Tier Four additions, the consumer, MARS, WTB, hotels & other:

A DAY IN THE LIFE:

The holiday period is nearly upon us & this is the last Langton Capital email of 2020.

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It just remains to wish as Merry a Christmas as possible to one and all, to express the heartfelt wish that 2021 will be better than 2020 for all of us and to move on to the news:

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PUBS & RESTAURANTS:

More tiers:

• The government has announced that around six million more people in the south east of England will go into Tier Four on Boxing Day. People will be told to stay at home and non-essential shops will close.

• Concerns have been growing that the new variant of Covid-19 could spread the disease more rapidly across the population. The government yesterday announced that 744 people died with Covid-19 in the UK in the prior 24hrs, the largest death toll since the third week of April.

• Health Secretary Matt Hancock told the Downing St briefing that the old tiering system was not enough to bring the situation under control.

• Mr Hancock has been repeating the government line that people are responsible for their own behaviour. The crowds on Oxford St last week and at London train stations on Saturday were the fault of the individuals themselves and not hasty political U-turns. It has been suggested that this is a softening up ahead of what may be further bad mortality figures and a new year lockdown.

• Several areas have moved from Tier Two to Tier Three including Bristol, Gloucestershire, Somerset, including the North Somerset council area, Swindon, the Isle of Wight, the New Forest and Northamptonshire as well as Cheshire and Warrington. Cornwall and Herefordshire will move into tier two.

Trade body & company response:

• The BBPA says ‘the update on the virus and associated tier restrictions today is yet another blow to a sector already on its knees. It is clear that it is going to be the longest winter in living memory for Britain’s pubs and brewers. Unless there is a greater package of financial support from the Government to secure our pubs and the brewers that supply them, a wave of business failures in the New Year is inevitable.’

• The BBPA says ‘we desperately need the Prime Minister to step up to the plate and commit to an enhanced package of measure for pubs and brewers. If the Government acts now they can still secure pubs and jobs by giving locals in England the sort of support those in Wales and Scotland are getting. Without this the outlook is very bleak indeed.’

• Operators have pointed out that stock levels would normally be higher than usual at this time of year meaning that closures could lead to more wastage. In addition, delivery concern re the Tunnel and fears of a no-deal Brexit could have led to stocking up.

• UKH’s Kate Nicholls tweets ‘with no parts of the country in tier 1 the best any open business can manage is just 15% of normal revenues. Over 95% hospitality closed. 80% by law and the remainder because it isn’t possible to trade. It means hospitality has only traded normally for 9 weeks in 2020.’

• UKH continues to tweet ‘industry now facing collapse – with whole country subject to travel restrictions and severe restrictions, it cannot continue to maintain a cash burn of £0.5bn and a loss of £11bn sales in Dec. Support needed to sustain 3rd largest employer and export earner #hospitalitymatters.’

• It adds ‘for hospitality, the Boxing Day announcements put the sector into lockdown across the country but the support simply isn’t there to get businesses through what will be a very bleak New Year. Vat and rates extended beyond March now urgently needed.’

• Founder and Chairman of Loungers, Alex Reilley tweets ‘ten days ago it felt like we were three-quarters of the way through this. Today it feels more like two-thirds.’

• UKH has said ‘we estimate 82% of pubs are now in Tier 3 & 4 and 94% of all pub businesses are unviable. Not such a Merry Christmas. We need urgent support now to prevent business failure.’

• Alex Reilley of Loungers says it has reopened its units in Bristol & North Somerset. It says it is ‘restocking from a standing start & our staff proudly putting in the effort to make their sites shine & look lovely & festive.’ He adds ‘this government don’t care & Hancock is intoxicated on the drama.’

Other Covid & trading news:

• The British Beer & Pub Association has said that there will be 39 million fewer pints and 5 million fewer Christmas dinners enjoyed in pubs over the festive period from Christmas Eve to Boxing Day. Since the BBPA calculated the above, a number of areas have moved from Tier Two to Three. Pubs moving from Three to Four will not be subject to additional measures as they are closed already.

• The BBPA says ‘this Christmas will be the quietest year on record for our pubs. The current restrictions were devastating enough but now with the introduction of tier four and a tightening of the rules over Christmas, consumer confidence will be hit further, leading to cancellations and greater financial woes for pubs and brewers.’

• The BBPA, UKH, the BII, CAMRA, the IFBB and others have combined to call on the government to provide more support. The trade associations say that ‘the average pub would expect to take £47,000 in December. Much of this would see them through January and February when trade is typically quieter. With 85% closed or unviable now, and the likelihood of an extended period of full closure and tighter restrictive measures, the certainty provided by a proper financial support and economic bridge to the Spring is critical for the survival of thousands of pubs.’

The consumer:

• Mintel has reported ‘that British consumers have been remarkably resilient in the face of unprecedented turmoil. After the initial spike in concerns over the risks posed by the new virus, we’ve adapted to the new normal. Or, more accurately, a series of ‘next normals’.

• Whilst consumers have muddled through by using online services and accessing off-trade sales, the downside for operators has not been shared evenly. Some operators have adapted more readily than others.

• Here’s hoping for a better 2021. Though Mintel says ‘any empty shelves will shake consumer confidence, particularly when combined with already elevated concerns over the possible impact of Brexit. And although Brexit planning will help retailers manage the impact on stock availability, using up those contingency supplies will have a knock-on effect if we do end up with further disruption on 1 January.’

• Some 4,000 lorries, and thousands of smaller small vans, are now backed up and waiting to cross the Channel.

• A special cargo flight has landed in Yorkshire with 80 tonnes of fruit and vegetables on board.

Company news:

• Marston’s announcement yesterday that it was to take over the operation of Brain’s c150 pubs has received a favourable press. It is deemed a win-win, though Brain’s had been placed in a difficult position due to closures due to the Covid-19 pandemic.

• CAMRA says ‘while we still need to see the detail of this deal, at first glance it appears a positive move.’ CAMRA says the deal brought hope the pubs would survive. It says ‘this could be the first of many hospitality businesses forced to take drastic action to survive.’

• Unilever reports it has expanded its partnership with Burger King to supply its plant-based burgers

• Italian online marketplace Deliveristo has closed a €4.5m Series A funding.

• See comments on Whitbread below

HOTELS & LEISURE TRAVEL:

• Whitbread, operator of the largely freehold Premier Inn chain of budget hotels, has written to all of its landlords saying it will pay half its December quarter rent. It is calling on its landlords to ‘provide a proportionate degree of temporary financial support.’

• WTB says ‘throughout this period, we have however continued to pay all our landlords our rent commitments in full, even when our sites were closed for over 12 weeks during the first lockdown period. This is in stark contrast to some of our competitors, some of whom have received the benefit of rent reductions through a CVA process.’

• Cruise body CLIA has suggested that two thirds of cruise holiday veterans are willing to cruise in the next year and almost six in 10 first-timers would still consider a cruise in the future.

• STR reports that occupancy across European hotels in November was down 70% on last year (at 21%) with daily rates down 32%. REVPAR was some 81% lower.

• New York City has introduced a 14 day quarantine for international travellers following the discovery of new Covid variants in several countries including the UK.

OTHER LEISURE:

• Hollywood studio MGM is reported to be for sale at more than $5bn

• The radio and arts sectors are to benefit from a multi-million pound government funding to ‘tackle loneliness’ during the winter.

FINANCE & MARKETS:

• A UK / EU trade deal is expected to be announced as having been agreed later today.

• The SMMT reports that the number of cars made in the UK fell by 1.4% this November compared with last year. For the year to date, production is down by 31%. The SMMT says this is ‘yet another decline for UK car production is of course concerning, but not nearly as concerning as the New Year nightmare facing the automotive industry if we do not get a Brexit deal that works for the sector.’

• Sterling up at $1.3554 and €1.1105. Oil higher at $51.43. UK 10yr gilt yield up 10bps in anticipation of a trade deal at 0.29%. World markets better yesterday with London set to open up around 34pts.

RETAIL WITH NICK BUBB:

Today’s Market: Wall Street was up by 0.4% at the close last night (as measured by the Dow Jones index), but the FTSE 100 index is expected to be only modestly up this morning (there is a half-day of trading), with the market not sure to celebrate the last-minute Brexit deal or fret about the impact of the strength of sterling (according to the Proactive private investor website), with the index set to open 35 points up at 8am at c6530, according to the spread betting firms. Sterling is trading up a bit at around $1.357…

Today’s Press: The news that another 6m people will be moving into Tier 4 on Boxing Day (including Oxford and Cambridge) is knocked off the front pages today by the news of a last-minute Brexit deal: the Daily Express screams “The deal is done!”, the Daily Mail exults “Hallelujah! It’s a Merry Brexmas”, the Daily Telegraph runs with “Johnson poised to seal Brexit trade deal”, the Times reports that “Britain and EU on brink of signing Brexit deal” and the FT goes with “UK-EU on cusp of historic trade deal”.

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

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