Young & Co, Fever Tree, longer term spending trends, tariffs & other:

A DAY IN THE LIFE:

I think out dog is size-prejudiced.

Or it may be a more sophisticated mental, not-worth-the-bother calculation but, either way, she won’t bat an eye if a spider crosses her path.

Or any other insect, for that matter, and she’s pretty indifferent to frogs, field voles, mice and sparrows, robins, blue tits and great tits but, if a pigeon violates her airspace, it’s a different matter.

And rabbits and squirrels, well, they’re toast.

Or they would be if a 50kg dog that runs like an undulating sofa with a lot of cushions on it could catch them but, as always, she lives in hope.

Anyway, enough of that. On to the news:

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PUBS & RESTAURANTS:

Services sector:

S&P’s UK service sector purchasing managers’ index suggests there was a ‘renewed upturn in UK service sector output’ in May, ‘helped by improving confidence among clients and fewer reports of tariff concerns.’ The PMI rose to 50.9 in May, above the 50.0 neutral level and ahead of the April figure of 49.0…

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Demographic trends:

Younger drinkers drink less. Startups.co.uk notes that ‚Brits are drinking less and swapping late nights for early morning food and drink experiences, and it’s having a big impact on the already-pessimistic hospitality sector….’

Spending review. Some disappointments to come. There is only so much money to go around and the BBC quotes chancellor Rachel Reeves as saying that has said ‘not every department will get everything that they want next week’. She says a spending squeeze is the ‘product of economic reality’.

The Grey Pound. The chancellor has hinted, however, that the winter fuel payments will be back in place in time for this winter. The payment, is worth up to £300 and, whilst it is meant to help cover the cost of heating, the funds could be redirected by some recipients to the benefit of the hospitality industry.

YOUNG & CO – FULL YEAR NUMBERS:

Young & Co has this morning reported full year numbers and our comments thereon are set out below: Headline numbers. Young & Co reports revenues up by 24.9% to £485.8m inclusive of the City Pub Group acquisition. Adjusted PBT is up by 4.5% at £51.6m but adjusted EPS is some 1.8% lower at 61.84p. The total dividend for the year is up by 6.0% at 23.08p. YNGA reports that its NAV per share is virtually unchanged at £12.47 (FY24: £12.48). The shares stand at a 22% discount….

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FEVER-TREE – AGM TRADING UPDATE:

Fever Tree has updated on trading in Q1 and our comments are set out below: Headline numbers: Fever Tree reports that ‘trading in-line with expectations, with good progress being made in the US following the announcement of our strategic partnership with Molson Coors.’ It says ‘we remain comfortable with consensus expectations of low single digit Group revenue growth at constant currency and c.12% Group Adjusted EBITDA margin for FY25.’ In the US, the company ‘continues to deliver strong momentum…with underlying brand performance well ahead of the competition.’ In the UK, Fever-Tree has ‘retained its number one position across both channels’ and ‘in Europe, we’ve seen good momentum across multiple markets, including The Netherlands and France, but a continuation of more muted sales in Germany.’

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COMPANY NEWS:

Caffè Nero has reported ‘very strong’ Q3 results. It says group sales growth was 11% year on year in Q3 with group sales up 12.6% in the first three-quarters of the financial year to date. The company adds that it has ‘continued its global roll-out, opening 15 stores in Q3.’ It adds that Will Stratton-Morris, CEO in the U.K. for Caffè Nero, has stepped down from his current position and from the U.K. Board as of May 31st 2025. He took up a new Group role as Chief Business Development Officer from the first of this month. The company reports that the ‘business in the UK will be led by Gerry Ford-Group CEO, Ben Price-Group CFO, and Glyn House-CN UK Managing Director. The process to appoint a new CEO for the UK Caffè Nero business is well underway, and an appointment will be made in the months ahead….’

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The Telegraph points out that since reaching an all-time high in December 2021, Diageo’s share price has ‘plummeted by 51pc’. It adds that ‘shares in the alcoholic beverages company have been on a seemingly constant decline and have shown little sign of mounting a sustained recovery.’ Nonetheless, the paper remains supportive.

Electric Shuffle, the cocktail and high-tech shuffleboard bar, officially opens the doors to its new King’s Cross venue this Friday, 6th June. The unit, located ‘close to the vibrant Coal Drops Yard’, is the third Electric Shuffle to open in London, the fifth in the UK and the ninth globally….

The Cornish Bakery reports that it has generated ‘9% like-for-like growth since the start of 2025 and record-breaking Easter and May Bank holiday performances.’

Remy Cointreau has reported full year numbers saying that sales fell by 18% to €984.6m. Gross margin slipped from 71.2% to 70.6% and the company reports net profits down 34% at €121.1m. EPS is 249c (excluding non-recurring items) against 384c in the prior year…

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HOLIDAYS & LEISURE TRAVEL:

WH Smith yesterday reported on the strength of its travel business saying that its ‘UK division is growing and performing strongly’ with revenue in the 13 weeks to 31 May 2025 up 5% and LFL revenue up 6%. The company reports ‘we continue to invest in the quality of our UK store portfolio.’

FINANCE & MARKETS:

S&P’s services PMI for the Eurozone fell to 50.2 in May from 50.4 in April.

The British Chambers of Commerce suggests that UK GDP growth is expected to be 1.1% for the whole of 2025, 1.2% in 2026, and 1.5% in 2027. IT says that CPI inflation is expected to be 3.2% in Q4 2025, and 2.2% and 2.0% in 2026 and 2027. The BCC adds that ‘the interest rate is expected to be cut to 4% by the end of 2025…’

Sterling higher at $1.3546 and €1.1876. Oil lower at $64.75. UK 10 year gilt yield down 5 basis points at 4.59%. World markets mixed yesterday & London set to open around 3 points lower as at 6.30am.

RETAIL WITH NICK BUBB:

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