Langton Capital – 2020-07-17 – Social media, Tracker, rents, Pizza Express, Azzurri, Heineken etc.:
Social media, Tracker, rents, Pizza Express, Azzurri, Heineken etc.:A DAY IN THE LIFE: In common with many pet owners, we have various dog bowls around the garden to keep the mutt watered. And, whilst I wouldn’t want to drink out of them myself, they are kept clean relative to the mud around them but the dog, when he gets a chance, he seems to want to drink from almost any receptacle other than the ones provided. This because the aim seems to be to ingest as many dead insects, brown leaves and as much general muck as possible as he operates on the simple principle that it’s better to get stuff down his gullet and let his stomach decide. However, though his belly and points south do make unpleasant rumbling noises and worse for hours thereafter, he seems generally happy suggesting that there’s something to be said for the simple life. Anyway, it’s time to wake up and smell the caffeoylquinic, feruloylquinic and coumaroylquinic acids in the morning. We were absent on Twitter yesterday due to a combination of lack of manpower, inconsiderate demands from the VAT man for information and general tardiness and a reluctance to read stuff in brown envelopes on our part. Still, follow us on Twitter more usually at @brumbymark and let’s move on to the news: LANGTON PREMIUM EMAIL: Corporate Offer: Premium email just £295 (plus VAT) for a single subscriber or £495 (plus VAT) for multiple subscribers. Drop us a line to get involved. Retail Offer: Easy in, easy out. £30 per month (inclusive of VAT, £25 net) via PayPal. Email us for details or check here. ADVERTISE WITH US: Langton’s free email now carries adverts. See front page of website for today’s copy & contact us for further details. BOOK REVIEWS: SHAMING AND THE ROLE OF SOCIAL MEDIA: 17 July 2020: 1. JON RONSON: SO, YOU’VE BEEN PUBLICLY SHAMED: 2015: An investigation into the widespread demands for apologies, public mea culpas etc. 2. RICHARD SEYMOUR: THE TWITTERING MACHINE: 2019: How social media has driven change. Not all for the better. See Premium Email. PUB & RESTAURANT NEWS: Covid – the new (ab)normal: • Please let us know if you are passing on the VAT cut to customers. Anonymised comments, depending on whether we get any feedback, on Monday. • Coffer Peach Tracker. • The latest Coffer Peach Business Tracker, covering the week from 6 July to last Sunday, suggests that managed sites that were open recorded LfL sales down some 39.8% on the same week last year. Stating the obvious but closed units will be down 100%. This will clearly drag estates that are only partially open, down. • The Tracker says that 55% of the units owned by the contributors of data were open for eating and drinking inside, up from the 36% trading on the first weekend restrictions were lifted. • The momentum, to the extent that there is any after only a few days, is upwards. The first weekend was down 44.5% but the first full week from the Monday was down a lesser 39.8%. Pubs, bars and restaurants performed broadly in line with each other. Pubs were down 39.3%, bars were down by 42.9% and restaurants were down by 40.0%. • As regards the number of units re-opened, more pubs than restaurants are now trading at 70% against only 17% of restaurants. The former tend to have more outside spacer than the latter but restaurants should benefit from the cheap meal deals being offered (by the taxpayer) next month. The Tracker says that 42% of bars are open. • CGA says the UK, at 40% down, is better than some comparable overseas markets were at this early stage of re-opening. It says ‘the sector still has a long way to go, but this sets the benchmark against which the speed of recovery will be judged.’ CGA adds ‘operators told us that most would be taking a phased approach to reopening and we have seen this in the figures. The 70% of managed pubs in the first full week compares to just 42% over the first weekend, and although restaurants have been taking an even more cautious approach we know more will be open next week.’ • The outlook for rents: • Property agent Colliers has reported its belief that the Covid-19 pandemic will reduce casual dining spend in the UK by more than £20bn this year. It says the crisis ‘is triggering a fundamental restructuring of the sector and the property market which serves it.’ • Colliers says ‘operators have found themselves with overheads that are too high, margins which are too low and a target market which is nervous about a return to eating out on the scale which prevailed prior to the pandemic.’ This is certainly the case in the short term. Colliers says ‘the Government’s ‘Eat to Help Out’ scheme and VAT reductions are timely measured but to restore trading viability, support existing operators and woo new offers into vacant space, rents must inevitably fall and the sector has to target new and sustainable profit margins.’ • Colliers reiterates ‘as a consequence, we expect there to be a further significant reduction in rental values, and an increase in vacancy rates, together with a structural change in the way that casual dining property leases are structured.’ • Spoiled beer. • The BBPA has reminded publicans to ensure they have submitted applications to destroy their spoilt beer before the end of July, so they avoid charges from water companies. • SIBA has expressed disappointment at the scale of proposals to reform liquor licensing laws in Northern Ireland saying ‘small independent brewers in Northern Ireland want the freedom to sell their local beers directly to the public, to open taprooms and sell online. Sadly, today’s proposals fall far short of what small breweries need and mean they can’t meet the customer demand for a greater variety of locally produced beer.’ • The Independent Family Brewers of Britain says that its members have extended more than £20m in financial support to their pub tenants. Family brewer Hall & Woodhouse is among a number to cancel rent throughout the enforced closure. • Reuters has conducted interviews with operators who have expressed concerns that the dining out habits of UK consumers may have been changed by the Covid-19 lockdown. • Hong Kong has banned dine-in services at restaurants between 6pm and 5am. Company news: • Sky reports that around 75 Pizza Express restaurants could be permanently closed under plans being drawn up to enact a CVA. The company has c470 outlets in the UK and employs c8,000 people in this country. A thousand jobs could be lost. Current owner, Hony Capital, bought the company in 2014. • French chain Bistrot Pierre has been sold in a pre-pack administration. Six of its units are to close with 19 transferring to the new owner. KPMG has undertaken the transaction. • Various sources also suggest that Azzurri Group, owner of the ASK and Zizzi brands of Italian restaurants, could also announce a CVA, perhaps as early as today. This is likely to ‘tidy the company up’ ahead of a takeover deal. Perhaps 100 restaurants could shut. See Colliers’ comments on rents (above) in the light of such news. • Heineken reports a €500m write-down to asset values and says it could make a loss for the year. The brewer reports net revenues down 16.4 per cent on an organic basis as beer sales were impacted by worldwide lockdowns and the closures of restaurants and bars. • Domino’s Pizza Inc beat Wall Street estimates yesterday when it reported Q2 numbers. The company says that total revenue rose 13.4% to $920 million in the quarter ended 14 June with net income up 28.5% to $118.7 million. On a per share basis, the company earned $2.99, beating the estimate by 75 cents. International LfL sales were up by 1.3%. The consumer: • The ONS has reported that the number of people employed in the UK fell by 649,000 between March and June. It says, however, that the official number of people unemployed has not changed. That seems a bit odd. Presumably those 649,000 are not yet claiming the right sort of benefit to count as jobless. • The headline rate of unemployment is unchanged at 3.9% between March and May. • Analysts are reported to be looking at the number of hours worked (which will clearly correlate closely with wages paid and therefore spending power) and here there has been a sharp drop. • Genting (see below) is announcing redundancies as is Buzz (used to be Gala Bingo). These companies (and Pizza Express above) are jumping the gun and forgoing the £1,000 per capital retention bonus that employers have been promised. • The British Chambers of Commerce has said that 29% of UK employers plan to cut jobs in the next three months. • The ONS has reported that average weekly earnings, excluding bonuses, grew at an annual rate of 0.7 per cent in the three months to May, or around zero in real terms. • The NIESR says ‘pay growth in the private sector has fallen, but may flatten off for a time as workers return from furlough before weakening further in the second half of the year when unemployment is set to rise sharply.’ Other news: • Feedback. See also Coffer Peach Tracker above. • ARC Inspirations’ CEO Martin Wolstencroft says last week’s revenues were down only 15% on the same week the year before. He says ‘the pattern emerging is people are staying closer to home, avoiding public transport resulting in our suburban sites being in great growth.’ • Wolstencroft says ‘trade in big City centre sites being affected due to offices not being open, no corporate bookings, big party/celebration/graduation bookings and restricting capacity/numbers.’ He adds that he is ‘seeing stronger growth in our wet sales compared to food showing that customers really missed going out for a pint/wine/cocktail and to be in a social space to relax and the return of diners has been slower.’ • Forward booking (with non-returnable deposits) has been a smart move. A number of operators have been hurt by no-shows. • One operator is around 75% of last year, another 60% to 65%. These numbers are broadly in line with the Coffer Peach numbers with a better performance coming from operators with a community/suburban bias. • Please feel free to drop us a line. We’re particularly interested in hearing just who is, and perhaps more importantly who is not, passing on the VAT cut as well as comments on trading levels, how much is due to competitors being shut etc. • The Southbank Centre, Europe’s largest arts complex, says it may have to make two-thirds of its staff redundant due to the coronavirus crisis. HOLIDAYS & LEISURE TRAVEL: • STR reports that US hotels saw occupancy fall by 38% in the week to 11 July compared to last year with rates achieved down 27%. The resultant REVPAR is down by 55%. • The US CDC has said that cruises cannot operate in US waters until the end of September at the earliest. The previous ‘No Sail Order’ had been due to expire on 24 July but industry body CLIA had already extended this on a voluntary basis until 15 September. CLIA says ‘as reflected in today’s announcement, Clia and its member lines remain aligned with the CDC in our commitment to public health and safety. We are also pleased that the CDC has announced its intention to issue a request for information about the industry’s resumption of passenger operations.’ OTHER LEISURE: • Genting Casinos has cautioned that some 1,642 employees in the UK are at risk of losing their jobs. The company is clearly not going to stick around for the retention bonus in January. • Netflix has seen subscriber growth slow after the great rush to sign up that it saw as Covid-19 first hit global markets. The company added 10m new subscribers in the three months to end-July, down from the 16m that it had added in Q1. FINANCE & ECONOMICS: • See under The Consumer above for info on job losses and average earnings. • Sterling higher at $1.2565 and €1.1035. Oil down a shade at $43.21. UK 10yr gilt yield down 4bps at 0.13%. World markets weaker yesterday with Far East mixed in Friday trade. London set to open up around 10pts as at 7am. START THE DAY WITH A SONG: The song has been furloughed. See you on the other side. RETAIL WITH NICK BUBB:
• Today’s News: Today is the Homeserve AGM (at 10am in the HQ in sunny Walsall) and the company has issued a brief update beforehand, to flag that “HomeServe continues to expect to deliver a solid performance in FY21”, highlighting that membership renewal/cancellation trends have been unaffected by the pandemic and that “consumer demand for home improvements has recovered strongly across all businesses” (with Checkatrade.com having its largest ever number of consumer web visits in June at 2.76m, up nearly 60% on last year). The main news last night was that the key bosses of the embattled Boohoo had at last moved in to support the struggling share price yesterday, via the announcement at 3.42pm that Mahmud Kamani and Carol Kane had bought 7m shares between them at c214p. More modestly, AO.com has announced this morning that CEO and founder John Roberts has edged up his stake, by buying • News Flow Next Week: A quieter week kicks off at c8am on Tuesday with the latest monthly Kantar/Nielsen grocery sales figures. There are a couple of AGM’s (Ted Baker on Tuesday and Kingfisher on Friday), but the only company results scheduled are the Howden interims on Thursday, although it is possible the hapless Frasers Group (aka Sports Direct) could get its act together and announce its finals and we are still waiting for the delayed McColl’s interims. The timing of the widely followed monthly GFK Consumer Confidence index is not as predictable as it used to be, but the latest edition could be out first thing on Friday, along with the ONS Retail Sales figures for June. • BDO High Street Sales Tracker: The BDO High Street Sales Tracker today for medium-sized Non-Food chains flags that in w/e Sunday July 12th, BDO Fashion sales were down by c17% again (down 56% in Store sales and up 40% Online), but Total BDO LFL sales (including a handful of Homewares and Lifestyle retailers, as well as Fashion retailers) were down by only c6% (down c43% in Store sales, but up by c80% in Online sales).
• Trade Press: Drapers magazine is now monthly, but Retail Week magazine has been published today and the striking front cover is a close-up photo of “the business end” of a sewing machine, to illustrate the main feature article on “Fashion’s open dirty secret” (“Leicester sweat shop scandal rocks retailers”). The RW article flags that the problems in Leicester’s clothing factories go much deeper than just the link with Boohoo, but the Executive Editor has a column arguing that “Boohoo should cut ties with Leicester following revelations”. The main Editorial column looks at the help given to the hospitality industry in last week’s mini-Budget and thunders that “Retail has become the UK’s invisible industry”. RW also have a feature on the problems for the new Sainsbury CEO, Simon Roberts (“The triple threat facing Sainsbury’s new boss”), a profile of the new John Lewis boss Pippa Wicks, a TRADING STATEMENTS & EVENTS: Upcoming results are set out below: • 13 Jul 20 Pepsi Q2 numbers • 21 Jul 20 DP Eurasia H1 trading update • 22 Jul 20 Britvic Q3 • 23 Jul 20 C&C AGM • 27 Jul 20 Gregg’s H1 numbers • 28 Jul 20 Gregg’s H1 numbersa • 28 Jul 20 AG Barr trading update • 28 Jul 20 Starbucks Q3 numbers • 29 Jul 20 Wizz Air June quarter numbers • 29 Jul Premier Foods AGM & Q1 update • 5 Aug 20 Rank H1 numbers • 6 Aug 20 Naked Wines AGM • 7 Aug 20 Diageo FY numbers • 11 Aug 20 Domino’s Pizza Group H1 numbers • 19 Aug 20 Rank FY numbers • 2 Sept 20 Gym Group H1 numbers • 8 Sept 20 Fever Tree H1 numbers • 10 Sept 20 Morrison’s H1 numbers • 11 Sept 20 JDW full year results • 6 Oct 20 Restaurant Group H1 numbers • 9 Oct 20 JD Wetherspoon FY numbers • 26 Nov 20 Britvic FY numbers Many results are likely to be delayed. For information purposes, the results below were delivered at these dates last year. 2019 COMPARATIVE RESULTS: • 11 Jul 19 Dart Group FY numbers, 16 Jul 19 Fulham Shore FY numbers, 17 Jul 19 Nichols H1 numbers, 24 Jul 19 Marston’s Q3 trading update, 25 Jul 19 Fuller’s FY numbers, 25 Jul 19 Compass Group Q3 update, 25 Jul 19 Diageo FY numbers, 30 Jul 19 Gregg’s H1 numbers, 31 Jul 19 M&B Q3 update YESTERDAY’S TWEETS: • None yesterday LANGTON CAPITAL: Made in Hull. Like all the best things. Langton Capital is a financial advisory company providing insightful views on the UK and global leisure industry and the wider consumer sector in general. Subscription to the daily email is free. Unsubscribing is painless. We provide daily off the shelf and bespoke research. We have helped with transactions, fund-raisings, disposals and other corporate issues. We have a good ear, we are impartial, independent and not half bad at what we do. If you think that we could help you or your business, drop us a line. |
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