Langton Capital – 2021-03-03 – Budget, beer tie, the consumer, holiday dilemma & other:
Budget, beer tie, the consumer, holiday dilemma & other:
A DAY IN THE LIFE:
Well, we’ve bagsied our seat in front of the telly to watch Mr Sunak later on and, since he’s allegedly got the fate of the nation resting on what he says, we’re banking on him not getting swollen headed about it and on him coming up with the goods that will be guaranteed to please all the people, all of the time.
Just what those ‘goods’ are, however, is above our paygrade.
But, like the apocryphal elephant, though we can’t describe it, we’ll know it if we see it and, like all good democrats, we reserve the right to moan about whatever it is that he decides to do, whenever he decides to do it.
So, no pressure there, then. Bit busy today so let’s move on to the news:
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PUBS & RESTAURANTS:
• The bets have been placed, the fix is in. All eyes and ears will now be focused on the Chancellor and his 12.30 House of Commons speech.
The beer tie:
• A major area of discussion for years, the beer tie has been eclipsed by Covid. But the SBPA comments on moves north of the border.
• The Scottish Beer & Pub Association reports that ‘pub tenants and landlords have united to express disappointment and frustration that the Tied Pubs (Scotland) Bill has passed Stage 2 in the Scottish Parliament today. Emma McClarkin, CEO of Scottish Beer and Pub Association says ‘this is a sad day for the leased and tenanted pub sector in Scotland. Despite efforts from tenants and pub owning businesses alike, our parliamentarians are simply not listening to them and seem determined to push through a Bill which will have a long-term detrimental effect on the fabric of Scottish pub sector.’
• The SBPA says ‘the leased and tenanted tied pub model operates as a partnership between the pub owning company and the pub tenant. The business model which has operated successfully for generations, seeks to share the financial risk and reward of running a pub business in partnership.’
• Recent research covering the UK as a whole has seen tenants express general satisfaction with the way that their landlords have behaved during the Covid-19 pandemic.
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• The SBPA goes into detail as to what it sees as the shortcomings of the Market Rent Only provisions and says it is unfair to allow tenants to break leases that were signed in good faith by both sides. It quotes multiple-tenant Simon McLeod as saying ‘this just isn’t the right time to be considering legislation that is only going to stifle our recovery. The focus now from MSPs should be on revitalising the industry and the timing of this Bill is really not good. I think it’s unwise and we should be concentrating on the economy.’
• Another multiple tenant says the Bill would be ‘taking a sledgehammer to crack a nut.’ The tenant says the whole area is one for negotiation rather than legislation.
• The Budget may take money out of the consumer’s pocket but a) it probably will not and b) there is growing evidence that ‘forced savings’ have been one of the side effects of the current and prior lockdowns. The Bank of England has reported another major paydown in debt in January with consumers adding to their savings.
• On the other hand, the LSE Centre for Economic Performance has found that two-thirds of those who are self-employed have lost out financially to Covid. This is the flipside of the freedoms to be found in self-employment. A regular pay-cheque is not one of the main features and, as such, compensation by the state is harder to organise than it is for salaried employees.
• The LSE says that over half of the two thirds of self-employed people who have been disadvantaged are earning less than £1,000 per month. It says ‘despite the availability of different types of financial support, many self-employed workers are still suffering hardship.’ It adds ‘this crisis is far from over, and policy-makers still have ample room to make policy changes that will affect not only livelihoods today, but also the speed at which the UK can grow when coming out of the crisis.’
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Company & other news:
• Molson Coors is reported to have sold its Indian beer business to Inbrew Holdings, which is HQ’d in Singapore. Inbrew says it ‘understands the Indian beverage market and comprehends the needs of existing and emerging consumers. A portfolio of strong local and international brands supported by established distribution and well-invested manufacturing facilities will allow Inbrew to continue offer quality products.’
HOTELS & LEISURE TRAVEL:
Should we, shouldn’t we: The holiday dilemma
• Overseas holiday bookings are said to be buoyant.
• There may be a feeling that the future will take care of itself. But 7hr queues at Heathrow will not help sentiment and nor will comments from Professor Jonathan Van-Tam, deputy CMO, that there is “great uncertainty” about the prospect of overseas summer holidays because of new variants of Covid-19.
• Even PM Boris Johnson has left himself plenty of room to pull the rug, which does put the sharp uptick in bookings in a questionable light. Van Tam says ‘many of the vaccination programmes in Europe – which is a place where we frequently go on holiday abroad – are running behind ours.’ He adds ‘whether we can go on holiday abroad to places such as Europe depends upon what other countries will say and do in terms of foreign tourism.’
• Provided consumers are confident that, if necessary, they will get their money back on cancelled holidays, they may be prepared to book. Nonetheless, home secretary Priti Patel and Labour’s Yvette Cooper have also said that it may be ‘too soon’ to book summer holidays.
• The WTTO is lobbying for a return to air travel and there is talk that Spain may establish a “green corridor” for vaccinated British tourists. Spanish tourism minister Fernando Valdes told Bloomberg that ‘we have discussions with our colleagues in the UK.’ He says ‘for us the British market is our main market. But obviously since we are a member of the European Union, the solutions have first to be part of the discussions in the EU.’
• Transport secretary Grant Shapps has chaired the first meeting of the new Global Travel Taskforce.
• Jet2holidays has told Travel Weekly that 2022 capacity could exceed 2019
• A survey by Thrive has found that 74% of respondents believe it is reasonable to be told to wear a facemask on a plane. Thrive says ‘these findings suggest consumers are now conditioned to ongoing social distancing measures which reduce transmission and prevent the spreading of Covid-19.’
• Hotstats says that, though there is cause for optimism, turning the page on a calendar year, in this case 2020, does not assure a better result in 2021. It reports that REVPAR across European hotels in January was down by 87% on the same month last year.
• IHG has told Hotel News Now that ‘now is the perfect time to reinvent the industry’.
• STR reports that the performance of hotels in China this January ran ahead of the same month last year, but it is still well below 2019 levels. Referring to the Chinese New Year, STR says ‘daily occupancy in the market sat in the 30% range for most of the festival period (Feb. 11-17) then rose to as high as 37.6% on Saturday, Feb. 20.’
MORE LEISURE SNIPPETS:
• Consumers are reported by think tank Thrive to be in favour of vaccinated-passenger only flight.
• Scenic has reported a 150% uptick in bookings since PM Johnson reported his roadmap out of lockdown last week.
• Instagram is launching Live Rooms to host up to four people talking at each other together.
• Sky reports that ‘a group of Virgin Active landlords are exploring moves to end their relationship with the health and fitness chain as it tries to thrash out a rescue deal that could involve steep haircuts for creditors.’
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SOME OF YESTERDAY’S RESULTS:
• Hotel Chocolat
• Has reported H1 numbers saying revenue rose 11% to £101.9m with PBT up by 3% to £15.5m. CEO Angus Thirlwell says ‘the Hotel Chocolat brand stayed strong during a difficult period for all of us.’ He says ‘we recorded superb results in the UK, USA and Japan despite Covid-19 restrictions affecting all our physical locations. We achieved sales growth during those periods when all UK physical locations were closed, demonstrating the brand’s appeal to our loyal customers, and our flexible business model.’
• Hotel Chocolat says ‘we look forward to building the Hotel Chocolat brand further as we move closer to our goal of becoming the leading global direct-to-consumer premium chocolate brand.’
• Has reported full year results for the year to end-December. CEO Boris Ivesha says ‘despite the challenges presented over the past 12 months, our well-invested portfolio, agile owner-operator model and strong 30-year track record together provide a solid foundation for success, and we remain excited about the long-term future of the business.’
• The CEO says ‘I am confident that our high-quality portfolio and strong pipeline, together with our unique owner operator approach and the operational initiatives implemented during 2020 positions the Company very well to benefit from the anticipated uplift in domestic and international demand as the global vaccine rollout continues and restrictions ease.’
• PPHE reports that revenue fell from £357.7m to £101.8m. A PBT of £38.5m was transformed into a loss of £94.7m and the 85p of EPS recorded in 2019 was replaced by a loss of 181p per share.
• Has announced ‘the agreed sale to Beds and Foods Barcelona s.l.u, of the smallest of its three hostels in Barcelona, called Barcelona Sea, a leasehold site with 96 beds, for a total consideration of €900,000, which is also the book value of the hostel in the Group balance sheet. The annual EBITDA of the hostel pre-COVID 19 was €70,000.’
• The company says ‘while Safestay’s 17 hostels continue to be temporarily closed, since the timetable for coming out of lockdown announced by the UK Government, the Company has been able to begin planning for an orderly reopening of the portfolio, in time for the summer season. With the additional expectation that European governments will start to announce similar plans for coming out of lockdown.’ Chairman Larry Lipman says ‘the sale of Barcelona Sea fits with our strategy of rationalisation of the portfolio as the business grows. It is particularly pleasing to conclude the sale during these difficult times. As we emerge from the COVID-19 lockdown, we shall continue to seek value added opportunities, whether through further disposals or acquisitions on the right terms.’
• Flutter Entertainment
• Has reported 2020 Preliminary Results saying revenues more than doubled on its merger to £4.4bn with profit wiped out to £1m from £136m last year. The group earned 29.3p per share against 180.2p in the prior year. CEO Peter Jackson says ‘2020 was an historic year for the Group as we completed our merger with TSG, commenced the integration of our two businesses and increased our ownership of FanDuel in the US, whilst at the same time navigating the challenges presented by the Covid-19 pandemic.’
• Mr Jackson says ‘during this exceptionally testing time, we have focused on safeguarding the welfare of colleagues and contributed more to the communities in which we operate.’ He concludes ‘while the global outlook remains uncertain, our momentum remains strong and we look forward to the future with confidence.’
• Says it expects revenue to rise by more than 40% this year having seen sales in the last three months of 2020 rise by 370% compared to the same period in 2019, hitting $882.5m. CEO Eric Yuan says ‘the fourth quarter marked a strong finish to an unprecedented year for Zoom. As the world emerges from the pandemic, our work has only begun.’
FINANCE & MARKETS:
• As suggested in the Day in the Life, above, this is perhaps the most keenly awaited Budget in years. The Institute of Economic Affairs has suggested a sweeping range of taxes that could or should be abolished. That may not happen any time soon.
• The NIESR quotes the Chancellor as saying that, in the absence of spending cuts or tax rises, then ‘debt will continue to rise indefinitely and that’s not a good situation.’ That shows a certain understanding.
• The Nationwide reports that house prices rose last month to leave the price of the average house up 6.9% in the year to February vs up 6.4% in the year to Jan.
RETAIL WITH NICK BUBB:
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TRADING STATEMENTS & EVENTS:
Upcoming results are set out below:
• 2 Mar 21 PPHE FY results
• 2 Mar 21 Hotel Chocolat H1 numbers
• 2 Mar 21 Flutter FY numbers
• 2 Mar 21 Dalata Hotels FY numbers
• 2 Mar 21 Virgin Wines first trade
• 3 Mar 21 Nichols FY numbers
• 3 Mar 21 Government Budget Statement
• 4 Mar 21 William Hill FY numbers
• 4 Mar 21 Entain FY numbers
• 5 Mar 21 Marston’s SA Brains transaction webinar
• 10 Mar 21 Restaurant Group full year numbers
• 11 Mar 21 Playtech FY numbers
• 11 Mar 21 Morrison’s FY numbers
• 15 Mar 21 Carlsberg AGM
• 16 Mar 21 Gregg’s FY numbers
• 16 Mar 21 C&C pre-close trading update
• 17 Mar 21 Hostelworld H1 numbers
• 18 Mar 21 Fever Tree FY numbers
• 23 Mar 21 DP Eurasia FY numbers
• 24 Mar 21 M&B AGM
• 25 Mar 21 Compass Group H1 update
• 30 Mar 21 AG Barr FY numbers
• 8 Apr 21 Sportech FY numbers
• 15 Apr 21 Pepsi Q1 numbers
• 23 Apr 21 Gear4Music results
• 28 Apr 21 Carlsberg Q1 numbers
• 4 May 21 Campari Q1 numbers
• 7 May 21 Intercontinental Hotels Q1 numbers
• 12 May 21 Compass Group H1 numbers
• 12 May 21 Stock Spirits H1 numbers
• 18 May 21 Britvic H1 numbers
• Est 19 May 21 Marston’s H1 numbers
• 27 Jul 21 Campari H1 numbers
• 10 Aug 21 Intercontinental Hotels H1 numbers
• 18 Aug 21 Carlsberg H1 numbers
• 22 Oct 21 Intercontinental Hotels Q3 numbers
• 26 Oct 21 Campari Q3 numbers
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