Langton Capital – 2021-04-29 – Trading, staycations, WFH, YUM, Starbuckss, Carlsberg etc.:
Trading, staycations, WFH, YUM, Starbuckss, Carlsberg etc.:
A DAY IN THE LIFE:
Sometimes we take things for granted.
Houses, for example. They’re man-made caves and, even if they had no running water, electricity, even no doors, windows or a roof, they would still be 100x as good as the caves our ancestors lived in for maybe 10,000 generations before we came along and decided that we wanted more.
Not that I want to sleep in a ditch from time to time, just to ground myself but, every now and again, it might be an idea to stand in the rain for half an hour and thank your lucky stars that you don’t have to do it for fifty years before you die of accumulated misery with a few leaves as clothing and a dead rabbit as an umbrella.
Just saying. On to the news:
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PUBS & RESTAURANTS:
Current trading – Much to agree on but plenty of uncertainty.
• Points of little contention. Demand was there, wet sales outperformed food, the provinces outperformed London, suburbs traded more strongly than did city centres etc. The Daily Mail reports that Heineken has been rationing beer deliveries, table service apps have been overworked and the weather has held. But ‘most’ units remained closed (more so restaurants than pubs) and there is a general feeling that momentum (towards 17 May and 21 June) must be kept up, Covid passports are a potential major nuisance and more government aid (lower VAT & business rates etc) may need to be retained.
• Areas of uncertainty. Comps are skewed by the novelty factor, the Wall of Money and the good weather. Also, 2020 comparatives are meaningless and Easter Sunday in 2019 was 21 April – so it impacted comps (made them tougher) in the week after pubs reopened this year. Near term, the weather has reverted to average but it’s pay week and there’s a Bank Holiday coming (and another a month later). The major question is, how long will good trading last?
• Langton comment: See premium email
• The MA reports AB InBev as saying ‘we’re now busy producing all our brands, including Stella Artois, Corona and Camden, to meet surges in demand from our pub partners. This includes extra production over last weekend, when we saw especially heightened demand.’ Unlike Heineken, AB InBev says ‘we haven’t seen significant shortages of our brands but we keep in close contact with our customers daily to support them in this dynamic reopening period.’
• Alix Partners says that ‘Covid-19 anxieties are driving significant changes in consumer behaviour’. Speaking of the US, it says ‘our ongoing study of changing consumer priorities has found that two-thirds of consumers are optimistic about a vaccine. But while many will go back to spending through familiar pre-pandemic mechanisms, others will not abandon behaviours learned during this period anytime soon. It is imperative for consumer companies to understand what has and is continuing to cause these permanent shifts.’ It says ‘people have been riddled with anxieties about finances and physical as well as mental health over the last year. Our study has found that consumers who have felt the most vulnerable are more likely to exhibit permanently changed habits. Significantly, the survey found that these consumers span all age groups, genders, income levels, and locations.’
• KAM Media reports that ‘at-home hospitality’ is likely to persist post reopening. It says ‘consumer demand is significant with 9-in-10 wanting the brands which they’ve had in their homes during lockdowns to continue offering these ‘at-home’ solutions even when restrictions lift. 62% want their favourite restaurant brands to start selling ‘cook at home’ meal boxes nationwide.’ KAM in partnership with eCommerce platform Slerp says that ‘UK adults are so excited to finally meet up with friends and family that a larger than normal amount of socialising ‘at home’ is predicted; 36% said they will have friends/family over more often vs pre-pandemic.’ It says ‘41% of UK adults said they are planning on having picnics with friends and family, 31% are planning garden parties and 39% will invite friends and family for BBQs. And it’s not all happening in the garden, when restrictions allow 28% are
• KAM’s Katie Jenkins says ‘‘at-home’ solutions will soon hit the mainstream as we move towards a future of multi-channel hospitality. That means that where consumers may have been forgiving of the kinks in new delivery services during initial lockdowns, brands now really need to up their game. Competition is already pretty fierce and now is the time for operators to cement their brand as a ‘go to’ for their target customers and/or target ‘dine at home’ occasions.’
• Working from home:
• JP Morgan has told its US bankers that they should be back in the office, albeit on a rotational basis, by early July. UK flexible office company IWG has said that the bottom of the market has passed. It says the last three months were an “inflection point” in the pandemic. It hopes to be a beneficiary if employers downsize offices and move to more flexible solutions. Whitbread, which owns Premier Inn, said on Tuesday that the 50% of its business customers who are white collar rather than tradespeople, may not be back in force until September.
• This is a travel story but it clearly has implications for UK pubs & restaurants. Travel Weekly reports that ‘more UK travellers are looking at holidays in September, October and November than in 2019, with delayed demand lengthening the summer peak season.’ This per Skyscanner. If consumers stay in the UK for the period including the children’s summer holiday, then pubs & restaurants should benefit.
• Langton comment: See premium email
Company & other news:
• Deliveroo making back some ground at 256p.
• City Pub Group has announced the acquisition of a 49% stake in Kensington Park Hotel and announces that it has increase in shareholding to 24% in Mosaic Pub and Dining. See premium email.
• Yum! Brands yesterday reported Q1 numbers, saying that it was up against two-year-ago comps. It says system sales were ‘over $5bn’ with ‘accelerated off premises growth’. CEO David Gibbs says ‘first-quarter results reflect encouraging momentum across our business, including solid 2-year same-store sales growth and a meaningful uplift in unit development, underpinned by the focus and collaboration of our franchise partners and restaurant teams around the world.’ YUM says ‘while uncertainties remain due to the ongoing impact of COVID-19 in many geographies, with our iconic brands, world-class talent and a healthy franchise system we are poised to enter a post-COVID world with a long runway of growth ahead of us.’ YUM says worldwide system sales were up 11% in total and up 9% LfL.
• US company Tao Group Hospitality has bought the Hakkasan Group for an undisclosed sum. The enlarged company has 61 entertainment, dining and nightlife venues in 22 markets across five continents. Tao CEO Jason Strauss says ‘despite the challenges caused by the pandemic, we know there’s a real desire by people around the world to gather once again. As indoor dining and other hospitality experiences start to return to regular operations, we believe our newly combined company will be well-positioned to take advantage of this pent-up demand, setting the stage for long-term growth.’
• Starbucks, covered in yesterday’s email, now says that its U.S. sales have fully recovered from the impact of the pandemic by the end of Q2 this year. Digital sales has been an area of growth. Restaurant Dive suggests that traffic will rise further as consumers are vaccinated. It points out that AI has been helpful in driving digital sales. Restaurant Dive says ‘as American consumers look to spend their stimulus checks and engage with restaurants thanks to widespread vaccinations, transaction frequency could also improve. But growth in at-home coffee consumption, driven by pandemic conditions, could be an obstacle.’
• Langton comment: See premium email
Company news expected later:
• Delata, Flutter, Molson Coors, Texas Roadhouse, Royal Caribbean, McDonald’s, Twitter, Amazon.
FROM YESTERDAY’S PREMIUM EMAIL:
• Carlsberg has reported Q1 numbers saying ‘the Group delivered a good start to the year.’ It says total organic volume growth was 11.5% with reported growth of 12.8%. Organic growth was negative 5.8% in Western Europe through to +29.7% in Asia. The company updates on the full year saying ‘uncertainty remains high. However, in light of the good start to the year, we raise the bottom end of the range in our earnings expectations for 2021.’ It says organic growth in operating profit should be within the range of 5-10% (previously 3-10%).
• CEO Cees ’t Hart says: ‘COVID-19 continues to impact people across the world. As in 2020, our top priorities remain the health and wellbeing of our employees, supporting our customers to the best of our ability and safeguarding the financial health of the business.’ He says ‘the Group had a strong start to the year in Asia and Central & Eastern Europe, while Western Europe was significantly impacted by the extensive lockdowns and restrictions across the region. With COVID-19 continuing to be a challenge in many of our markets, our geographical exposure showed its strength, as strong volume growth in several markets across all three regions more than offset challenging circumstances in other markets.’ The CEO concludes ‘although the uncertainty as to how the pandemic will evolve in the coming quarters remains high, we’re pleased that we can raise the bottom end of our earnings
HOTELS & LEISURE TRAVEL:
• There are some concerns that the UK Covid testing system will be overwhelmed when overseas travel recommences. Magazine Which? Has warned that the travel test system is already struggling.
• PPHE Hotel Group has updated on trading for the three months ended 31 March 2021. See premium email.
• A YouGov poll of c1,400 people has found that 63% of respondents were not comfortable with the idea of travelling internationally when restrictions are lifted.
• Transport secretary Grant Shapps has told Sky that the NHS app will be used as a digital pass for overseas travel this summer. He also says the green list of countries will be published in the next ‘couple of weeks’.
• Spain hopes to reopen to foreign tourists in June under a digital health certification scheme.
• TUI says there is increasing demand for “greener and fairer” holidays
• Global Data has reported that the growth in interest for long haul holidays is sharper than that for shorter trips. It says its data ‘shows how general fatigue created by the pandemic has left travellers adamant that they need a radical change of scenery and may be willing to put considerable concerns aside to achieve this.’ Or maybe just at least research it on the internet.
• STR reports that ‘hope is in the air for the United Kingdom hotel industry.’ It says there are great hopes for 17 May but, for the moment, demand is sluggish. It says ‘occupancy now retains the same pattern it has since the beginning of the year, with weekday peaks of approximately 40% and weekend troughs of approximately 20%.’
• STR says that demand in the US for travel from larger groups is growing. Talking about sports, it says ‘teams that might have only played a few tournaments a year in the past are packing a tournament schedule to make sure that their players get exposure and get development to make up for lost time.’
• Willerby Caravans in Hull is to add over 100 jobs due to buoyant demand.
• Flutter has announced Q1 trading numbers. Gaming Realms has commenced trading on the OTCQX Market in the United States. Facebook & Apple have beaten Q1 estimates. See premium email.
• Google owner Alphabet has reported a 162% increase in net profits to a record $17.9bn in the three months to March.
FINANCE & MARKETS:
• Job numbers have been robust to date but Nestle is to make around 600 people redundant in the North East as it closes a factory to move production to Europe. The BBC reports ‘hundreds of car parts jobs are set to be axed after a firm [Toyoda Gosei] announced it was pulling out of the UK.’
RETAIL WITH NICK BUBB:
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TRADING STATEMENTS & EVENTS:
Upcoming results are set out below:
• 27 Apr 21 Whitbread FY numbers
• 27 Apr 21 Starbucks Q1 numbers
• 28 Apr 21 Carlsberg Q1 numbers
• 28 Apr 21 Nichols AGM
• 28 Apr 21 YUM Brands Q1 results
• 28 Apr 21 Sainsbury FY numbers
• 28 Apr 21 888 Q1 numbres
• 29 Apr 21 Molson Coors Q1 numbers
• 29 Apr 21 Royal Caribbean Q1 update
• 29 Apr 21 Texas Roadhouse Q1 numbers
• 29 Apr 21 WH Smith H1 numbers
• 30 Apr 21 Safestay General Meeting
• 4 May 21 Campari Q1 numbers
• 5 May 21 Ten Entertainment AGM
• 6 May 21 Shake Shack Q1 numbers
• 6 May 21 Bank of England MPC meeting
• 7 May 21 Intercontinental Hotels Q1 numbers
• Est 9 May 21 Barclaycard Consumer Spending (Apr)
• 10 May 21 Marriott Q1 numbers
• 12 May 21 Compass Group H1 numbers
• 12 May 21 Stock Spirits H1 numbers
• 12 May 21 TUI H1 numbers
• 12 May 21 Just Eat AGM
• 14 May 21 Tasty AGM
• 15 May 21 Premier Foods FY numbers
• 18 May 21 Britvic H1 numbers
• 19 May 21 Marston’s H1 numbers
• 20 May 21 Fevertree AGM
• 20 May 21 888 AGM
• 25 May 21 Restaurant Group AGM
• 25 May 21 Shaftesbury H1 numbers
• 26 May 21 C&C FY numbers
• 3 Jun 21 New River full year numbers
• 8 Jun 21 DP Eurasia AGM
• 15 Jun 21 Vianet full year numbers
• 24 Jun 21 Bank of England MPC meeting
• 23 Jul 21 Premier Foods Q1 update
• 27 Jul 21 Campari H1 numbers
• 3 Aug 21 Domino’s Pizza H1 numbers
• 5 Aug 21 Bank of England MPC meeting
• 10 Aug 21 Intercontinental Hotels H1 numbers
• 12 Aug 21 TUI Q3 numbers
• 18 Aug 21 Carlsberg H1 numbers
• 19 Aug 21 Rank FY numbers
• 22 Oct 21 Intercontinental Hotels Q3 numbers
• 26 Oct 21 Campari Q3 numbers
• 8 Dec 21 TUI FY numbers
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