Langton Capital – 2021-05-10 – State aid, Gregg’s, Hot Choc, path to reopening, current trading, travel traffic lights etc.:
State aid, path to reopening, current trading, travel traffic lights etc.:
A DAY IN THE LIFE:
Langton is facing something of a dilemma in that its lawnmower is at the menders and the grass won’t stop growing.
And the repair shop, obviously prioritising its big clients during what must be the busiest time of the year, has sat on the machine for nearly a month saying that it can’t get a part from Germany (I could have walked there and back by now) but that everything is being done to expedite matters.
Which would be fine if the grass had read the script and had taken a breather – but it hasn’t and now, after a week of solid rain, it’s heading for the sky at an alarming rate in an attempt to cut off the sunlight from about a billion happily flowering dandelions.
Anyway, being rude would just make matters worse so I’ve asked them to throw a weld on the mower (it’s a broken steering rod) and bring it back today. They can then get the steering rod when it turns up via three-legged pony express and then fit it on site.
That is, in my garden. Let’s see if that works. On to the news:
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PRIVATE COMPANY ACCOUNTS:
Accounts to end-March 2020, the period covered in the accounts reported to Companies House recently by a number of operators, are interesting if the comments contained therein refer to the Covid-19 pandemic but, if they do not, they have been well and truly overtaken by events. Here we look (very briefly) at Arc Inspirations (to 29 March 2020) today, and Rosa’s London (also to 29 March 2020) tomorrow. See premium email.
PUBS & RESTAURANTS:
More help may be required:
• UKH CEO Kate Nicholls has sent a letter to chancellor Rishi Sunak saying that the hospitality industry will need further support, even as trading restrictions are removed, reports Sky News. UKH calls for low interest loans and for help for tenants who are (or will shortly be) in discussions with their landlords as to how to deal with outstanding rent arrears. The moratorium on evictions is currently due to expire at the end of next month. With regard to debt, UKH says that government loan schemes have been ‘received positively’ but it says there has been some overpromising in that banks are not always interpreting the rules in line with Treasury comments. UKH says ‘many of our members report that they are being denied access to the full loan schemes by their banks. In particular, very few are able to extend their [CBILS] to the full ten years that is available to them [while] others
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The path to further relaxation of restrictions:
• PM Boris Johnson will today update on the proposed changes to regulations due to come in on 17 May. It is planned – and there are no reasons to think this should have slipped – for pubs and restaurants to be allowed to reopen indoors a week today. Hotels and theatres should also be allowed to reopen. The Sun reports an ‘insider’ as saying ‘the number of people dying or in hospital has fallen dramatically over the past few weeks and with two-thirds of adults now vaccinated, the risk of spreading the virus is also pretty low. At this stage there is nothing to suggest the PM will slam the breaks on his roadmap out of lockdown or that he will want to slow it down. But he’ll want to weight up all the evidence first before he fires the starting gun for the next step.’
• The weather, since reopening, has moved from good to dreadful to mixed. The latest CGA’s Drinks Recovery Tracker repeats its view that trading was good in mid-April but it says that ‘the week to last Saturday (1 May) proved much more challenging for pubs, bars and restaurants. Average like-for-like drinks sales were down by 38% on the equivalent week in 2019—nearly twice the deficit of 21% in the previous seven days.’ This is just for units that are open. Pubs and restaurants that have not reopened, still the majority, are down 100% (ex-delivery). CGA reports ‘the crucial Bank Holiday weekend was a washout for many operators, and drinks sales on Sunday (2 May) were down by 35% on the same Sunday in 2019. Worst hit of all was Bank Holiday Monday (3 May), when they dipped 66%. Wales bore the brunt of the weather, and takings were 85% down as a result.’
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• Cask beer sales have ‘surged’. We reported last week that Cask Marque maintains that cask ale has been the ‘most-missed’ drink for UK pubgoers during and coming out of lockdown. The drink is not easily replicated at home. Sky now reports that the ‘unbelievable’ surge in post-lockdown demand for cask beer is offering “a glimmer of hope” for the struggling UK pub industry. Production is said to have been ‘ramped up at breweries after some underestimated just how many pints would be sold in pubs after they reopened in last month.’ Sky quotes Timothy Taylor as saying ‘the last two weeks we have done similar volumes to what we did in the same two weeks of 2019 so that is unbelievable against the forecasts that people gave us.’ Brewing is a chemical process that can’t be hurried up. Long range weather forecasts aren’t really accurate enough to provide promises as to what the weather will be
Other Covid news:
• The Night Time Industries Association says, with 77.6% of the late night economy businesses more than three quarters in arrears on their rent, it has ‘campaigned for many months regarding the issue of commercial rents’. It says ‘with the end of the Forfeiture Moratorium looming the industry is desperate for a long term solution.’ CEO Michael Kill says ‘businesses Owners will continue to take on further rent debt through this period, which will inevitably compromise their future. This needs Government intervention.’
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• Tech. In the US, Restaurant Dive reports that ‘ninety-two percent of restaurant customers who are fully vaccinated plan to continue ordering online at least as often as they do now, while just 8% plan to return to dine-in as they did prior to the pandemic.’ Working out what will be the ‘new normal’ is critical (but hardly easy). The journal says the study ‘suggests that robust digital ordering capabilities are more critical for restaurants than other sectors, as online restaurant customers plan to maintain more of their current digital habits than grocery and retail shoppers, who are more willing to return to brick-and-mortar businesses.’
Company & other news:
• Gregg’s has updated on trading saying that it has seen a strong recovery in sales levels following the easing of restrictions. It says that its two year LFL in latest eight-weeks was down only 3.9% ‘with positive two-year LFL since non-essential retail reopened’. See premium email.
• Hotel Chocolat has also updated on trading saying that ‘despite physical retail locations in England being closed for six weeks during the period, including for both Mother’s Day and Easter, the Group’s revenue increased 60 percent compared to the prior year (during which physical retail locations were closed for 5 weeks, however, were open for Mother’s Day). See premium email.
• The Daily Mail reports that a study in the US has found that drinking a moderate amount of alcohol daily can lower the rate of heart disease.
• Wendy’s, the second largest burger chain in the US, is reported set to return to the UK after an absence of 20 years. The group plans up to 400 outlets nationwide creating at least 12,000 jobs. The first site will open next month, in Reading, followed by Stratford and Oxford.
• Hofmeister is launching two new beers it believes will help it capture its share of two of the fastest growing beer trends – a Weisse beer and a 0.5% Ultra Low Helles variety.
• Beyond Meat last week reported a larger Q1 loss than had been expected.
• Frosts in early April in Champagne may cause output losses of between 20% and 80%, depending on the location.
HOTELS & LEISURE TRAVEL:
Traffic light scheme:
• The colours were announced on Friday. Green countries such as Iceland, Brunei, Gibraltar, the Falklands, South Georgia, St Helena etc are unlikely to move the travel dial. Australia, New Zealand & Singapore are not mass-market destinations. Israel is putting on holiday capacity leaving Portugal, a destination to which bookings are reported to have exploded, as the only mass market holiday destination currently on the green list. Spain and Greece and France are amber. The new rules, which will see travel allowed to the above and other destinations – with different rules applying on return – from 12.01am on 17 May.
• Response. TTG reports that AITO believes the government’s traffic light list is a deliberate move by to keep Brits spending in the UK this summer. AITO says ‘we believe that keeping the British people stuck at home rather than on holiday abroad has been the government’s intention throughout – to ensure that its furlough payments are used solely to boost the UK economy, whether UK residents go on holiday in the UK or simply stay at home.’ Whether this allegation is true or not, keeping Brits in the UK will help domestic pubs & restaurants alongside hotels and holiday accommodation providers.
• Cabinet minister George Eustice has defended the reopening, saying that the move is a “modest first step”. The lists will be reviewed regularly with the first review due in three weeks. Thomas Cook reports that searches for Portugal holidays are up 264% whilst those for Gibraltar are up 277%. Thomas Cook says, however, that bookings are still lower than they normally would be at this time of year. Fellow cabinet minister Grant Shapps has said there will be delays at the border and he warned holidaymakers only to book holidays offering a refund if travel rules changed.
Other holiday & hotel news:
• Hull-based holiday home company Willerby is teaming up with Club Jupiter to “make caravans cool”.
• Viking will restart voyages from Malta for vaccinated guests this summer.
• STR reports that US hotel trading softened in the last week of April saying REVPAR for the week to 1 May was 65% of the 2019 level, the lowest number in the last seven weeks.
• Nintendo last week reported record full-year profits as its Switch console sold nearly 85m units. Unit sales are slowing but sales are ultimately expected to beat Wii’s 101 million lifetime sales some time during this year. Gaming has been one of the undisputed winners during lockdown.
FINANCE & MARKETS:
• The US economy added 266k jobs in April. This was a shade fewer than hoped, given the scale of the stimulus package in the US. The unemployment rate edged up to 6.1% with 9.8 million workers unemployed.
• China’s exports rose rapidly in April on the back of increased demand in countries, chiefly the US, that are now coming out of lockdown. Comps were heavily impacted by the start of lockdowns in a number of countries last year.
RETAIL WITH NICK BUBB:
• Langton comment: See premium email.
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 SB InBev Q1 numbers
• 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
• 11 May 21 Morrison’s Q1
• 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
• 14 May 21 Gregg’s AGM
• 18 May 21 Britvic H1 numbers
• 19 May 21 Marston’s H1 numbers
• 19 May 21 Premier Foods FY numbers
• Est 19 May 21 M&B H1 numbers
• 20 May 21 Young & Co FY 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
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