Cost of living, Covid, Carnival, JDW, Pret, Grind, 2023 outlook & other:

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A DAY IN THE LIFE:

Right, it’s the last working day and a half day at that, at least as far as the London Stock Exchange is concerned.

And that will leave this afternoon and tomorrow to get all the present shopping done, to get the food and drink in, visit the relatives, send out cards etc before the main fixture, no, not Christmas Day itself but rather the earth-trembling Hull City vs Blackpool fixture on Boxing Day.

So, secure in the belief that we have our priorities rightly-ordered, it only remains to us to wish all readers a very Merry Christmas and a Happy New Year. On to the news:

PUBS & RESTAURANTS:

Cost of living:

Rail fares in England are to rise by up to 5.9% from March, the Department for Transport has announced. This is well below inflation but it is the second highest hike on record.

Covid:

Numbers are rising, which isn’t good. The BBC reports that ‘thousands of people who had Covid-19 at the start of the pandemic are still finding that certain foods, toiletries and even their loved ones smell repulsive…’

• Parosmia is apparently a distorted sense of smell and, for some, it has been a feature of life after Covid. Some sufferers have said things smell ‘of death’ whilst the BBC quotes another as saying the Christmas Dinner smells of mould.

• For Langton after covid, everything tasted of beer. Seriously. Far less bad than mould, of course. Aldi Weiss Bier. Coffee, tea, everything tasted of it. Presumably it was the best bits of my life flashing before my eyes – or my taste buds. Not bad but it did get a bit samey after a month or so of nothing else.

Outlook for 2023:

We think there’s a good chance that it will end better than it starts. That a) isn’t saying much but nor b) is it a certainty.

Restructuring specialist Cork Gulley says ‘the UK economy is expected to have entered a recession in the second half of 2022, after a 0.2% quarterly GDP contraction was measured in Q3 [this has now been upped to minus 0.3%] and a 0.3% decline is forecast for Q4. GDP is expected to continue declining in 2023, with a 1.6% contraction expected for the year as a whole…’

• Cork Gully says ‘the recession will be driven by a reduction in demand as consumers cut back spending amid the cost-of-living crisis, as prices for essentials rise at a rapid pace.’

• This doesn’t sound good for the hospitality industry but now may not be the time to go into the subject in any detail. Cork Gully says ‘between Q3 2021 and Q3 2022 there was a 39% rise in the number of insolvencies in the UK, to stand at a quarterly total of 5,773. Furthermore, the latest monthly data shows that there were 2,167 insolvencies across the UK in November 2022, the highest number since March.’

• The accountant says ‘despite the improving business conditions expected towards the end of 2023, the quarterly number of insolvencies are still expected to stand at around 6,000 in Q4, which is far above the quarterly average of 4,600 seen between 2010 and 2019.’

• It says ‘businesses in consumer-facing services are expected to see the highest number of insolvencies in 2023, as they see demand decline amid the cost-of-living crisis. This could also impact city-centres with large retail and hospitality industries.’

Follow accountants RSM are similarly downbeat saying 2023 is expected to be an exceptionally tough year for the UK economy. It says the squeeze on household real incomes will intensify as tax rises kick in and rising interest rates reduce discretionary spend…

• RSM says ‘most of the pain has been delayed until after the next General Election. But they won’t help the economy much in the short term either.’ It says the recession peak to trough should be around 2.5%, which is significantly less than that seen after the Global Financial Crisis.’

• RSM suggests that the unemployment rate could rise from its current 3.6 per cent to around 5 per cent by the end of 2023. This would suggest around 200,000 job losses.

Train strikes:

Bloomberg reports that last week’s rail strikes cut sales in pubs and restaurants to half of pre-pandemic levels. Kate Nicholls, CEO of trade group UKHospitality, said takings were 46% lower.

COMPANY NEWS:

J D Wetherspoon will close three more pubs in the new year, bringing the total number of its pubs on the market to 42. The three pubs are The Postal Order in Worcester, The Willow Grove in Southport & The Edmund Halley in Lewisham.

Pret A Manger is to shut or rebrand 75% of its Veggie Pret stores, leaving just two open in Soho and Shoreditch..

• Pret said the decision was driven by the fact vegetarian options were now widely available at all its stores, giving customers less reason to seek out the specialist shops. The company says ‘our focus now is to keep growing our extensive vegetarian and vegan offer in every Pret shop, so we’ve decided to convert or close some of our current Veggie Prets.’ It adds that it ‘will continue to develop new vegan and vegetarian options to be rolled out to our classic Prets.’

• Pret had operated 10 Veggie Prets and it had intended to convert all of its acquired EAT stores into vegetarian outlets. Those plans were scrapped during the pandemic.

Grind reported turnover of £8.3m in the year to 30 April 2022, up from £2.1m in the prior period. The 13-strong operator said its High Street bounced back well the business generating EBITDA of £200,000, having made losses in previous years…

• Founder and CEO David Abrahamovitch comments ‘given the challenges the business and the broader industry faced during the year, management is satisfied with the strong and profitable trading results delivered by the business.’

HOLIDAYS & LEISURE TRAVEL:

Research from travel debit card Currensea shows that half of regular skiers say they can’t afford their annual winter ski trip this year. The data showed that 57% were exploring more cost-effective destinations for a ski trip and 60% were looking at booking a shorter trip.

Carnival Corporation reports a record $5.1bn in customer deposits in Q4 2022, with the company stating that there has been a ‘measurable lengthening in the booking curve’…

• The world’s largest cruise firm is suggesting that customers are booking further out. It has reported a net loss of $1.1bn for the fourth quarter and low occupancy levels. However, CEO Josh Weinstein remained upbeat about the company’s pandemic recovery, saying the firm was ‘accelerating’ to ‘strong profitability’ across its fleet.

• The company reports ‘the momentum [seen earlier in the year] has continued into December, which bodes well for 2023 overall as more markets open for cruise travel, protocols continue to relax, our closer to home itineraries play out, our stepped-up advertising efforts pay dividends and our brands continue to hone all aspects of their revenue generating activities.’

The Times reports that Schroders €260m deal for the assets of the Hoxton hotels in Paris & Amsterdam works out to be nearly €1 million per room. The Times says that this is thought to be the biggest per-room price ever paid in Europe for a hotel without suites.

FINANCE & MARKETS:

UK GDP fell by a revised 0.3% (was 0.2%) in Q3. The ONS reports that households’ savings rose markedly during the quarter and spending declined. That’s ultimately what rising bank rates are meant to achieve…

• The numbers show UK GDP still 0.8% below its pre-coronavirus pandemic level, revised from the previous estimate of being 0.4% below. The UK is lagging behind other G7 countries.

RETAIL WITH NICK BUBB:

Today’s News: There is again no substantial Retail company news out this morning, apart from the usual share buyback announcements, but Superdry enlivened a dull day by announcing a pre-close trading update at 2.30pm yesterday afternoon, to coincide with news of a new financing facility. Group revenue increased by 3.6% in the 26 weeks to 29 October, driven by strong 14.4% growth in owned Stores and Superdry also reported a “positive” start to the Autumn/Winter season. Julian Dunkerton, the Founder and CEO, said in the statement that : “I’m pleased with the performance of the business over the first half…I am also encouraged with how we have started the second half, which has seen our biggest ever week for Ecommerce orders driven by a return to record levels of jacket sales over the Black Friday period and good momentum through the recent spell of colder weather”. Superdry also announced
that it has agreed a loan facility of up to £80m, with the specialist lender Bantry Bay Capital, and although this will be expensive to use (at base rate + 750bps), Superdry emphasised that the revised facility is “operationally less complex to manage and covenant light”. And investors were pleased with the news, with the shares jumping up by 16.6%.

Today’s Press: According to the invaluable Guardian morning email briefing, the Guardian’s front page headline today is “NHS bosses urge PM to intervene to avoid war of attrition on strikes”. The Daily Mirror flags “King’s Xmas safety fears”, adding that the “traditional royal walkabout” is under review because of possible protests. “We WILL have a merry Xmas,” says the Daily Express, adding that after a “year of misery”, Britons are “determined to splash what’s left of their cash” for the sake of the season. “Got a cough or cold? Stay away from grandparents” is the advice, says the Times, “as flu cases rise”. The Financial Times has “Badenoch ⁩ joins EU critics in attacking ⁦Biden green subsidies as protectionist”. Yesterday, by the way, the FT led with the news that the likes of Google and Meta/Facebook are ditching many of their big office plans in London: “US tech giants’ retreat
from London raises heat on commercial landlords”.

News Flow After Christmas: Next week will be very quiet, with Bank Holidays on Monday and Tuesday, although the stockmarket will be open on Wednesday, Thursday and Friday morning. The week after, as we move into January, kicks off with another Bank Holiday, but Wed Jan 4th should bring the latest Kantar monthly grocery sales figures, whilst the first scheduled Christmas trading news comes on Thursday Jan 5th, via updates from Next, B&M and Greggs.