Britvic, Loungers’ webinar, recovery, passports, Coke, Chipotle & other:

A DAY IN THE LIFE:

I’ve never seen ‘Discoloured White With Water-Stains’ advertised as a colour on any tins of paint in the DIY shop but, the evidence of my eyes would very much suggest, it’s a colour that we’ve picked out with care and used on multiple occasions over the last few years.

Because that one on our walls, alongside ‘Two-Toned Creamy Grey With Embedded Flies & Other Insects (on our woodwork), seems to have been our hue of choice.

Of course it might be that, in the same way that all Plasticine ends up brown, paints just end up like this no matter how optimistically they start out but anyway, it’s too hot to paint anything at the moment so that’s all very academic.

Before we melt, let’s move on to the news: 

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HERE

LOUNGERS’ FULL YEAR WEBINAR:

Following the release of its full year numbers, Loungers hosted a webinar for analysts and our comments thereon are set out below:

Headline numbers:

• For the FY22, LfL sales are +23.7%. This includes a VAT benefit of around 10%. The underlying LfL increase ‘feels like it is around 10%’

• Only 34% of weeks were available in FY21 compared with 90% of weeks in FY20

• H1 was better as the co was open for a greater number of weeks & was helped by EOTHO. H2 was restricted, even before the lockdowns. The weaker margin includes higher company furlough contributions

• The VAT drop is worth 760bps to margin in the year under review. The margin bridge, which is a necessarily busy slide, is no14.

Balance sheet issues:

• Roll-out is now back on track. The group should open 23 this year. Probably 2 Cosy Clubs & 21 Loungers. The run rate will be over 25 a year. The pipeline ‘has never looked so exciting’. Loungers picked up 4 sites as a result of the Pizza Express CVA.

• Whilst not committing itself, the co says it would like to be in a position ‘to open more than 25 sites a year if it chose to do so’. It would add a 5th build team.

• The group does not expect to be opening in Zones 1 or 2 in London but an Ealing site is in the offing

• Further comment: See premium email.

PUBS & RESTAURANTS:

A long road ahead:

• Trade bodies UKH, the BBPA and the BII have combined to say that ‘ongoing Government support essential to help sector meet challenges and rebuild after the pandemic’. The joint release says that ‘the long-awaited easing of restrictions this week does not mark an easing of challenges for sector businesses. Chief among these are major concerns around staffing, the supply chain and tapering of Government support.’ It says ‘furthermore, the current ‘pingdemic’, as a result of the NHS Covid app, means up to as many as a fifth of staff in the sector are isolating at any one time. This is forcing operators to reduce operating hours or to close venues completely, threatening to derail recovery.’

• Further comment: See premium email.

• SIBA has written to the chancellor to say that ‘small independent brewers were left in limbo over Small Breweries’ Relief changes.’ It says the ‘changes could see more than 150 small brewers paying up to £44,000 extra per year to the Treasury. They could come into force within months leaving small brewers little time to prepare.’ SIBA says ‘Small Breweries’ Relief is pivotal for brewers’ survival, and we have now faced a year of uncertainty not knowing when changes will be made or how much extra brewers will have to pay.’ It adds ‘this is at a time when pubs have been closed for most of the past 16 months and small brewers are struggling to survive and repay debt. We therefore urge the Chancellor to support the sector and provide the certainty we need by not reducing SBR for those below 5,000hl.’

• Further comment: See premium email.

Covid passports & pingdemic:

• The Morning Advertiser reports that hospitality industry bosses have been left in the dark about the possibility of the Government introducing vaccine conditions for pubs and bars in the autumn. Boris Johnson’s spokesperson said ‘we’re going to use the coming weeks to look at the evidence, particularly both in the UK and globally before making a specific decision’. 

• The government has said it is ‘crucial’ that individuals alerted by the NHS Covid 19 app isolate themselves even if they were not contacted by NHS Test and Trace via phone, email or text. This message contradicts business minister Paul Scully, who said bosses and individuals should make ‘informed decisions’ about whether or not to self-isolate.

Company & other news:

• Britvic Q3. Good momentum, some caution as to further development of the pandemic. has reported Q3 revenue of £384.8m, an increase of 22.8% on last year. The company says it has seen ‘revenue growth in all business units’ and adds that ‘year-to-date revenue increased by 3.1% to £1,001.9m.’ Britvic says ‘we continued to deliver strong GB At-Home performance in Q3, with revenue ahead of last year throughout the quarter.’

• Further comment: See premium email.

• Coca-Cola Co has reported on Q2 saying that the company was raising its full year sales forecast after beating numbers to date. Sales in some markets in Asia were impacted in Q2 by the resurgence of the virus. The company rose adjusted overall revenue by 41.1% in Q2 and raised its annual organic revenue target to an increase of 12% to 14%, from the high single digits rise expected earlier. Annual adjusted earnings per share are expected to rise 13% to 15%.

• Chipotle has beaten Q2 sales & earnings forecasts but warns that higher beef and freight costs will offset the benefit of prices rises. The company says ‘Q3 is going to be challenged by several industry-wide issues.’ Sales were up 31.2% on last year (estimates +29.4%) with margins up to 24.5% from 12.2% in Q2 last year. The operator opened 56 new locations during the quarter.

• Remy Cointreau says it expects an ‘excellent’ first half due to the ‘shipment phasing effects’ and better consumption trends in the US alongside soft comps from next year. The company says it ‘remains confident in its ability to outperform the exceptional spirits sector.’ Sales in Q2 were up 105% to €293.1 million.

• Consumer spending. Chancellor Sunak has been told by the IFS that he will have to either raise taxes or cut spending.

• Further comment: See premium email.

• Top Hat, a ‘Monopoly’-themed restaurant, is to open at The Court on Tottenham Court Road, London.

• Fountain Beverage Co.’s Hard Seltzer is to commence a multi-million-pound investment campaign. UK Partner, Jon Hamm, comments that ‘as a successful start-up in the U.S we are delighted by the momentum of Fountain in the UK. There is a huge amount of potential here.’

• Big Hospitality reports that Market Halls is launching a £1m crowdfunding campaign on Seedrs early in August. The London-based food hall operator currently has three locations; Victoria, Fulham and the West End and plans to launch a site in Canary Wharf next year.

• Cobra Coffee has acquired Amsric Ltd, a Starbucks franchisee with 12 stores, taking the total number of Starbucks stores Cobra operates to 47.

• JTF Mega Discount Warehouse has entered administration after a potential takeover deal collapsed at the last moment. JTF is a retail discount chain with 12 outlets across the Midlands and North of England, selling toys, health and beauty products and home and garden furniture.

HOTELS & LEISURE TRAVEL NEWS:

• Per the Guardian, basic checks on people arriving in England from green and amber list countries will no longer be required by border officials, according to leaked instructions. One officer said ‘The only rationale for this change is to speed up queue times when travel is expected to increase. At a time when the country is unlocking, this is the time when we should be using every tool available to mitigate the risks, not turn a literal blind eye’.

• Travel Supermarket has said that Lanzarote is the best value package holiday destination for a last-minute peak summer holiday.

• STR reports that the US hotel industry recorded its highest monthly occupancy and revenue per available room (RevPAR) since October 2019 in June. It says occupancy was 66.1% with rates $129 and REVPAR $85.31. STR says ‘in addition to higher occupancy and RevPAR levels, ADR was the highest for any month since February 2020. While year-over-year percentage changes show significant increases because of comparison with a pandemic-affected period in 2020, the country’s performance levels remained below the pre-pandemic comparable of June 2019: occupancy (-9.8%), ADR (-4.0%) and RevPAR (-13.4%).’

• IATA reports that 89% of respondents in 11 countries would like to see a global standard for Covid vaccines, testing and certifications. IATA says ‘almost two thirds of respondents plan to resume travel within a few months of the pandemic being contained and borders opened. And by the six-month mark almost 85% expect to be back to travel.’ It adds ‘to avoid overwhelming airports and border control authorities, governments need to agree to replace paper-based processes with digital solutions like the IATA Travel Pass for vaccine and testing documentation.’

• ‘Escape the Everyday’ a UK-wide campaign to drive domestic day trips and overnight breaks is being accelerated with the launch of more than 1,200 digital billboard adverts showcasing activities and experiences in cities across the UK alongside radio adverts.

• The Caterer reports UK hotel property deals bounced back during the first half of 2021. Total hotel investment volumes reached £1.7bn across 59 deals between January and June 2021, an increase of 135% compared to the previous six months. The figure is below the pre-pandemic five-year average of £2.43b for the same period. 

• Carnival Cruise Line said  it hopes to resume sailings on its entire fleet by the end of the year, which would add another nine vessels, totalling 63 ships.  

OTHER LEISURE:

• Netflix confirmed it is moving into video games as it reported a sharp slowdown in subscriber growth, adding only 1.5 million subscribers in the April-June quarter compared to 10 million in the same period a year prior. Netflix said the pandemic had resulted in “unusual choppiness” in its growth.  

FINANCE & MARKETS:

• UK government borrowing. The ONS reported yesterday that net government borrowing in June was £22.8bn. Though down on last year, this is the second-highest June borrowing since monthly records began in 1993. Tax receipts were £62.2 billion with central government spending of £84.1 billion (the latter is £2.5 billion more than in June 2020.) The shortfall of income vs expenditure will need to be born in mind when estimating whether the chancellor can continue making payments and concessions to the hospitality industry.

• Further comment: See premium email.

• The HMRC reports that 213,120 property sales were completed during June, more than twice the total in May.

• Lord Frost has said that the Northern Ireland protocol, which he negotiated, is not working. The EU has refused the UK’s demand to negotiate it again.

• Sterling up at £1.3714 and €1.1624. Oil up at $71.15. UK 10yr gilt yield up 5bps at 0.61%. World markets better yesterday and London set to open up by about 12pts as at 7am.

RETAIL WITH NICK BUBB:

• Further comment: See premium email.

TRADING STATEMENTS & EVENTS:

Upcoming results are set out below:

• 22 Jul 21 Britvic Q3 update

• 23 Jul 21 Premier Foods AGM & Q1 update

• 23 Jul 21 GfK UK Consumer Confidence numbers

• 27 Jul 21 Campari H1 numbers

• 27 Jul 21 Games Workshop FY numbers

• 27 Jul 21 Starbucks Q3 numbers

• 28 Jul 21 Marston’s Q3 trading update

• 29 Jul 21 Molson Coors Q2 numbers

• 29 Jul 21 YUM Q2 numbers

• 29 Jul 21 Texas Roadhouse Q2 numbers

• 30 Jul 21 DPP AGM

• 3 Aug 21 Domino’s Pizza H1 numbers

• 3 Aug 21 AG Barr H1 trading update

• 5 Aug 21 Bank of England MPC meeting

• 10 Aug 21 Intercontinental Hotels H1 numbers

• 11 Aug 21 Deliveroo H1 numbers

• 11 Aug 21 Hostelworld H1 numbers

• 12 Aug 21 TUI Q3 numbers

• 18 Aug 21 Carlsberg H1 numbers

• 19 Aug 21 Rank FY numbers

• 2 Sept 21 Jet2 AGM

• 22 Sept 21 Ten Entertainment H1 numbers

• 1 Oct 21 JW Wetherspoon

• 22 Oct 21 Intercontinental Hotels Q3 numbers

• 26 Oct 21 Campari Q3 numbers

• 24 Nov 21 Britvic FY 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.