Langton Capital – 2020-12-22 – Sales volumes, normality, tourism impact, Escape Hunt etc.:
Sales volumes, normality, tourism impact, Escape Hunt etc.:A DAY IN THE LIFE: Christmas is nearly upon us & this is a shorter-than-usual email. Thank-you to those who have purchased our BOOK to date. You can buy it HERE. Merry Christmas to one and all and on to the news: ADVERTISE WITH US: Langton’s free email now carries adverts. See front page of website for today’s copy & contact us for further details. LANGTON PREMIUM EMAIL: Langton produces a premium email alongside the free version that you receive. It’s c100 lines longer than the free version (depending on what’s going on) and inc. analysis and opinion. If you would like an example, please let us know. Corporate Offer: Annual subscription 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: PUBS & RESTAURANTS: The state of the nation. • Not too good just about sums it up. London, for example, started last week in Tier Two and is now in Tier Four with much of the rest of the UK set to join it shortly. • Writing in City AM, D&D boss Des Gunewardena says last week was a ‘horror show’. He says ‘we have had some bad weeks during this pandemic, but last week may have been the worst. It started with the announcement that the whole of London was to be placed into Tier 3. We are regularly briefed by our industry body, UK Hospitality, which is in daily touch with the government. On Friday we were confident that Central London, where infections were still relatively low, would remain in Tier 2, even if a number of outer boroughs went into Tier 3.’ • He says ‘if the start of the week was terrible, the end of the week was a genuine horror show. Seemingly alarmed again by the data as it emerged during the week Boris announced to the UK that our 5 day Christmas easing of restrictions was to be shelved. An action which the government only a week before had dismissed as being “inhuman” was now being taken. The British public will, in the interests of defeating the virus, of course comply with these draconian rules. We have no option.’ • Mr Gunewardena says ‘it is funded it is vital that restaurants are properly compensated as they are in other countries such as France and Germany. The hospitality sector is a powerful engine for driving economic recovery and employment post-Covid. Pubs and restaurants are also vital to the social fabric of the UK. They need to be properly supported. That needs to be our agenda for 2021 as we say goodbye to the fiasco that was 2020.’ • There is speculation that England is looking at a New Year lockdown as the new variant of Covid-19, per Health Secretary Matt Hancock, is ‘out of control and we need to bring it under control.’ • Sky says, ‘with the new variant now surging across the UK, an announcement that large areas of England will join London and parts of southeast England in Tier 4 is expected on Wednesday, 30 December, when the next review of the tier system is due.’ It says, ‘the clampdown is expected to come into force in the New Year.’ • Sir Patrick Vallance says there is evidence of the new variant across the country. He says ‘the evidence on this virus is that it spreads easily. It’s more transmissible, we absolutely need to make sure we have the right level of restrictions in place.’ Sir Patrick adds ‘I think it is likely that this will grow in numbers of the variant across the country and I think it’s likely, therefore, that measures will need to be increased in some places, in due course, not reduced.’ • Foodservice sector analyst Peter Backman says that consumers may have more savings. He says ‘there is plenty of anecdotal evidence that consumers have been able to save during lockdowns – and while many individuals and families have faced severe financial problems, there is no doubt a large well of pent-up demand waiting to be unleashed once eating out is fully reopened and consumers feel safe to do so.’ • Mr Backman says ‘some of the changes that we’ve seen over this past year are likely to become permanent. From my perspective, the top three are: working from home for perhaps 20% of the time; more deliveries of restaurant meals (whether prepared in a restaurant or a dark kitchen); damaged and disrupted high streets with shuttered shops and offices and few people in what, in normal times, were bustling centres.’ • He says ‘there are many more changes to add to this list, but they depend on where the focus of your interest lies. Some things that seem to have changed will pass – the wearing of masks, empty streets and hotels, high levels of hygiene and sanitation, for example. But that the world, will be different, I have no doubt.’ Current trading: • S4labour reports that sales are down 64.3% year on year for Tier 2 venues, for December to date. It says food is down 55.3% and drink is down a significant 72.5%. • Tier 1 (miniscule) can safely be ignored. S4labour says ‘these Tier 2 figures are the best-case scenario for the majority of the hospitality industry, most of which is now in Tier 3 or 4, and down over 90% year on year.’ • The company says ‘London has fared worse, down 71.1% year on year, while the rest of the country is down 61.9%. These figures in the capital are due to drop even further to full lockdown levels, given the recent announcements regarding further restrictions.’ It says ‘the ever changing COVID restrictions continue to have a damaging effect on the industry as expected, and Christmas this year is now set to look even more uncertain than previously expected.’ • UKH’s Kate Nicholls has quoted the reasonable concerns of those ‘lucky’ operators in Tier One, who say that, without legal visitors from Tiers Three and Tier Four, they cannot sustain their businesses. Outlook: • See also Langton comments on permanent and transient impacts of Covid-19. • Pragma consulting says we can now see a ‘pathway to life beyond lockdown.’ It says ‘the variable speed of progress, economic fallout, and structural impact will continue to be challenging.’ • The major ‘pillars for success’ it sees for 2021 include sustainable business models, space and environments. Effectively this is telling operators to be in the right place, selling the right products, at the right time. This is certainly correct but harder to enact in practise. • Even when operators know beyond a doubt what they should do and when (which is arguably rare), legacy issues (such as large estates of outlets perhaps selling the wrong things to the wrong people at the wrong price from the wrong units) may mean that it is not possible to execute sensible plans in a timely fashion. Perhaps, to lighten the mood, we should substitute the word ‘suboptimal’, for ‘wrong’. Other news: • The SBPA comments on further support for the hospitality sector in Scotland saying ‘the announcement [yesterday] of extra funding is hugely welcome, especially for those businesses which completely missed out earlier in the year, and we were pleased to work closely with the Scottish Government to deliver this. These funds will provide a real boost, ensuring that jobs are protected, and businesses survive. The support still has to get to operators though, and it is imperative that local authorities are able to process these payments as quickly and efficiently as possible.’ • Gordon’s has launched a juniper-led, alcohol-free gin. It has the same botanicals as its London Dry Gin. • Corona lager, despite its name, has had a good year. Nielsen reports that off-trade sales of the beer rose by £68m to £237m in the year to 5 September. • Drinks Business reports that wine tourism is unlikely to recover until at least 2022 • Trading in DP Poland on AIM was restored yesterday. • The French and UK authorities are still working towards restarting Channel Tunnel freight traffic. PM Boris Johnson has said that there will be no food shortages. He says that ‘British supermarkets say supply chains are strong and robust.’ Hopefully, he is right about that. HOTELS & LEISURE TRAVEL: • Spare a thought for tourist-facing operators – both outbound and inbound. • Spain has joined the list of countries to ban flights from the UK. Christmas getaways currently a non-starter. • Over 40 countries have now banned UK arrivals due to concerns about the rapid spread of the new variant. Europe is working towards a coordinated response. It is being proposed in some areas that all UK travellers may be required to test negative for Covid-19 before departure. • PR firm The PC Agency suggests that the travel bans associated with the faster-spreading Coronavirus variant could cost the outbound travel trade £400m over the Christmas period alone. • The PC Agency chief executive Paul Charles tweeted: “The consequence of bans on UK transport are immense – cargo backlog leading to Xmas goods/gifts not arriving; thousands of people stuck overseas; aircraft grounded; and just days before possible Brexit. These are challenging times for airlines and operators.” • UK Inbound says the collapse in international visitors over the Christmas period could cost hoteliers, restaurateurs & retailers up to £2.5bn. OTHER LEISURE: • Escape Hunt yesterday reported that the ‘performance of the digital and remote play products in December has surpassed management’s expectations.’ It says this is ‘significantly offsetting the reduction in site revenues resulting from the temporary closure of a number of the Company’s sites and the restrictions on household mixing in place under the Government’s COVID related tier systems.’ • CEO Richard Harpham says ‘we are absolutely delighted with the success of this important part of our strategy to date. We have benefitted enormously from the fact that companies have looked to offer their staff a remotely delivered social event for Christmas in light of the Coronavirus restrictions.’ • US-based games company Electronic Arts has announced a bid for Codemasters, the maker of Formula One racing games. Listed games companies have been very strong, with most registering gains of over 100%, this year. FINANCE & MARKETS: • There have been calls on the government to extend the post-Brexit transition period. Some Conservative MPs, the Mayor of London Sadiq Khan and Scottish First Minister Nicola Sturgeon have now called for the prime minister to request post-Brexit trade talks be extended into next year. • Grant Shapps said on TV yesterday morning that there would be no extension. Downing St has also said the post-Brexit transition period will not be extended. • Sterling stronger at $1.3407 and €1.0967. Oil lower at $49.68. UK 10yr gilt yield down 4bps at 0.20%. World markets mixed yesterday. London set to open down around 35pts. RETAIL WITH NICK BUBB: • Today’s News: The administrator decided to sell off the Evans fashion brand to an obscure Aussie business yesterday for £23m, thus dashing the dreams of anybody who dreamt of buying the whole of the bankrupt Arcadia empire, but there has been no further news on the subject. And nobody else has followed Frasers in moaning about the shock closure of non-essential shops in London and the South-East just before Christmas and the Boxing Day Sales, although DFS has put out a surprisingly bullish pre-close update, noting that only 59 of its 206 UK stores are in Tier 4 areas and edging up its full year profit guidance, given the strength of first half trading and the order book.
• Retail Sales Watch: The key Retail Sales month of December (the 5 weeks to Jan 2nd) will soon be over and Online retailers will be hard pressed to make up for the non-essential retail lockdown impact on the High Street in London and the South-East this week and next…but we haven’t seen the final word yet on how bad November was on the High Street…The Office of National Statistics (ie the ONS or what we laughingly call the “Planet ONS”) reported on Friday that non-seasonally adjusted total Retail Sales by value were up by as much as 7.6% in November (ex-petrol), which, thanks to some bizarrely strong figures for Small Retailers, was a lot better than the BRC-KPMG measure of gross sales growth of only 0.9%. So, who was right? Well, the Retailing consultancy group, Retail Economics (RE), which was founded by Richard Lim (who used to run the monthly BRC-KPMG Retail Sales survey), has just TRADING STATEMENTS & EVENTS: Upcoming results are set out below: • 15 Dec 20 Shaftesbury FY numbers • 16 Dec 20 Wagamama (Restaurant Group) bondholder update • 17 Dec 20 Revolution FY numbers • 17 Dec 20 JD Wetherspoon AGM • 17 Dec 20 SSP FY numbers • 18 Dec 20 Fulham Shore H1 numbers • 22 Dec 20 Revolution AGM • 5 Jan 21 Morrison’s Xmas update • 6 Jan 21 Gregg’s Q4 update • 7 Jan 21 Constellation Brands Q3 • 12 Jan 21 Nichols FY trading update • 12 Jan 21 Games Workshop H1 numbers • 14 Jan 21 C&C EGM • 15 Jan 21 Gym Group trading update • 19 Jan 21 Premier Foods Q3 update • 20 Jan 21 JD Wetherspoon H1 update • 5 Feb 21 On the Beach AGM & trading update • 11 Feb 21 Pepsi FY numbers • 3 Mar 21 Government Budget Statement 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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