Langton Capital – 2020-08-18 – Evictions, JDW, Tasty, Carnival, EOTHO, Diageo & other:
Evictions, JDW, Tasty, Carnival, EOTHO, Diageo & other:
A DAY IN THE LIFE:
As mentioned before, the quote ‘there is nothing new under the sun’ (Book of Ecclesiastes) is a) correct and b) 3,000 years old.
Hence, with the fact that people don’t really change in mind, I picked up Robert Hare’s 1993 book, Without Conscience, to remind myself what the eminent psychologist, the father of research into psychopaths, not just the nasty nutjobs with a maniacal grin and a blood-drenched hammer but also your everyday liars, cheats and swindlers, had had to say on the matter.
And Mr Hare’s observations remain pertinent today. His bottom line is basically, beware dishonest, superficial, twinkly-eyed, lying charmers, but one bit stood out.
He said that psychopaths’ brains don’t function like those of most people. They are bitty and incomplete. They have the Scrabble letters but find the words difficult.
If you mention something emotional like love, babies or Hull City, they will think in discrete segments and then try to cobble something together. They then lie without compunction but, because they aren’t as clever as they like to think they are, these bitty comments contradict each other, perhaps even in the same sentence.
And this leads them to overuse hand gestures, eye contact, facial movements, give meaningful stares etc because, think if you tried to give directions in schoolboy French, it’s tricky for them to pull everything together when they don’t really understand the ‘language’.
All of which was starting to remind me of someone. Inconsistencies, easily disprovable ‘facts’, repetition, denial, lots of gestures with his tiny, little hands etc.
Anyway, bit deep. On to the news & follow us on Twitter at @brumbymark.
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LANDLORDS, EVICTIONS & THE 30 SEPT END TO THE CURRENT MORATORIUM: Are landlords chomping at the bit to evict? No, we thought not. 18 Aug 2020:
• The current moratorium on evictions ends 30 September. There are calls to extend it. Others say, what’s the point? See Premium Email
CURRENT TRADING INCLUSIVE OF THE EAT OUT TO HELP OUT SCHEME: The scheme, sadly, is now more than halfway through. 18 Aug 20:
See Premium Email
PUB & RESTAURANT NEWS:
Footfall – West End.
• New West End reports that footfall in London’s West End was lower week-on-week. The dog days of August are upon us but, at this early stage in the recovery, it would be nice to see more sequential increases. See Premium Email.
Eat out to help out:
• The Centre for Economic & Business Research has said that ‘the number of people dining out during the week has surged this month since the introduction of Eat Out to Help Out, bringing in hundreds of millions of pounds for Britain’s suffering hospitality sector.’
• The CEBR says ‘the scheme has given the country “a much-needed boost towards normality”. It estimates that shops, pubs and restaurants in London missed out on £600 million of sales each month as people stayed at home because of the pandemic. However, it expects that figure to drop to £178 million this month, with Eat Out to Help Out “partially responsible” for the improvement.
• The CEBR adds ‘the goal [of the scheme] isn’t just for people to eat in restaurants, but also to get back into the habit of socialising, making non-essential journeys and being surrounded — albeit not too closely — by groups of strangers. It is arguably this push towards normality that will prove the biggest benefit of the scheme.’
Overcrowding, Track & Trace, JDW etc.
• The Guardian reported on ‘concerns that JD Wetherspoon is failing to prevent overcrowding in pubs in its 900-strong chain.’ It says ‘concerns about poor social distancing by customers in Wetherspoon pubs followed a surge in visitors during recent hot weather.’
• The paper quotes staff as saying that units were ‘rammed’ and cites customers standing within one metre of each other at the bar. Last week, chairman Tim Martin called on scientists to produce any evidence that they may have that the virus spreads in pubs.
• The Daily Record in Scotland has reported that some of JD Wetherspoon’s pubs were failing to take details from customer for Track & Trace purposes. Taking details is not mandatory in England, though Scotland’s First Minister, Nicola Sturgeon, is making it compulsory north of the border.
• The Guardian quotes JDW as saying ‘the absence of music, for example, and high food sales attract all age groups. In the good weather of recent weeks, there may have been a higher than usual number of young people in pubs generally.’ It adds ‘the company is making strenuous efforts to comply with the regulations around social distancing. Whereas it is not possible to create an entirely risk-free environment, the company will continue to modify and improve its systems in response to Covid-19 and will review the procedures at any individual pub which is the subject of complaint.’
• Separately, JDW Chairman Tim Martin has said that the UK should have followed the same approach taken by Sweden and should not have entered lockdown. Some others have pointed out that Sweden has one of the highest Covid-19 death rates in Europe. Martin suggests that the policies implemented by the UK government have damaged the economy, caused mental health problems, disrupted education and stopped people from being treated for other serious illnesses such as cancer.
• Martin says ‘following the science has been particularly hazardous in the pseudo-medical area of dietary advice, for the last half century at least. The main advice since the 1970s has been to avoid or minimise consumption of butter, cheese, eggs and full fat milk – unfortunately, it would seem, that advice has turned out to be utter cobblers too.’
Overseas visitors vs staycations:
• Foodservice analyst Peter Backman comments that ‘of all the issues arising out of Covid, one of the most critical for the foodservice sector has been restrictions on travel. This has massively affected the numbers of visitors from overseas. But it hasn’t stopped there. Travel on London’s underground is down to 24% of pre-covid levels because “locals” (otherwise known as commuters and shoppers) are less likely to travel by tube.’
• Backman says ‘fewer travellers have impacted a multitude of places, from restaurants Wetherspoons chairman Tim Martin today launched a blistering attack on the government over its handling of coronavirus, saying the UK should have followed the Swedish model.
• The absence of travellers has certainly influenced the decisions of F&B companies as to which units to reopen and when. Units at travel hubs may be amongst the last to reopen.
• On the plus side, Backman says that staycations are on the up. This is no doubt the case, but the beneficiaries from more staycations, Aldi and local pubs, may not be the same as the losers from a lack of overseas visitors and reduced travel by Brits overseas (the West End, London in general and the outbound travel industry in general). Some sectors of the economy
• Business in these areas will remain dismal until travel reaches its former levels. Meanwhile, theatres have only just been allowed to reopen and both demand and the supply of reopened venues may remain depressed over the medium term.
Strange shape, this V.
• ‘A V-shaped recovery’ paints a picture in people’s minds.
• But that doesn’t have to be an accurate picture. A V-shaped recession implies downward and upward moves of similar lengths and gradients. This does not look to be the case. Stock market moves tend to be sharper on the way down than the way up and the same may be (and often is) the case when it comes to recessions.
• The Observer reported over the weekend that 7m people in the UK remain on furlough. It’s looking as though one side of the V-shaped recover could be flatter than the other. Tick-shaped? Or Victorian bath shaped? At least it’s not L-shaped.
• Tasty has updated on trading saying that ‘the process of significantly reducing the workforce by more than 30% is substantially complete.’ It adds ‘the phased reopening schedule has continued, principally to take advantage of the Government’s ‘Eat Out to Help Out’ scheme and reduced VAT.’
• Tasty adds ‘the Board expects to have up to 48 sites trading in August, which will represent approximately 86% of the estate. Most of the remaining restaurants are not planned to re-open for the foreseeable future and some of the restaurants which are currently open may need to close again should they not reach expected trading levels.’
• Tasty says ‘the Company has experienced a positive level of sales this month to date, temporarily supported by the increase in people staying in the UK this summer, Government initiatives and pent up demand following the relaxation of lockdown restrictions since March, however, the Board expects future trading to remain challenging.’
• It concludes that it ‘remains extremely cautious regarding trading in September and is continuing to explore ways to minimise costs and to strengthen the balance sheet including the possibility of new debt and/or equity capital. Discussions are also continuing with landlords and trade creditors to reduce current and future liabilities.’
• Compass Group has announced the appointment of Ian Meakins as non-executive Chairman and a Director of the Company. It says ‘Ian will join the Board on 1 September 2020 and will take over as Chairman on 1 December 2020 when Paul Walsh steps down from the Board.’
• Diageo is to acquire Aviation Gin and Davos Brands for up to $610m. It says ‘Aviation American Gin is an American style gin crafted with a blend of botanicals, with subtle juniper notes, delivering a smooth balanced flavour profile.’ It adds ‘the brand has thrived under the leadership of its majority owner, Davos Brands, and the creative direction of co-owner Ryan Reynolds, who will retain an ongoing ownership interest in Aviation American Gin. Through this acquisition, Diageo is also acquiring the other brands in the Davos Brands’ portfolio consisting of Astral Tequila, Sombra Mezcal and TYKU Sake.’
• Diageo CEO Ivan Menezes says ‘we are delighted to announce this transaction, which supports our participation in the super premium gin segment in the United States. The acquisition of Aviation American Gin and the Davos Brands portfolio is in line with our strategy to acquire high growth brands with attractive margins that support premiumisation. We are confident that Aviation American Gin will continue to shape and drive the growth of super premium gin in North America and we are looking forward to working with Ryan Reynolds and the Davos Brands team to accelerate future growth.’
• Domino’s perhaps feeling the strain in missing out on EOTHO. Co offering 25% off orders over £25. Back to ‘normal’?
• Dominos in the US is hiring 20,000 new workers
• US Pizza Hut franchisee NPC International, which filed for Ch11 bankruptcy protection last month, has said that it could dispose of a quarter of its c1,200 Pizza Hut restaurants.
• Redefining failure as success? NPC says ‘this deal provides tremendous benefits to NPC and its stakeholders by positioning the NPC Pizza Hut business to drive operational excellence through a streamlined portfolio and allowing for new development to rebuild and modernize Pizza Hut assets in viable trade areas, which will strengthen and benefit the broader Pizza Hut system and its loyal customers.’
• Former McDonald’s CEO Steve Easterbrook has denied allegations of lying and inappropriate workplace romances. Mr Easterbrook is being sued by his former employer, which is seeking to recover millions that it paid him in compensation and severance.
• Liz Truss has said she will get the US to bin its tariffs on Scottish whisky.
• Brewhouse & Kitchen has reported EOTHO sales growth of 115% over the first six days that the scheme has been in operation. See also Premium Email.
• Starbucks franchisee GK Coffee, which has eight units in the South East, has secured a CBIL loan.
• Italy has ordered the wearing of masks in public spaces between 6pm and 6am ‘in places where there is risk of assembly’.
• South Africa has lifted the ban on selling alcohol (for the second time) and said restaurants and bars could re-open.
• Tesco is to introduce free delivery.
• Reporting v analysis. Two different things. Reporting (of most stories) is here for free. Please consider subscribing to Premium Email for analysis.
• 72 workers have tested positive for Covid-19 at Bakkavor’s Nottinghamshire dessert factory.
• Morrison’s is to remove plastic bags in favour of paper alternatives.
HOLIDAYS & LEISURE TRAVEL:
• Carnival Corp has ‘detected a ransomware attack that accessed and encrypted a portion of one [of the company’s] brand’s information technology systems. The unauthorized access also included the download of certain of our data files.’
• The company says ‘promptly upon its detection of the security event, the Company launched an investigation and notified law enforcement, and engaged legal counsel and other incident response professionals. While the investigation of the incident is ongoing, the Company has implemented a series of containment and remediation measures to address this situation and reinforce the security of its information technology systems. The Company is working with industry-leading cybersecurity firms to immediately respond to the threat, defend the Company’s information technology systems, and conduct remediation.’
• Carnival says it ‘does not believe the incident will have a material impact on its business, operations or financial results.’
• Jet2.com is to make 102 pilots redundant
• Ryanair is to cut September & October capacity by 20%. It says bookings have ‘notably weakened’ in recent days.
• EasyJet is to close its bases at Stansted, Southend and Newcastle
• Club Med has said its all-inclusive ski resorts are in a “better position” financially than some other operations. They may be more ‘resilient’ but they will also be benefiting because the winter ski season is further away than is the summer 2020 season for other tour operators.
• Booking.com offering 10% off hotel bookings.
• Gfinity has updated on the performance of Gfinity Digital Media. It says ‘Gfinity continues to grow its user base, whilst increasing its lucrative US audience and adding new partnerships including Steel Series and TopCashBack.’ It says ‘Gfinity Digital Media is one of the fastest-growing revenue streams for the Company’ adding ‘overall, Gfinity Digital Media is expected to generate revenues of £2 million in the financial year ending 30 June 2021, supporting the Company’s target of moving into profitability in Q1 of 2021.’
• Gfinity says ‘Gfinity Digital Media continues to go from strength-to-strength. Our sites have become popular destinations for the latest news on a number of games including FIFA, Fortnite, Call of Duty and Minecraft.’ It concludes ‘we are well positioned to leverage the opportunities that will come with the new console launches and AAA game releases towards the end of this year.’
• The Telegraph reports ‘Cineworld is facing a court battle after one of its landlords launched legal action against the cinema chain over unpaid rent.’
• Electronic Arts is to rebrand its subscription game services under the EA Play brand name.
• Angry Birds owner Rovio Entertainment has reported a 160% jump in Q2 adjusted operating profit over the period of the lockdown.
FINANCE & ECONOMICS:
• Auctioneers have reportedly seen a sharp rise in the sale of bankruptcy properties
• Sterling up against the dollar at $1.3136 but down fractionally versus the Euro at €1.1042. Oil higher at $45.27. UK 10yr gilt yield down 3bps at 0.22%. World markets better in the UK & Europe yesterday but mixed in the US. Far East lower today & London set to open down around 20pts.
START THE DAY WITH A SONG:
The song has been furloughed. See you on the other side.
RETAIL WITH NICK BUBB:
• Today’s News: A quiet day for company news has been enlivened by an unscheduled trading update from Marks & Spencer, flagging that recent business has been better than expected, but that it still wants to cut 7000 jobs in HQ and store management (hopefully on a voluntary redundancy basis). Food sales have been up 2.5% in the 13 weeks to Aug 8th (up 10.6% LFL, allowing for Travel closures etc), with Clothing and Home sales down 38.5%, despite 42% Online growth and solid trading in out-of-town stores.
• News Flow This Week: The latest monthly Kantar/Nielsen grocery sales figures (for the 4 weeks to Aug 8th/9th) will be out at 8am today, followed at lunchtime by the Asda/Walmart Q2 results. The much-delayed final results from the hapless Frasers Group (aka Sports Direct) then come out on Thursday, along with the AO.com AGM. First thing on Friday we then get the widely followed GFK Consumer Confidence index for August, as well as the ONS Retail Sales figures for July…
TRADING STATEMENTS & EVENTS:
Upcoming results are set out below:
• 18 Aug 20 ASDA trading update
• 20 Aug 20 Tasty AGM
• 21 Aug 20 GfK consumer confidence numbers
• 2 Sept 20 Gym Group H1 numbers
• 8 Sept 20 Fever Tree H1 numbers
• 8 Sept 20 DP Eurasia H1 numbers
• 10 Sept 20 Morrison’s H1 numbers
• 10 Sept 20 Rank FY numbers
• 30 Sept 20 Compass Group FY update
• 30 Sept 20 Everyman Media H1 numbers
• 6 Oct 20 Restaurant Group H1 numbers
• 9 Oct 20 JD Wetherspoon FY numbers
• 3 Nov 20 DART Group AGM
• 24 Nov 20 Compass Group 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:
15 Aug 19 Vianet trading update, 22 Aug 19 Playtech H1, 22 Aug 19 Sportech H1, 28 Aug 19 Loungers FY results, 28 Aug 19 Fulham Shore AGM, 30 Aug 19 Gear 4 Music AGM, 6 Sep 19 Greene King AGM, 10 Sep 19 888 Holdings H1, 12 Sep 19 Comptoir H1, 19 Sep 19 Diageo AGM, 19 Sep 19 City Pub Group H1, 19 Sep 19 Saga H1, 23 Sep 19 Brighton Pier Group FY, 24 Sep 19 TUI Group FY trading update, 24 Sep 19 DP Poland H1, 24 Sep 19 Ten Entertainment H1, 24 Sep 19 Hotel Chocolat FY, 24 Sep 19 AG Barr trading update, 24 Sep 19 Tasty H1, 25 Sep 19 Shepherd Neame FY, 26 Sep 19 Time Out H1, 26 Sep 19 M&B FY trading update, 26 Sep 19 SSP FY update. 27 Sep 19 Escape Hunt H1
• Fears (or hopes) that working from home could be semi-permanent. Good for gardeners but puts the wind up office landlords, councils, Pret, coffee shops and the like. This is a decision crossroads workers didn’t know we’d be at. Yet, here we are.
• Hugh Osmond (& probably others) looking to raise ‘blank cheque’ funds to invest in opportunities. Smacks of South Sea Bubble but timing probably right. Some others with tarnished reps might find fund raising trickier
• #EatOutToHelpOut has been a real boon to the industry. Has smoothed sales over the week. Some evidence of weekend cannibalisation (after little in week one) as punters may ultimately run out of spending money. Good while it lasts, nonetheless.
• The quote ‘there is nothing new under the sun’ (Book of Ecclesiastes) is a) correct and b) 3,000 years old. Bob Hare has been studying psychopaths for 50yrs. His observations remain pertinent. Basically, beware dishonest, superficial, twinkly-eyed charmers
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