Langton Capital – 2021-06-21 – WFH advice, loans & liability, staff, Recovery, staycations, BrewDog etc.
WFH advice, loans & liability, staff, Recovery, staycations, BrewDog etc.A DAY IN THE LIFE: In the same way that paint scrapes on the bollards in car parks tell an unpleasant story, so too do smeary nose prints on glass doors. Because, unless a door slams in your face or you walk, wholeheartedly and at pace straight into it, there is no particularly persuasive reason as to why you would find a nose print on a door unless it was that of a two year old toddler who thought it was a good idea at the time. Or a dog, of course, because there are very few places that they aren’t happy to put their noses but, for an adult human, a bit more care should be taken, particularly if you want to avoid heavy, swinging objects and thereafter talking with a nasal burr for a few days until you can get the congealed blood out of your schnoz. Anyway, enough of that. The weather’s set fair and, hopefully, England will progress tomorrow. On to the news: ADVERTISE WITH US: Langton’s free email now carries adverts. See front page of website for today’s copy & contact us for further details. CHANGED EMAIL FORMAT: The Premium Email is unchanged. The Free Email is written and pre-sent the evening before. It may not include breaking stories nor Langton comment. See Twitter for in-day comment. Let us know if you would like an example of the Premium Email. Prices: £295 for one subscription, £495 for multiple, both plus VAT. Or sign up for easy in, easy out monthly option: PUBS & RESTAURANTS: Working from home: • Guidance is clear at present. You should work from home if you can. But this is shortly to be withdrawn [was going to be 21 June and is now 19 July] and there are indications that the government will suggest employers and employees should make their own minds up. This has ongoing implications for pubs, bars, restaurants and coffee shops in town centres and near to commuter rail and tube stations. • New flexible season tickets go on sale today aimed at commuters who do not travel to work every day of the week. The tickets can be used for eight days in any one month. Bounce Back Loans and directors’ personal liability: • Company Rescue reports that, though anecdotal, it is hearing of multiple instances of the mis-use of the Bounce Back Loan Scheme. It says ‘we are hearing that some people have been applying for bounce back loans for their companies and then using the money to pay off debt either for the company or personal debt.’ It cautions that ‘just because they [the party making the loan] didn’t ask for guarantees doesn’t mean that under no circumstances would you per personally liable to pay them back if the company couldn’t.’ • Further comment: See premium email Staff shortages: • One of Langton’s ‘elephants’, there are plenty of comments in the Press regarding instances of staff shortages. The Telegraph says Tesco has sounded an alarm over driver shortages. It (The Telegraph) says the ‘UK faces shortfall of 65,000 drivers after EU workers leave the UK and driver training and testing is suspended during the pandemic.’ This may be temporary. But it probably isn’t and, even if it was, it is leading to supply chain problems and to inflation in the immediate term. • Further comment: See premium email • UK Hospitality has unveiled a ‘new 12-point plan to tackle the current staffing crisis facing an industry that remains in a hugely fragile state following more than a year of closures and severely restricted trading.’ It says ‘the plan focuses on short-term solutions the sector is facing but also looks at some medium- and long-term actions, outlining what both employers can do and how the Government can support these efforts’ and adds ‘this includes short-term actions to boost collaboration between the industry and Government, schools, colleges and universities, along with broader measures to improve perceptions of the sector as an employer, introduce new qualifications and grow the pool of available workers in the economy.’ • Further comment: Interestingly, the 12-points don’t include the obvious (quick and dirty) solution, which is to throw money at the problem. Pay staff more, pay higher retention bonuses, pay joining fees and pay staff to introduce colleagues. In the real world, all of these actions will be taking place and costs – and prices – will rise accordingly. Concentrating on non-financial issues, UKH says ‘hospitality offers a wonderfully diverse range of roles and exciting careers and is a stable employer for millions of people across the UK. Staff at all levels play a crucial role delivering world-class hospitality at the very heart of their communities, with employers large and small offering high-class training schemes, apprenticeships and career development pathways.’ Other trading & covid news: • The latest Market Recovery Monitor from CGA and AlixPartners ‘shows a strong reopening for some segments but jeopardy for late-night and independent businesses.’ It says ‘around 25,000 licensed premises were still shut at the end of May 2021’ and adds that ‘with strict restrictions including distancing and table service in place, CGA’s trading data shows that sales have been well below pre-COVID-19 levels in these segments in particular. The four-week delay to a full easing of trading restrictions in England until 19 July, with Scotland likely to follow a similar path, places many closed businesses in jeopardy of failure.’ • CGA’s Karl Chessell says ‘Britain already has nearly 10,000 fewer licensed premises than before the pandemic, and that number will sadly rise as a result of the government’s delay. Coming as it does on top of a mountain of challenges on debt, tax, rising costs, recruitment and much more, hospitality now deserves sustained financial backing to save thousands of businesses and jobs, and the government’s extension of the ban on commercial evictions of tenants is a welcome first step. The hospitality sector’s recovery is central to the UK’s economic revival, and more support like this is vital if we are to prevent further casualties.’ • The Federation of Small Businesses has warned that the UK hospitality sector is in a critical position and has called for a new strategy to help bolster operators. Research highlights the impact of the pandemic on the UK’s tourism and hospitality sector and its supply chain and the FSB points to the high levels of debt in the sector. It says ‘with mass closures and restricted openings over the last 15 months, COVID-19 lockdowns have shown just how important our pubs, restaurants, hotels and thousands of businesses in the supply chain are to both the economy and communities.’ • The HMRC reported on Friday that British food and drink exports to the EU fell by £2bn in the first three months of 2021. The sale of dairy products slipped by a non-negligible 90% leaving farmers, who will shortly face competition from Australian producers, to join the list of those wrong-footed by Brexit, Mr Johnson, or both in the last few months. (List incl. fishing industry, Ulster Unionists, EU grant beneficiaries in South Wales etc.) • The FDF says ‘the loss of £2bn of exports to the EU [in Q1 this year] is a disaster for our industry, and is a very clear indication of the scale of losses that UK manufacturers face in the longer-term due to new trade barriers with the EU.’ Dairy was down 90~%, fish down 52%, snacks down 39% and chocolate down 37%. Covid and transport issues will have added to problems caused by Brexit red tape. • CEO of The Crown Estate, Dan Labbad, said the estate and other property owners in the UK faced ‘obsolescence’ if they did not adapt as they would risk losing tenants to nimbler rivals and the potential redundancy of buildings that failed to meet rising environmental standards. • Agriculture industry members say that the UK faces shortages of British-produced meat as problems with recruitment continue due to Brexit and coronavirus. The poultry industry is reporting a 10% fall in the number of birds being slaughtered for meat in recent weeks. • The Telegraph runs a story saying that European retailers are still hamstrung by post-Brexit red tape. It says ‘EU store owners bemoan trade rules ‘nightmare’ as shelves left bare amid weeks of delays to shipments of British produce.’ Staycations: • Travel Counsellors has said that would-be holidaymakers from the UK are postponing their holidays due to the current levels of uncertainty and changes to the government’s traffic light system. It says that 31% of new holiday bookings made last week were for winter 2021-22, and 23% were for summer 2022. Travel Counsellors says ‘travel has of course become more complex than ever, with the traffic light system and latest FCDO advice to navigate.’ Company news: • Hotel Chocolat has announced that it has agreed to acquire the shares in Rabot 1745 Limited that it does not already own. The business currently operates a JV with Andrew Gerrie (the Non-Executive Chairman of Hotel Chocolat) to develop a range of beauty. Hotel Chocolat holds its c.47 per cent. of the issued share capital of Rabot through its subsidiary, Hotel Chocolat Limited. It says it has ‘agreed to acquire the remaining c.53 per cent. of the issued share capital of Rabot, including the 40.5 per cent. owned by Andrew Gerrie, for a total cash consideration of £4.00.’ • BrewDog co-founder James Watt has said in a Linked In post that he takes responsibility for the company’s culture and has said that the fact that this was deemed ‘toxic’ by some members of staff was his fault. Watt says the company is “very close to appointing an independent agency to conduct a review of our culture and people practices to ensure we can make positive and inclusive change at all levels of our business.” He says that the findings will be shared internally and externally before the end of this year. Watt says ‘the correct way to approach this situation is to focus all our energy on how we can use this platform to think differently, challenging ourselves to build a team and company we can all continue to be very proud to be a part of. Although this situation hurts a lot, I am determined to ensure we use it as a catalyst to become a better business.’ • Per The Telegraph, McDonalds plans to hire 20,000 more workers and open up to 150 high street restaurants in the UK and Ireland. Paul Pomroy, its UK CEO, said ‘People are using their local high streets in a different way, because they’re working from home at the moment, and I think local high streets will continue to be part of the fabric of the UK.’ • Itsu plans to open 100 new stores after founder Julian Metcalfe sold a 30% stake to Bridgepoint capital for around £200m, potentially valuing the chain at more than £660million overall. • Morrisons has rejected a £5.5bn takeover proposal from US private equity firm Clayton, Dubilier & Rice, saying it ‘significantly undervalues’ the firm. • Despite the above, insurance company Battleface says 48% of Britons will still consider travelling to Spain for a holiday this summer despite the country being on the UK’s amber list. Battleface says ‘there is still a huge appetite for international travel this summer.’ Inflation: • Another of Langton’s elephants gets plenty of coverage. The Telegraph says ‘households face a £700 blow as inflation rises to its highest level for a decade this summer, economists have warned.’ It says this could be the financial cost of rising prices to the average UK household. The natural response will be for workers in said household to ask their employer for a pay rise. The Resolution Foundation says ‘the temporary nature of this inflation spike means the Bank can look through it. But the £700 hit to living standards it will bring means households and the Government cannot afford to ignore it.’ • Further comment: See premium email • El Pollo Loco in the US is to test drone delivery via a partnership with drone operator Flytrex. Apparently, Flytrex orders take about a third of the time taken by road delivery. The Air Loco drones cruise at 32 miles per hour and have a wire release mechanism to lower the food orders from 80 feet. Let’s see how that goes. It will certainly give the neighbourhood dogs something to bark at. • Further comment: See premium email HOTELS & LEISURE TRAVEL: • Italian health minister Roberto Speranza confirmed that all visitors from the UK will be required to quarantine for 5 days upon arrival from Monday. The Netherlands introduced mandatory quarantine for UK arrivals from Tuesday, and Germany, Austria and France already have restrictions in place. • The Guardian reports that the UK govt’s ‘very cautious’ approach will see few countries added to the green list for travel at the next review, due by 28 June. • Manchester Airports Group is leading the call for a judicial review over the traffic light system’s ‘lack of transparency’, with British Airways and Virgin Atlantic joining the legal challenge. • Royal Caribbean International has reduced capacity on a UK-based ship as it tries to bring numbers onboard in line with government restrictions. The restrictions capping numbers at 1,000 passengers or 50% of the ship’s capacity could be in place for a further four weeks until July 19. • Business Travel Association CEO Clive Wratten said the UK corporate travel sector is in a ‘catastrophic’ state as the government ‘changes its mind like the weather’. Wratten said ‘There is a desire to travel but what is needed is confidence.’ • The BTA reports that the UK lost £3.18bn in GDP this week due to the decline of business travel trips following Covid-19, The data shows that in the second week of June, business travel trips from the UK dropped by 67.72% from 2019 pre-pandemic levels. • Balpa has reported that it believes the UK aviation industry has been the ‘hardest hit’ in Europe by restrictions on international travel. Balpa says this has been ‘caused by the UK government’s ludicrously cautious restrictions on international travel.’ It adds ‘hapless ministers give all the appearance of deliberately attacking aviation and tormenting the public with their mixed messages over summer holidays’ and adds ‘Balpa is demanding that the UK government gets its act together and opens the US routes and European holiday travel destinations that it has blocked with no published evidence at all.’ • STR’s latest Market Recovery Monitor shows that for the week ended June 12 the U.S. hotel industry sold more than 90% of the rooms that it did during the comparable week in 2019. OTHER LEISURE: • ByteDance, owner of TikTok, saw total revenue up 111% to $34.3bn in 2020, with annual gross profit rising by 93% to $19bn and a net loss of $45bn. • Spotify acquires Podz, a podcast discovery platform. Spotify said ‘We believe that Podz’ technology will complement and accelerate Spotify’s focused efforts to drive discovery, deliver listeners the right content at the right time, and accelerate growth of the category worldwide.’ FINANCE & MARKETS: • Further comment: See premium email RETAIL WITH NICK BUBB: • Further comment: See premium email TRADING STATEMENTS & EVENTS: Upcoming results are set out below: • 22 Jun 21 Coca Cola HBC AGM • 24 Jun 21 Carnival Cruises Trading Update • 24 Jun 21 Bank of England MPC meeting • 25 Jun 21 GfK Consumer Confidence • 30 Jun 21 Constellation Brands Q1 • 8 Jul 21 Fuller’s FY numbers • 13 Jul 21 Pepsi Q2 numbers • 21 Jul 21 Loungers FY numbers • 23 Jul 21 Premier Foods AGM & Q1 update • 27 Jul 21 Campari H1 numbers • 27 Jul 21 Games Workshop FY 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. |
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