Langton Capital – 2023-01-25 – JD Wetherspoon, XP Factory, EasyJet, inflation, services, London & more:
JD Wetherspoon, XP Factory, EasyJet, inflation, services, London & more:A DAY IN THE LIFE: I know straight lines can be a bit boring, but I do sometimes wonder why so many things have to be curved or sloping. A bar restaurant company of our acquaintance shelled out a not inconsiderable sum on a number of splendid looking lean-on tables, for example. They looked trendy but, as they curved in towards the middle, they subsequently claimed between 5 and 10 drinks per evening on a regular basis. Of course top-heavy wine and Peroni glasses didn’t help but, since the tables didn’t even have a drain hole, they seemed to be a little impractical unless you aspired to house a number of alcoholic goldfish around the bar or were trying to pilot the idea of a shallow, rather disgusting punch bowl concept. And my bete noire at the moment is my computer stand, which is sloping when it should be flat, and which is home to various stacks of coins, thumb drives, a tub of paper clips and a cup full of pencils all of which move outwards, as predictably as the geyser Old Faithful, at the rate of around 1cm per day. I tell myself I’ll catch them before they plunge to oblivion but of course I don’t and that’s why the carpet around my screen is home to a number of well-trodden in one and two-pence-pieces, misshapen paperclips and sundry other office essentials. On to the news: LANGTON EMAIL: The Free Email is now written in short form. Extended versions of many stories (after the ellipses) are in the Premium Email. Reply to this email if you would like to upgrade. Prices for the Premium at time of writing are £345 for one subscription, £595 for multiple, both plus VAT. Or sign up for easy in, easy out monthly option HERE https://www.paypal.com/cgi-bin/webscr?cmd=_s-xclick&hosted_button_id=87YUG2Z5W7PSN UTILITY BILLS: Question: Thanks to those who replied yesterday. But here we’re repeating the question that will have a lot of different answers: what are you paying for your gas and electric? It will depend very much of if and when the contract was fixed but it would be very interesting to know and we can summarise the results later in the week. Please let us know. JD WETHERSPOON – Q2 & H1 UPDATE: JD Wetherspoon has today updated on H1 trading and our comments thereon are set out below: Revenues: JDW reports that ‘in the 25 weeks to 22 January 2023, like-for-like sales were 13.1% higher than the same period a year ago and 0.7% lower than the same period immediately before the pandemic – the 25 weeks to 26 January 2020.’ It says ‘like-for-like sales in the last 12 weeks were 17.8% higher than the same period a year ago and were 2.0% lower than the pre-pandemic period.’ Sales have accelerated on the back of recovery, the World Cup and soft comps due to Omicron last year. The company reports that it outperformed in December saying sector LfL sales in December were up 15.0% but ‘Wetherspoon’s like-for-like sales in December were +21.3%.’ Costs: JDW reports ‘costs in the hospitality industry are far higher than the pre-pandemic period, especially in respect of labour, food, energy and maintenance.’ There is no detail as to resultant margins. Cashflow, balance sheet, capital spend: The company reports that ‘free cash flow is expected to be substantially in excess of profits, as a result of a cash inflow of approximately £170 million from the October 2022 sale of interest rate swaps, as previously announced.’ It reports ‘as at 22 January 2023, the company’s net debt was £745 million, approximately £60 million lower than the company reported at… • See premium. Reply for sample or to upgrade. Single £345, multiple £595. Limited time offer: PayPal monthly £25 + VAT. Easy in, easy out. PUBS & RESTAURANTS: Inflation: CGA and Prestige Purchasing have updated on food price inflation and say ‘December 2022 marks the 11th consecutive month of double-digit inflation after a year of intense inflationary pressures for foodservice businesses. Year-on-year inflation in the food basket of the Index—excluding beverages—was even higher at 24%…’ • See premium. Reply for sample or to upgrade. Single £345, multiple £595. Limited time offer: PayPal monthly £25 + VAT. Easy in, easy out. Wealth Club analyst Nicholas Hyatt claims that that inflation rates looked ‘to have peaked in October last year’ after continuing to slow in December. The investment analyst did warn that ‘the cost of living crisis is set to continue…10.5% inflation may be better than we’ve seen recently but is still eye-watering by most standards.’ Services sector: S&P Markit has released flash PMI readings for the UK in March suggesting that the services sector hit a 24-month low of 48.0 (Dec 49.9) with manufacturing at 46.6 (Dec 44.4) and the composite reading at 27.8 (Dec 49.0) also a two-year low. S&P says ‘January data highlighted a sustained downturn in UK private sector business activity. Although only modest, the overall rate of decline accelerated to its fastest for two years…’ • See premium. Reply for sample or to upgrade. Single £345, multiple £595. Limited time offer: PayPal monthly £25 + VAT. Easy in, easy out. Demographics matter: Levelling up currently in reverse gear. The CEBR comments on levelling up, saying that it is currently moving backwards. It says ‘we highlighted this in our Forecasting Eye from last November, which found that the output per capita gap between richest and poorest regions is set to widen notably over the coming five years…’ • See premium. Reply for sample or to upgrade. Single £345, multiple £595. Limited time offer: PayPal monthly £25 + VAT. Easy in, easy out. CEBR reports that London residents saw their real wages adjusted for inflation slip by £9 a week compared to a year ago during Q4 2022. However, this was a lot better than in the rest of the UK, with real wages sliding by £19 on average… Late night industry: The NTIA reports that a third of nightclubs have been lost since before the pandemic with CEO Michael Kill saying ‘that independent businesses across the night-time economy and hospitality sectors are at the greatest risk under the current crisis.’ More than three quarters of the 4,800 closures in 2022 occurred in the second half of the year. Other news: Technavio research suggests that the global Irish whiskey category will have grown by$1.54bn between 2021 to 2026. Growth in market share is set to be concentrated between Asahi, Becle SAB, Brown Forman, Diageo, G and J Distillers, Pernod Ricard, Suntory, Teeling, West Cork Distillers and William Grant and Sons. COMPANY NEWS: The Restaurant Group’s Wagamama brand is set to open its first Florida location next month. The operator currently has six U.S. restaurants, with three in New York City, two in Boston and one in Atlanta… • See premium. Reply for sample or to upgrade. Single £345, multiple £595. Limited time offer: PayPal monthly £25 + VAT. Easy in, easy out. Crussh has been acquired for £640k by Keep Business Ltd in a pre-pack administration. Keep is owned by Tolladine Estates Ltd (33%) of which Simon Waterfield and Ralph Congreve are shareholders. These individuals are minority shareholders and secured creditors of Crussh parent company Krush Global. Lucky Saint, the alcohol-free beer brand, is taking over the old site of The Mason’s Arms in Marylebone, marking its first on-site outlet in central London. The site will be serving up both alcoholic and non-alcoholic beverages and will open in March. Dash Water has completed a £9m fundraising round, with the seltzer brand planning to shake up the soft drinks market. Private investment firm McWin has announced that it is to acquire majority stake in leading German restaurant brand L’Osteria to further drive European growth. It is investing alongside L’Osteria founders, Klaus Rader and Friedemann Findeis, and management, led by CEO Mirko Silz, to ‘support the continued success and expansion of the Company both in the DACH region and in multiple new and existing European markets.’ The transaction values the business at nearly €400m. HOLIDAYS & LEISURE TRAVEL: EasyJet has updated on Q1 trading. CEO Johan Lundgren reports ‘we have seen strong and sustained demand for travel over the first quarter, carrying almost 50% more customers compared with last year…. • See premium. Reply for sample or to upgrade. Single £345, multiple £595. Limited time offer: PayPal monthly £25 + VAT. Easy in, easy out. “In summary, we expect to see our winter loss reduce significantly over the first half compared to last year. This will set us firmly on the path to delivering a full year profit, where we anticipate beating the current market expectation enabling us to create value for customers, investors and the economies we serve.” A poll of Luton airport passengers has found that more than a third of people are willing to forgo eating out and ordering take-aways to afford a holiday this year… A survey on behalf of RSM UK has found that 36% of people are planning to take a short break of one to four days in the UK over the next 12 months, and that 28% are planning to take a long stay break of five or more days in the UK… A Roomex survey has found that two of the top concerns for UK-based travel managers in 2023 are rising hotel prices and room availability. Nearly two thirds of travel managers are expecting their travel bookings to rise in 2023. UK Inbound has reported that over half of UK inbound travel businesses report bookings for the first quarter of this year at the same level or higher than in 2019… Eurostar Group announces its new brand following the merger between Eurostar and Thalys rail operators. CEO Gwendoline Cazenave said ‘for the next chapter, Eurostar will be the backbone of sustainable travel across European borders. We will have the largest international high-speed network in western Europe’. Stansted airport is reported to be looking to recruit 1,000 new staff ahead of the summer season. Belfast International Airport is also set to hold its biggest ever jobs fair later this week. Eurostar trains are said to be carrying 30% fewer passengers in order to avoid ‘bottlenecks’ in stations. Eurostar is running 14 services a day between London and Paris, compared with 18 in 2019. OTHER LEISURE: Boom Battle Bar and Escape Hunt games company XP Factory has updated on trading for its full year to end-December saying that this has been a ‘transformational year…’ • See premium. Reply for sample or to upgrade. Single £345, multiple £595. Limited time offer: PayPal monthly £25 + VAT. Easy in, easy out. Ticketmaster claims it has learned ‘valuable lessons’ after the sale of Taylor Swift’s 2023 US tour was disrupted by software attacks. Live Nation president Joe Berchtold apologised ‘to the many disappointed fans as well as to Ms Swift’. Microsoft sales slowed in Q4 last year and were up just 2% on the year before, the smallest quarterly increase in over six years. Microsoft said revenue at Xbox fell 12% with spending on Windows down 39%. FINANCE & MARKETS: UK government borrowing overshot estimates in December, driven higher by interest payments and the cost of energy support… • See premium. Reply for sample or to upgrade. Single £345, multiple £595. Limited time offer: PayPal monthly £25 + VAT. Easy in, easy out. The latest CBI Industrial Trends Survey, which covers the quarter to January, reports that ‘cost and pricing pressures in UK manufacturing remain high, but shows signs of easing’ and manufacturers overall ‘reported stable output volumes’… • See premium. Reply for sample or to upgrade. Single £345, multiple £595. Limited time offer: PayPal monthly £25 + VAT. Easy in, easy out. The Telegraph reports that the percentage of cash buyers in the residential property market has risen to its highest level in eight years. Around 40% of buyers used cash. The paper suggests that higher mortgage rates have put off borrowers and have given cash buyers an even larger advantage over those needing to persuade a lender to support them. Sterling weaker at $1.2317 and €1.1304. Oil price lower at $86.55. UK 10yr gilt yield down 7bps at 3.29%. World markets mixed yesterday with London set to open down around 4pts as at 6.30am. 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