Death of cash, trading, shape of recovery, Campari, foreign holidays etc.:

A DAY IN THE LIFE:

Observing our dog lolling around the house, I have to conclude that he has a genetic fondness for being trodden on.

That and for having hot beverages showered on him from above because I’ve lost count of the times that I’ve stepped on his ears or on other sensitive parts of his anatomy and the similarly countless occasions on which I’ve slopped hot tea or coffee on him as I’ve failed to notice a humungous dog beneath my feet and have shed whatever dangerous, hot, heavy, sharp – but sometimes tasty – material I was holding.

And he seems to recognise this is an accident.

Somewhat remarkable coming from an animal whose nose means he’s aware of everything within twenty feet of him at all times even when asleep. Maybe he just thinks we’re pitifully slow-witted. But he’s OK with the situation so I can only assume that there’s some evolutionary advantage derived as a result. On to the news:

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A COMMENT ON THE REDUCED USE OF CASH:

Covid has been a catalyst for, and an accelerator of, change. See premium email.

PUBS & RESTAURANTS:

In the premium email:

• Detail on cashless trading. News on Britvic, staff shortages, Playtech, Lyft, NHS app (for holidays) etc.

Post reopening trading:

• The latter part of the Bank Holiday weekend was impacted by bad weather. Not including the Monday, six degrees during the afternoon and driving rain in York, S4Labour comments on sales last week, saying they ‘were down 1.2% on the previous week. However, the decline was driven from weak performance in London, where week on week sales slipped 9.1%. Sites outside the capital grow sales by nearly 1% on the previous week.’ Given the poor weather, this is perhaps better than might have been feared. S4Labour reports ‘the number of sites that were open also declined last week. For the first two weeks since the rules were relaxed to allow outside trading, circa 55% of sites were open, however, that figure slipped to 48% last week.’

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Shape of the recovery:

• As foodservice analyst Peter Backman says, there have for some time been many questions about the shape of any future recovery in the foodservice sector. Various letters have been suggested, V, U, W etc. Backman suggests a K shape – where the outlook for winners and losers is radically different. Working with economists at the IGD, Backman suggests there will be winners and losers. He says ‘winners will be those able to play their part in deploying the £100 billion that has accrued in combined UK consumer savings.’ Losers may fall by the wayside.

• Backman points out that hospitality players will not just be battling each other. He says ‘retail will do its hardest to retain the nearly £13 billion it gained form foodservice in 2020. It will do this in a variety of ways, but all will end up putting price pressure on the foodservice sector. He says that, with this in mind, trying to compete on delivery may not be the best choice. He says ‘in choosing to grow via delivery, foodservice operators have chosen to fight battle without the tool that gives them their competitive edge: hospitality. This, I fear is a mistake that will pile on additional pressure for the recovery of foodservice.’

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• On a similar theme, Pragma Consulting reports ‘over the next six months, Britons are forecast to spend over £23bn on leisure activities and holidays in the UK. This will provide a much-needed uplift and rejuvenation to the economy, and planned events such as the Euros and music festivals will have a positive impact on other parts of the economy, including retail.’ This is true, but it depends very much on how the upcoming overseas holiday versus staycation tussle pans out.

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• Pragma touches on the ‘new normal’ saying it isn’t clear what it will be. It says ‘though the willingness to get out and about and socialise is broadly accepted, the ability to regularly do so is less-clear cut.’ We believe that money and confidence could be limiting factors though, in the short term, demand is likely to be strong.

Company & other news:

• Campari has reported strong Q1 numers saying that sales rose 17.9% organic growth to €397.9 million. The number is up 12.1% on the same quarter in 2019. CEO Bob Kunze-Concewitz says this is a ‘very solid and satisfactory start to the year’. Home consumption has been strong but the company points out that Q1 is a low-sales quarter and, this year, it was ‘amplified by an easy comparison base as well as an early Easter effect.’ The company says ‘looking at the remainder of the year, in addition to a marginally worsening exchange rates outlook. volatility and uncertainty remain due to the ongoing restrictions and the timing of the vaccine roll out in the European Union, affecting the on-premise channel as well as Global Travel Retail.’

• The FT reports that Australian wine company Accolade is planning to float on either the Australian Stock Exchange or the Hong Kong stock exchange.

HOTELS & LEISURE TRAVEL:

Leaks & comment ahead of official statement on leisure travel:

• The Press seems to believe that ‘fewer than 10 countries’ could be green when further details about the UK’s traffic light system are revealed later this week. The countries could include Malta and Gibraltar which, though wonderful destinations, are limited in capacity term. The Guardian quotes a ‘source’ as saying ‘it will be a cautious approach, but then things could start to change quickly.’ Portugal believes it will be on the green list.

• The travel industry has pushed back against the suggestion from a group of cross-party MPs that, even when consumers are allowed to take foreign holidays, they might be well advised not to do so. Thomas Cook says ‘holidays will be back on this summer’ per the Guardian.

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Company news & hotels:

• London based escorted tours operator Go Tours is reported to have secured a £4.25m refinancing package from SME funding specialist ThinCats.

• Travelodge has announced that it will open 17 new hotels across the UK in 2021.

• The New York Times reports that ‘as hoteliers in France are preparing to reopen their doors as the national lockdown lifts this month, many are finding that long-furloughed employees have moved on, leading to a rush to fill open positions.’ This will be an issue across other hotel markets and across hospitality in general.

• STR reports that total revenue for U.S. hotels reached 50% of the comparable 2019 level in March. A milestone of sorts.

OTHER LEISURE:

• Odeon has joined Cineworld in saying it will reopen the majority of its screens on 17 May.

• Fortnite’s owner Epic Games has announced the acquisition of the artist portfolio community Art Station.

IN YESTERDAY’S PREMIUM:

• Domino’s Pizza Group plc has confirmed that the transaction to sell Domino’s Sweden completed on 2 May 2021.

• German meal-kit delivery company HelloFresh reported today that its active customer base grew by 74% in the first quarter.

• Nightcap, the newly listed bar company that owns the London Cocktail Club estate, has announced it has agreed to acquire the Adventure Bar Group.

FINANCE & MARKETS:

• Markit yesterday reported that the UK’s manufacturing PMI had risen to 60.9, the highest level since 1994. Markit says ‘further loosening of COVID-19 restrictions at home and abroad led to another marked growth spurt at UK factories.’ It says ‘export growth remains relatively subdued, however, as small manufacturers struggle to export.’ Markit separately reported a Eurozone manufacturing PMI of 62.9 for April, the strongest output growth in the history of the survey.

• The Bank of England reported yesterday the biggest net increase in mortgage lending on record in March driven by extension of the stamp duty rax relief.

BOOK REVIEW: THE HONEST TRUTH ABOUT DISHONESTY – DAN ARIELY:

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RETAIL WITH NICK BUBB:

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TRADING STATEMENTS & EVENTS:

Upcoming results are set out below:

• 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

• Est 19 May 21 M&B 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

• 26 May 21 Playtech AGM

• 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

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.