.

Footfall:

CGA & Wireless Social have updated on the relative busyness of UK cities and have suggested that ‘food and drink sales in Britain’s cities [are] back in growth as workers and visitors return.’ It says that the Vibrancy report ‘highlights the strength of cities led by Glasgow and Birmingham.’ It says that London have moved up the rankings ‘as workers and tourists return.’

The survey concludes that ‘restaurants, pubs and bars in Britain’s major city centres are achieving solid growth in sales from pre-COVID levels’ and it adds that ‘nine of the 10 cities recorded higher sales over the four-week period than in the same period in 2019. Bristol tops the list of most vibrant cities, and sales growth was also above 8% in Manchester, Birmingham and Glasgow.’

• See premium. Reply to this email to upgrade.

Bloomberg’s Pret Index suggests that ‘London’s financial districts have filled up again, driving weekday business to cafes and sandwich shops – except on Fridays, that is.’

• See premium. Reply to this email to upgrade.

Discounts:

Pizza Express still 50% off for club members (terms apply) and 35% off for non-members. Bella Italia offering 50% off mains.

Drink sales & supply issues.

The CGA On Premise Measurement service shows that vodka sales were 24% higher during the first quarter of this year versus the same period in 2019, totalling £516m, and taking 2.8 percentage points share of the spirits category since the start of the pandemic. Gin and whiskey lost 4.1 and 2.7 percentage points of share respectively.

Dunns Food and Drinks reports that glassware prices have risen by 80% over the past year, as production of bottles is energy intensive. As a result, stocks have tumbled and glassware shortages could soon be felt by the UK beer industry.

Other news:

Regarding footfall; Shaftesbury states that it is continuing to improve across its estate, being largely comprised of domestic visitors, workers and residents. Footfall from international tourists is also increasing and is expected to continue to grow through the summer.

COMPANY NEWS:

The MA reports that Greene King Pub Partners is set to increase prices of beer and cider on average by 4.7%. A Greene King spokesperson said ‘we’re seeing significant inflation across our industry with rising energy prices contributing to significant cost pressures in supply chains.’

HOLIDAYS & LEISURE TRAVEL:

US Customs and Border Protection is increasing the fee it charges for ESTAs from $14 to $21, set to take effect on 26 May.

UKinbound reports that inbound tourism to the UK could recover to ‘anywhere between 50% and 75% of 2019 levels’ but that a range of both supply and demand side issues, from recruitment to visas, were likely to slow down recovery.  The luxury and US markets appear to have recovered their confidence and holidaymakers there are likely to travel to the UK, although the important Chinese market is unlikely to return until 2023.

The Elizabeth line opened to passengers yesterday. It was originally meant to open in December 2018, but suffered a series of delays and ended up costing almost £19bn.

Stefan Schulte, CEO of Fraport, claims that he has an ‘optimistic view’ of the next few months for Frankfurt and its other airports. The group operates 31 airports around the world, including Slovenia and Greece in Europe.

Railway workers have voted to go on national strike later this year. The RMT says ‘members want a decent pay rise, job security and no compulsory redundancies’.

OTHER LEISURE:

Hollywood Bowl has reported H1 numbers to end-March saying that revenue is up by36.3% vs H1 2019 at £91.3m (ex the benefit of lower VAT). The group says that adjusted EBITDA is £39.2m (stripping out the VAT benefit) and adjusted, pre-IFRS16 profit before tax is £31m vs a profit in H1 2019 (pre-covid) of £21.1m. Bowl says that ‘strong pent-up demand [is] driving profit and free cash flow’ and adds that it is reinstating the dividend at 3p per share.

• See premium. Reply to this email to upgrade.

Separately, Hollywood Bowl announces the acquisition of Canadian bowling business, Teaquinn Holdings Inc. for a ‘total consideration of CAD 17 million (approximately £10.6 million) to be satisfied by an initial payment of CAD 13.6 million in cash and a deferred consideration of CAD 3.4 million.’ Teaquinn has 10 bowling centres and a B2B supplier and installer of bowling equipment. The Acquisition ‘will be funded from the Group’s existing cash resources and is expected to be earnings accretive for the year ending FY2023.’

Snapchat yesterday warned that it was seeing a decline in advertising spend. The group’s shares fell by nearly 40% in early trading. The co says ‘since we issued guidance on 21 April 2022, the macroeconomic environment has deteriorated further and faster than anticipated.’

FINANCE & MARKETS:

S&P Global / Markit’s Flash UK PMI Composite Output Index has come in at 51.8 for May, down from 58.2 in May. The number is still suggesting expansion, but it is a 15-month low. S&P says ‘UK private sector firms signalled a sharp slowdown in business activity growth during May as escalating inflationary pressures and heightened geopolitical uncertainty acted as constraints on customer demand.’

S&P / Markit’s Flash Services PMI for May showed ‘the greatest loss of momentum’ with a drop to 51.8 from 58.9 in April. It adds that ‘many businesses in the travel, leisure and events sector still commented on strong growth conditions due to a rapid recovery from pandemic restrictions.’

Re inflation, S&P says ‘cost burdens increased rapidly in May, with input price inflation at private sector firms hitting a fresh survey record.’

• See premium. Reply to this email to upgrade.

Government borrowing – at £18.6bn – was some £5.6bn lower in April this year than it was in the same month last. This may give the chancellor some room to provide help to households. Interest payments were £4.4bn.

Sterling down at $1.2538 and €1.1797. Oil price up at $114.89. UK 10yr gilt yield down 8bps at 1.895. World markets mixed yesterday. London set to open up 66pts as at 6.30am.

FORTHCOMING NEWS:

Hollywood Bowl reports H1 numbers today and tomorrow, we hear from Ted Baker and Wickes hosts its AGM. DP Eurasia will update on its first 4mths’ trading. AG Barr’s AGM is Friday. See also Trading Statements on the right.

RETAIL WITH NICK BUBB:

• Nick is taking a well-earned break, back later in the week.