Langton Capital – 2020-09-30 – 10pm curfew, City Pub Co, CPG, Everyman, 888, Time Out etc.:
10pm curfew, City Pub Co, CPG, Everyman, 888, Time Out etc.:
A DAY IN THE LIFE:
Bit busy with RNSs today so we’d better move on to the news. Good weather today and then it’s back to autumn again. Follow us for real time developments on Twitter at @brumbymark:
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10pm CLOSING. U-TURNS, TRADING PATTERNS, PUBS v RESTAURANTS, CITY CENTRES v SUBURBS ETC. A blunt and unguided instrument that was not costed or modelled. Discuss. 30 Sept 2020:
• S4Labour says (see general email) that the curfew drove sales by 12.9%. It says ‘sales over Thursday to Sunday when comparing the week prior to the curfew with last week show a 10.9% decrease in food sales and a 14.7% decrease in drinks sales.’ See Premium Email
PUBS & RESTAURANTS:
10pm curfew – U turn on the cards?
• As we tweeted yesterday (see below) ‘U-turn on the 10pm? Not out of the question. There was no research on the way in, so why not? Might depend on whether this week’s quota of U-turns has been used up or not yet.’
• PM Boris Johnson appears to be under pressure from libertarian back benchers who believe that his lockdown measures are going too far.
• The PM will give a coronavirus press conference today’ He will be accompanied by the Chief Scientific Adviser Sir Patrick Vallance and the Chief Medical Officer Professor Christ Whitty. The news conference will be focused on the latest numbers.
• Yesterday, a record 7,143 people tested positive for Covid-19 (admittedly, testing numbers are much higher than they were in March and April) and 71 people died. The number of deaths is the highest since before the government tightened the rules to include only deaths within 28dys of a Covid test in early August.
• A U-turn isn’t being flagged. No10 says the meeting is to ‘provide an update on the latest statistics.’ It says ‘it is not because there is some specific set of new announcements to make.’
• London Union’s Jonathan Downey says ‘I think there is a very good chance the government will u-turn on the curfew because the catastrophic consequences, for infection control and for the economy, are self-evident.’ He says ‘they’ve made a mistake, which is clear to see and hopefully they’re big enough to admit it and then put things right. If it happens, it needs to happen in the next few days. We need to keep up the pressure and we need to stick to the data.’
Impact of the 10pm:
• The Evening Standard reported yesterday that ‘desperate West End business leaders today warned of mass closures of restaurants, bars and nightclubs within days after the new 10pm curfew led to a “catastrophic collapse” in weekend takings.’
• We’re hearing back that some pubs were a bit rattled by the drop in takings whilst many restaurants, particularly in suburban and residential areas, have performed relatively better.
• The Standard says ‘revenues at late-night bars in districts of London normally packed into the early hours, such as Soho and Shoreditch, were down by as much as 60 per cent, with restaurants typically seeing around 20 per cent less trade.’
• The Standard quotes operators as saying there was ‘total carnage on the streets of the West End as thousands of revellers were disgorged on to the streets at 10pm and queuing for drink at local supermarkets.’
• See also company comment below.
• The BBC reports shop workers are being put at greater risk of violence, verbal abuse and coronavirus infection by pubs shutting at 10pm. Union USDAW says shops could become very busy after 10pm with customers buying more drink. Greater Manchester’s mayor Andy Burnham said supermarkets, convenience stores and off-licences were now “packed out to the rafters” after closing time.
• S4Labour says that the ‘10pm curfew drops sales by 12.9%.’ It says ‘sales over Thursday to Sunday when comparing the week prior to the curfew with last week show a 10.9% decrease in food sales and a 14.7% decrease in drinks sales.’
• S4Labour says ‘the impact of the latest challenge is another stark reminder of the effect that Coronavirus is having on our industry. EOTHO is becoming a distant memory and the requirement to think of news ways to drive businesses forward is ever-more important.’ Sam Wignell, Chief Customer Officer at S4labour, commented ‘I have never spoken to so many customers who are having to look at new innovations to drive sales and keep their businesses compliant. It will be interesting to see how consumer behaviours change as we become accustomed to the new regulations.’
• PM Boris Johnson, whilst bemoaning the fact that he had just introduced a curfew, said ‘I’m afraid the hospitality sector is an obvious place of transmission of coronavirus.’ The data does not seem to back this up.
• Mindful of the move to 10pm closing, a Sky spokesperson comments ‘once we heard last week’s news, that the government were introducing the 10pm closing time for hospitality premises, we wanted to make sure that our customers could continue to make the most of their investment in live sport whilst the restrictions are in place. So, the Sky Sports team worked closely with the Premier League to secure a change to the 8.15pm Premier League kick-off times, moving them to the earlier start time of 8pm.’
• Sky says ‘at a time when stadiums are closed, this will ensure Sky Sports venues can continue to bring their customers the experience they’ve been missing, while adhering to the Government coronavirus restrictions. These new kick-off times came into effect last night (Monday 28 September) with Fulham hosting Aston Villa at 5.45pm and Arsenal’s trip to Liverpool which started at 8pm. This means that pubs will be able to show the matches until the final whistle.’
Other Covid-19 issues:
• Trade associations the BBPA and UK Hospitality alongside the BII have organised a letter, signed by over 100 hospitality businesses in the UK, that has been send directly to the Prime Minister, Boris Johnson, warning that he must personally do more to help them.
• The letter says without additional and urgent support many businesses ‘will not “survive this bleakest of winters” and hundreds of thousands of jobs will be lost.’ It says that, even prior to the latest COVID-19 restrictions, half of all hospitality businesses did not believe they would survive beyond the middle of next year. The 10pm curfew and other changes ‘have made this fight to survive even harder.’
• The letter says that the Chancellor’s winter support package “does not go nearly far enough for our imperilled sector.” It continues, “without an immediate review of the support on offer to pubs, restaurants and wider hospitality businesses, many will be lost for years to come.”
• Signatories include Adnams, Admiral Taverns, Brakspear, Fuller’s, Greene King, Hall & Woodhouse, JD Wetherspoon, Marston’s, M&B, Pizza Express, Punch Taverns, Shepherd Neame & Wadworth.
• SIBA says ‘the brewing industry has not received the level of financial support from the Government that the hospitality sector has, and that support hasn’t stopped job losses in hospitality. From November 2020, The Job Support Scheme replaces furlough, and whilst the support for small businesses and the hospitality sector is welcomed, it doesn’t change the situation for the many people in the brewing industry who have been made redundant in recent months, and those who will be in the weeks ahead.’
• Gregg’s has said that staff at around a half of its outlets will need to cut their hours or lose their jobs. CEO Roger Whiteside said “about 50%” of its shops have staffing that was too high for customer demand.
• The City Pub Group has reported H1 numbers to 28 June saying that ‘since reopening, revenues [have been] strong at around 80% of previous levels for pubs re-opened, generating positive cashflow.’
• The company says its ‘estate [is] being appraised for alternative use (e.g. sale of excess space for residential use)’ in a further attempt to raise cash. The company has acquired a 14% equity stake in Mosaic Pub and Dining Group.
• Unsurprisingly, the H1 results are impacted by over 3 months of closure. The company announces revenue of £12.1 million (H1 2019: £27.1 million) with an EBITDA loss of £(1.2) million (H1 2019: profit £3.6 million). The adjusted loss before tax this year was £3.5 million (H1 2019: profit £1.9 million).
• City Pub Group chairman Clive Watson says ‘trading since reopening, given that there have been no sporting events or large bookings and given reduced opening hours, has been encouraging. This excellent performance has delivered profitable, positive cashflows allowing us to maintain our strong financial position.’
• City Pub Group says ‘since announcing our 2019 results in June, the Group has been able to re-open 37 of its 48 pubs.’ It says ‘our business is resilient with pubs that are modern and attractive to our customers.’ It adds ‘our balance sheet is extremely strong, heavily asset-backed and following the equity raise of £22m the Group only has approximately £13m of net-debt.’ City Pub Group concludes ‘whilst the trading environment is exceptionally challenging and ever-changing, our strong financial position means that the Group will emerge safely, rebuild quickly from the crisis and be in a position to take advantage of the undoubted opportunities that will arise, allowing us to resume our successful growth path.’
• Compass Group has updated on FY trading saying that group revenues are down 19% for the full year (down 44% in Q3 and down 36% in Q4). The company says ‘we are reviewing our contract portfolio and at this preliminary stage we estimate, subject to audit, that we will have to impair around £100 million of contract assets.’
• Compass concludes by saying ‘we are pleased with our progress in the quarter and that the business is now at breakeven at a trading level. We continue to proactively manage the business, reducing our costs, rebuilding our margins and investing to strengthen our competitive advantages.’ The company says ‘despite the current challenges, when looking further ahead, we remain excited about the significant structural market opportunity globally, and the return to organic revenue growth, margin improvement and returns to shareholders over time.’
• Time Out Group has reported H1 numbers saying that its ‘results reflect a period of significant disruption as a consequence of the enforced closure of leisure venues and travel restrictions in response to the COVID-19 pandemic.’
• Time Out says ‘prior to the escalation of the COVID-19 pandemic the Group was performing in line with our expectations.’ It says H1 shows a revenue decline of 24% to £20.3m with an operating loss of £13.6m (2019: loss £8.6m). the group placed stock during the half year to raise £47.1m ‘to strengthen the Company’s balance.’
• Time Out says ‘the duration and scale of the continued impact of COVID-19 and the measures required to curb it are unknown. However, the Group has taken funding, cost and operating initiatives to ensure it emerges stronger from this period of disruption.’ CEO Julio Bruno says ‘our Time Out Markets closed in mid-March but our teams continued to innovate resulting in the launch of our Time Out Market app, which facilitates contactless transactions, order & pay at table, takeaway and delivery.’ Mr Bruno says ‘the combination of a successful fundraising, a cost-reduction programme and further strategic initiatives will support Time Out as it emerges from this period of COVID-led disruption with a stronger global brand, a larger audience, and a higher operating margin. ‘
• Sky reports that Burger King is preparing to close a number of its UK restaurants as part of a restructuring process triggered by the coronavirus pandemic. It says the operator has ‘drafted in advisers from AlixPartners to review options for one of its subsidiary companies, which directly owns approximately 25 of the chain’s outlets.’ A CVA is possible but a pre-pack administration is thought more likely. Sky reports that Alasdair Murdoch, Burger King UK chief executive, has been a vocal critic of policy-making towards the hospitality sector since the start of the COVID-19 crisis.
• Oakman Inns comments on its decision to discount early-week meals. It says ‘we’re leading the way in safe hospitality environments.’ CEO, Dermot King says the EOTHO scheme ‘was a success when the Government launched it and our guests have appreciated it too, so it made total sense for us to continue in September. By extending the offer into October it allows 6 ‘pods’ of friends and families to meet up safely outside their homes and give themselves a much-needed treat in these uncertain times.’
• Brewer and pub operator Robinsons says that it will continue to acquire new sites.
• T&R Theakston ltd has announced that Colin Wood who, alongside his Co-Executive Director Simon Theakston ‘masterminded the buy-back of Theakston’s from Scottish & Newcastle plc (S&N) 17 years ago’, will retire from the company in November.
• Tesco has set itself the target of quadrupling its sales of meat-alternative proteins by 2025.
• Charlie Gilkes of The Inception Group, tweets ‘hospitality is facing death by a thousand cuts. The support being offered is nowhere near proportionate to the restrictions being placed upon it. Hearing of more and more previously more than viable businesses going under- just tragic.’
• Lounger’s Alex Reilly tweets ‘More lies! The gov say they introduced the 10pm curfew because the one in Belgium was successful at reducing cases. Small issue – there wasn’t a national curfew in Belgium!’
• UKH’s Kate Nicholls says ‘hospitality venues in the North East will struggle to remain viable with these tough new restrictions – the squeeze on revenue was already intense and additional support is now vital for them to survive.’
HOTELS & LEISURE TRAVEL:
• ABTA has warned that public confidence in overseas travel has been badly hit by “chopping and changing” government quarantine restrictions
• Kuoni is reported set to cut the size of its store network with eight stores where leases are coming to an end, to be closed.
• Caesar’s has officially made its bid to buy Wm Hill.
• Walt Disney is to lay off 28,000 employees, mostly at its US theme parks.
• 888 Holdings has reported H1 numbers showing revenue up 37%. The company says ‘during the third quarter to-date 888 has continued to trade ahead of the Board’s expectations with average daily revenue 56 % higher than the prior year.’
• 888 CEO Itai Pazner says ‘888 has performed very well throughout the first half of 2020 with robust year-on-year growth in revenue and Adjusted EBITDA of 37% and 56% respectively. This outcome reflects the Group’s continued strong levels of customer acquisition, general consumer trends towards increased use of online services especially during the COVID-19 lockdown period and 888’s relentless focus on product leadership.’
• Everyman Media Group has reported h1 results saying that revenues fell to £15.0m from £28.9m in the prior year. The operating loss was £12.3m against an operating profit of £1.6m in the same period last year.
• Everyman ‘began [the] phased reopening of venues from 4 July, with all venues opened by 21 August.’ It says ‘we had a very strong start to the year with good revenue growth, illustrating that our model was gaining further traction. Covid-19 has halted that growth abruptly.’
• Everyman says ‘despite of the challenging current environment, we retain our confidence in people’s appetite to be entertained. And that film accounts for a large proportion of that appetite. People are fundamentally sociable, and we remain confident that, when it is appropriate, people worldwide will return to cinema, and specifically to Everyman.’ It concludes ‘we are confident in the Everyman brand, and importantly our ability to navigate whatever challenges the next twelve months may pose.’
FINANCE & MARKETS:
• The Institute for Fiscal Studies has reported that Covid-19 costs could force chancellor Rishi Sunak into having to decide between fresh austerity, higher taxes or more borrowing.
• Mortgage approvals rose to their highest level in around 13 years in August on the back of ‘pent up demand’ and the stamp duty holiday.
• The BBC reports that Britain’s car industry risks losing out even if there is a post-Brexit trade deal with the EU. It says ‘car parts from Japan and Turkey used in the UK will not be treated as British, so some exports may see higher tariffs.’
• Sterling lower at $1.2842 and €1.0941. Oil down at $40.66. UK 10yr gilt yield 2bps lower at 0.18%. World markets mixed with London set to open down around 40pts.
RETAIL WITH NICK BUBB:
• Today’s News: Mighty Boohoo has brushed aside the recent criticisms of its management and UK supply chain by reporting strong interims for the six months to end August, with revenue up by 45% and EBITDA up 48% and, “with momentum continuing into September”, it has edged up its cautious full-year guidance (which won’t give the bears much to chew over…). Little Topps Tiles has also edged up its full-year guidance (for the financial year just ended), after reporting decent 16.5% LFL sales growth in the last 13 weeks in its pre-close update. And Studio Retail (the Online value retailer formerly known as Findel) has also reported strong trading, with product sales up by 30% over the last 6 weeks.However, the heavily-indebted home-shopping business N Brown has reported that its Q2 sales (to the end of August) were still down by 12%.
TRADING STATEMENTS & EVENTS:
Upcoming results are set out below:
• 30 Sept 20 Compass Group FY update
• 30 Sept 20 Everyman Media H1 numbers
• 30 Sept 20 City Pub Group H1 numbers
• 30 Sept 20 Time Out H1 numbers
• 30 Sept 20 888 Holdings H1 numbers
• 1 Oct 20 Pepsi Q3 numbers
• 1 Oct 20 Constellation Brands Q2 numbers
• 6 Oct 20 Restaurant Group H1 numbers
• 8 Oct 20 Restaurant Group General Meeting
• 9 Oct 20 JD Wetherspoon FY numbers
• 15 Oct 20 Fulham Shore FY numbers
• 20 Oct 20 Marston / Carlsberg CMA backstop date
• 22 Oct 20 Gear 4 Music trading update
• 27 Oct 20 Whitbread H1 numbers
• 29 Oct 20 YUM Q3 earnings update
• By 31 Oct 20 DP Poland H1 numbers
• 3 Nov 20 DART Group AGM
• 10 Nov 20 Premier Foods H1 numbers
• 17 Nov 20 Gear 4 Music H1 numbers
• 19 Nov 20 Dart Group H1 numbers
• 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:
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
• U-turn on the 10pm? Not out of the question. There was no research on the way in, so why not? Might depend on whether this week’s quota of U-turns has been used up or not yet.
• Unintended consequences. 10pm curfew. Earlier & faster drinking. At home drinking, drinking, singing & dancing in the streets, crowded Tubes, bus stops & taxi ranks & serious damage to hospitality. On the plus side? Not clear as no research was done ahead of implementation
• Some operators suggesting trade, already down c15% from pre-Covid levels, has taken another 10% hit. Running at 75% of last year. See Gregg’s today. RTN report on Tues. Could 75% of normal be the new normal? Hopefully survivable. But for how long without help?
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