Langton Capital – 2020-10-05 – Cineworld, 10pm trading, sales levels, footfall & other:
Cineworld, 10pm trading, sales levels, footfall & other:A DAY IN THE LIFE: So, the Mighty Hull City and PM Boris Johnson appear to differ in that Hull City has been promoted to a division in which it looks good whilst the opposite seems to have happened to Mr Johnson. Hull has played four, won four, without conceding a goal whilst Mr Johnson’s team has not troubled the opposing goalkeeper and its own net is looking somewhat well-used. The ball’s been hammered home, been fumbled through the goalie’s legs and a number of crazy back-passes have put the opposition on the scoresheet. But maybe that’s a feature of careers in general. If you know which buttons to press, you can get promoted to the level at which you get found out. Although maybe that’s unfair. It could be that the U-turns, debacles and various stop-go policies are a part of some master plan that we are unable yet to comprehend. Anyway, it’s Monday and the week’s stretching out before us so let’s get on to the news. 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CURRENT TRADING: The 10pm curfew in particular and shifts in confidence brought about by increased regulations in general have impacted trading levels. 5 Oct 2020: See Premium Email PUBS & RESTAURANTS: Current pub & restaurant trading: • Sharp downturn last week. Food doing less badly than wet sales. • The latest Coffer Peach Business Tracker has suggested that the 10pm curfew and lockdowns have ‘put [the] pub and restaurant recovery into reverse.’ It says ‘sales across Britain’s managed pub, bar and restaurant groups were hit hard in the last full week of September as new restrictions on hospitality were introduced. Like-for-like sales across the sector were down 22.8% on the same week last year, with drink-led pubs down 28.6%.’ • The Tracker says that 88% of sites are now open. It adds that ‘total sales for the week across the sector were 27.7% below 2019 levels, but were crucially 8.2% down on the previous week, reflecting the immediate impact of new restrictions including the 10pm curfew, local lockdowns, table-only service and limits on numbers socialising. Drink-led pubs saw a 15.3% week-on-week decline.’ • August had looked good but CGA says ‘sales had started to slip back in early September after the Eat Out To Help Out initiative ended, but looked like they were levelling off, before this latest round of restrictions were announced.’ • CGA says ‘rising consumer confidence and government support gave managed groups a major lift in August, but the curfew and other restrictions are a severe setback to progress, and these numbers highlight the difficulties facing groups this autumn.’ • Drink-led businesses have performed worse than food led outlets. CGA says that ‘bar businesses saw like-for-likes down 47.6% for the week beginning September 21, with week-on-week sales falling 13.8%.’ Food-focused businesses ‘did relatively better. Pub restaurants and food-led pubs saw like-for-like sales drop 19.3%, with week-on-week trade down 11%. Restaurant groups were more stable, with week-on-week sales slightly up 1.9%, and like-for-likes 14.3% down on the same week last year.’ • The number of reopened units stand at 71% for group-owned restaurants, 96% for drink-led pubs and 97% for pub restaurants. CGA says ‘restaurants have been slower to return since lockdown than pubs, and many sites will not reopen at all. But their week-on-week sales growth suggests they might be better placed to sustain sales through the period of curfew than drink-led businesses, especially if they can encourage people to eat out earlier in the day.’ 10pm curfew: • The Telegraph says that PM Boris Johnson ‘must call time on his farcical 10pm pub curfew.’ It says ‘the scientists didn’t ask for it and it’s hurting the hospitality industry – all so ministers can claim to be “doing something”.’ • The Guardian, rare that these two should agree, says that the curfew is harming the sector. It says ‘the curfew, many feel, is not the result of due diligence or common sense, but classic political fudge.’ • The Independent quotes Sage member Professor Graham Medley as saying that ‘scientists advising Boris Johnson “never discussed” the 10pm pubs curfew widely criticised as inadequate to curb the pandemic.’ Medley says ‘I never discussed it or heard it discussed.’ • The IEA says ‘fatigue [with the rules] is setting in – especially among the young – and there is a sense of consent slipping away.’ It says ‘restoring trust requires politicians to own up to their mistakes. The 10pm closing time for pubs has been socially and economically damaging and has probably been counterproductive in the fight against Covid-19.’ • PM Boris Johnson has said that the Eat Out to Help Out scheme, which subsidised millions of meals in August, appeared to have helped spread Covid-19. He said ‘I think it was right to reopen the economy.’ On the Andrew Marr show, he said ‘I also think that it is important now, irrespective of whether Eat Out To Help Out you know, what the balance of there was, it unquestionably helped to protect many… there are two million jobs at least in the hospitality sector.’ • Mr Johnson says ‘it was very important to keep those jobs going. Now, if it, insofar as that scheme may have helped to spread the virus, then obviously we need to counteract that and we need to counteract that with the discipline and the measures that we’re proposing.’ Industry has been arguing against a stop-go approach for some time. Other trading issues: • The BBPA has produced a report entitled “UK Beer and Pub Sector: Coronavirus Scenarios Report” in which it models three scenarios on how Coronavirus could impact the sector, based on different assumptions underpinned by data and insights from surveys of pub and brewing businesses. • The BBPA says that it is increasingly likely ‘that more than 290,000 jobs will be lost, a third of the 900,000 jobs the pub and brewing sector currently supports.’ • In order to prevent the above, the BBPA says the Prime Minister must review the 10pm curfew at least every three weeks and also ‘provide a sector specific package of support for pubs and hospitality that will protect their businesses so they can survive and fully recover once the epidemic has ended.’ • The British Chambers of Commerce reports that 66% of hospitality and catering companies replying to its survey reported a fall in sales and bookings between June and the end of September. This despite the EOTHO scheme, which played out during August. • The BCC says ‘the economy will need more support, over and above the chancellor’s welcome recent efforts. Ministers must stand ready to provide that support, and to strengthen measures to underpin business cash flow and jobs.’ It also says ‘a Brexit deal must be reached to avoid yet more disruption.’ • Various comments (in The Spectator & elsewhere) suggesting that Christmas ‘is not cancellable’ and that PM Johnson is prepared to change the rules in order to save the day. City Centres: • The ONS reports that the proportion of workers working exclusively from home has risen from 21% to 24%. It says that 59% of workers are commuting against 64% a week earlier. • West End Footfall is bumping along. New West End says that, on Thursday, Friday and Saturday last week, it was up 10% week on week, down 17% and down 7%. Such short term comparisons will be impacted by the weather. On Saturday, compared to the same day last year, footfall was down 54% • A study conducted by the Institute of Directors shows that 74% of companies plan on maintaining the increase in home working. It says that more than half planned on reducing their long-term use of workplaces. The IoD says ‘remote working has been one of the most tangible impacts of coronavirus on the economy. For many, it could be here to stay.’ • The IoD adds ‘working from doesn’t work for everyone, and directors must be alive to the downsides. Managing teams remotely can prove far from straightforward, and directors must make sure they are going out of their way to support employees’ mental wellbeing.’ Other news: • Stay-in-a-pub reminds us that pubs are potential beneficiaries from he move towards staycations. It says ‘the global pandemic has seen the emergence of the ‘staycation’ fuelled originally by the inability to travel abroad and also fears of being stranded and uncertainty over quarantine rules.’ • Paul Nunny, founding director of Stay in a Pub says ‘we have been working hard behind the scenes over the past six months to enhance how we support pubs with rooms. The sector has invested significantly in accommodation provision which has become an important third income stream alongside food and drink.’ • The US Bureau of Labour Statistics has reported that employment levels in leisure and hospitality in the US remains around 2.3 million jobs under levels in February • Boris Johnson says Covid-19 trading ‘will be bumpy through to Christmas.’ It is not clear what that means to operators that have to run real businesses in the real world. Company News: • Some discounting. • Fulham Shore owned pizza operator Franco Manca has tweeted ’BIG NEWS- Rishi III We have extended the spirit of Eat Out to Help Out- again. Throughout OCTOBER, all of our pizzas will be just £5 when you dine in Mon-Wed. Valid at every pizzeria and we will continue to open at 11am.’ • Revolution says ‘you can now get Bottomless Brunch Thursday to Sunday!’ It says ‘we’ve extended our bottomless brunch offer so you can now enjoy more bottomless fun with your gal pals.’ • Mitchells & Butlers’ Vintage Inns is emailing customers saying ‘if you haven’t relaxed with our heart-warming dishes, Monday to Wednesday, by 7th October, you’ll miss out on an amazing 50% off mains.’ • Deliveroo coming to the market. • Deliveroo is reported to have appointed investment bankers Goldman Sachs to oversee its flotation. Sky says ‘a float is expected to take place in London next year, and is likely to value the company at more than £2bn, according to insiders.’ • Pepsi has reported a 5.3% year-on-year rise in net revenue for its third quarter. The company says ‘despite the ongoing volatility and complexity in our operating environment, I believe our third quarter performance reinforces the diversification of our portfolio, the resilience and agility of our teams across every continent and demonstrates our ability to support our customers and communities during their time of need while also delivering good results for our shareholders.’ • Chinese distiller Chongqing Jiangxiaobai has raised $230 million in a Series C funding round. • Beyond Meat is launching its flagship Beyond Burger into a number of Sainsbury’s stores this week. • Newlat Food, the Italian company behind Buitoni pasta, is reported to have joined the £100m race to acquire Hovis • A consortium of Zuber and Mohsin Issa and private equity firm TDR Capital is to take a majority stake in Asda. • The Co-op has donated £10,000 worth of supplies to university students in lockdown HOTELS & LEISURE TRAVEL: • The BBC reports that some would-be cruise holidaymakers are having difficulties in sourcing refunds. • Royal Caribbean says that demand for 2021 holidays is strong • The CMA says that local lockdowns should mean that consumers are entitled to cancel holiday bookings OTHER LEISURE: • Cineworld is to shut its cinemas in the UK & Ireland reports The Sunday Times. The ‘paper says ‘Cineworld, which has 128 theatres in the UK and Ireland, is this weekend writing to Boris Johnson and the culture secretary, Oliver Dowden, to say that the industry has become “unviable” because of the decision by film studios to postpone big-budget releases.’ • Phil Clapp, chief executive of the UK Cinema Association, said: “The announcement is probably the most serious blow to UK cinema operators of a number of similar announcements over the past few weeks and will undoubtedly cause a significant number of cinemas to close again.” • Cineworld says this morning ‘in response to an increasingly challenging theatrical landscape and sustained key market closures due to the COVID-19 pandemic, Cineworld confirms that it will be temporarily suspending operations at all of its 536 Regal theatres in the US and its 127 Cineworld and Picturehouse theatres in the UK from Thursday, 8 October 2020.’ • The company says ‘as major US. markets, mainly New York, remained closed and without guidance on reopening timing, studios have been reluctant to release their pipeline of new films. In turn, without these new releases, Cineworld cannot provide customers in both the US and the UK – the company’s primary markets – with the breadth of strong commercial films necessary for them to consider coming back to theatres against the backdrop of COVID-19.’ • It adds ‘these closures will impact approximately 45,000 employees. Cineworld will continue to monitor the situation closely and will communicate any future plans to resume operations in these markets at the appropriate time, when key markets have more concrete guidance on their reopening status and, in turn, studios are able to bring their pipeline of major releases back to the big screen.’ • CEO Mooky Greidinger says ‘this is not a decision we made lightly, and we did everything in our power to support safe and sustainable re-openings in all of our markets – including meeting, and often exceeding, local health and safety guidelines in our theatres and working constructively with regulators and industry bodies to restore public confidence in our industry.’ • The release of the new James Bond film has been delayed again, this time until April next year. • Moody’s says that Caesars Entertainment’s proposed purchase of William Hill is credit positive. FINANCE & MARKETS: • The US added 661k jobs last month. Economists had been looking for 800k. • There remain big differences between the UK & the EU in post-Brexit trade talks • Sterling up at $1.2933 and €1.1022. Oil higher at $40.15. UK 10yr gilt yield up 2bps at 0.25%. World markets mixed Friday, Far East up in Monday trade & London set to open up around 55pts. RETAIL WITH NICK BUBB:
• Today’s News: Today has brought the delayed Mulberry finals for y/e March, which show a big loss (and even bigger impairment charges), even though the pandemic lockdown only affected the very end of the period. Trading since the start of the current financial period is said to be “ahead of our early expectations”, with group revenue only down 29% for the 26-week period to 26 September, but CEO Thierry Andretta says “we cannot escape the reality that British luxury and UK cities face a very uncertain future, hampered by necessary but dramatic social distancing measures and alarmingly low levels of footfall, as well as the pressures of high rents and business rates and the upcoming changes to tax free shopping”. The news about Asda on Friday came out at about 11am, by the way, and though the precise ownership structure of the £6.8bn deal with the Issa brothers/TDR was not made clear,
• Saturday’s Press and News (2): In terms of Retailing stories, the big focus was obviously on Friday’s news that Walmart had, as expected, sold Asda to the EG Group/TDR consortium for £6.8m. The FT article highlighted that for Walmart the UK looked increasingly peripheral, compared with its Chinese and Indian ventures and that the Chancellor had, unusually, said that it was “great to see Asda returning to majority UK ownership for the first time in two decades”. The Guardian focused on the “roads to riches” story of the Lancashire-based Issa brothers since they bought their first petrol forecourt in Bury in 2001, noting the controversy about the huge mansions they are building in their home town of Blackburn. The Times had a similar article about the “Brothers from the “wrong side of the Pennines” who took over Asda”. The Telegraph flagged that the Issa brothers have promised to invest • Saturday’s Press and News (3): In other news, the Times had a photo of the garishly dressed Pretty Little Thing boss, Umar Kamani, after an Online gaming business he is invested in (Guild Esports) endured a choppy stockmarket debut on Friday. The market report in the Times noted that Ocado remained weak on Friday but that Dunelm was boosted by a broker upgrade. And Tesco featured in the “Popular Shares” column in the Daily Mail ahead of its interims on Wednesday. • Sunday’s Press and News (1): The headlines on most of the front pages of the Sunday papers were again about President Trump’s treatment for coronavirus: the Sunday Times ran with “Trump gambles on radical new drugs to beat the virus”, whilst the Sunday Telegraph went with “Trump “given oxygen” as vital signs “concerning”” and the Observer flagged that “Fears grow for Trump’s health amid chaos over Election plans”. The Mail on Sunday, however, focused on one of the revelations in the sensational new biography of Boris Johnson by the top investigative author Tom Bower: “Boris’s dad broke his Mum’s nose”.
• Sunday’s Press and News (2): In terms of Retail stories, Asda remained in the spotlight and the Sunday Times had an interesting background feature on “the superstore of the future” (with most of its space given over to Click & Collect and Online order/delivery operations). The Business Leader column in the Observer opined that the planned investment by the Issa brothers in developing Asda’s convenience store business doesn’t answer the question of what it does with its superstore chain, whilst the Mail on Sunday revealed the “miniscule tax bill” of the EG Group and its reliance on debt, plus the “paper trail of tax havens” behind the Issa brothers’ ownership structure. However, the Business editorial in the Sunday Telegraph (which claims to have been the first paper to reveal the interest of the Issa brothers in Asda back in February) trumpeted “A rich store of promise in this tale
• Sunday’s Press and News (3): In terms of all the Economics and comment columns in the Sunday papers, we would, as usual, highlight the thoughtful column by the Sunday Times Economics correspondent David Smith (“This nation of unexpected savers has money to burn”), in which he noted the jump in the savings ratio since the lockdown and highlighted that “Retail Sales have shown a strong and, dare I say it, V-shaped recovery”. We would also flag the columns by the veteran City commentator Jeremy Warner in the Sunday Telegraph (“This is shaping up to be the oddest Presidential Election in US history”), in which he noted that the next scheduled TV debate between Donald Trump and Joe Biden on Oct 15th may have to be postponed, and by the veteran Economics correspondent William Keegan in the Observer (“Sunak can’t become a statesman and remain a Brexiteer”), in which he noted that the 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 • 8 Oct 20 Carnival business update • 15 Oct 20 Fulham Shore FY numbers • 16 Oct 20 JD Wetherspoon FY numbers • 20 Oct 20 Marston’s / Carlsberg CMA backstop date • 21 Oct 20 Marston’s FY trading update • 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 YESTERDAY’S TWEETS: • Outlook for London. Resilient city. But it’s large (therefore requires more travel), it has huge office hubs (Docklands & The City but ‘work at home’) & it has a world-class entertainment district (West End, currently virtually empty). Short term outlook? Challenged. • Hypocrisy alive & well & living in my house. Langton Capital. Covid-19 positive mid-September. Reason? Rolled the dice once to often, EOTHO, cafes etc. Donald Trump. Covid positive early-October. Reason? Is an idiot. • ‘London villages’ such as Wimbledon, Richmond, Ealing, Battersea etc are performing much better (or less badly) than is the West End and the City. This is where people live. The two factors are positively correlated. • Covid-19. Life on the other side for hospitality. Supply reduced, some costs (labour shortages) reduced, rents possibly lower. Big Q for operators is ‘should they continue ‘feeding the pot’ to stay in the (currently very challenged) game?’ • A clear winner in the word-popularity contest for company announcements and that has to be ‘despite’ (closely followed by a mention of Covid-19, then a bit of a ‘big-me-up’, followed by something including the words ‘well-positioned’. • E.g. Despite Covid-19 currently shutting down our business, an asteroid hitting our Head Office & the FD running off with all the cash we remain well-positioned to emerge…. 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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