The consumer, NewRiver, Playtech, Games Workshop, staffing & other:

A DAY IN THE LIFE:

So, the number of out-of-office replies to our morning email roughly trebled this Monday and, rather than try to beat the holidaymakers in question, Langton will soon be joining them.

Hence, there will be no email next week or the week after as we jet, or rather drive, to the sunny climes of the Yorkshire Dales followed by the steamy environs of the Deep South (a.k.a. the Derbyshire Peak District).

We’ll be doing out bit, undertaking on-the-ground, staycation research. This will doubtless involve chatting up publicans, sampling beer, pies and chips and shovelling down ice-cream.

But we’re here for the remainder of the week and, come holiday-time, we’ll tweet the odd bit on @brumbymark. On to the news:

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PUBS & RESTAURANTS:

The consumer:

• The latest Deloitte Consumer Tracker, covering Q2 this year, shows that ‘consumer confidence bounced back to its pre-COVID-19 level.’ The accountant says its confidence index gained ‘nine points compared to the same period a year ago. It marks the highest ever recorded yearly growth and is back to levels of confidence seen last in January 2021.’ It says that consumer spending in the quarter shifted ‘from goods to services as discretionary spending increased by 19 percentage points this quarter compared to Q1.’ It says ‘food and drink manufacturers had to switch their efforts rapidly from mainly supplying the grocers to also supplying the food services and the hospitality sectors.’

• Deloitte points to four trends. These have been covered here & elsewhere and include ‘a focus on health and sustainability, the proliferation of online shopping channels, the increased demand for direct-to-consumer models (DTC) including especially the subscription model’ and the use of intelligent technology to personalise goods & services.

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Trading:

• IGD predicts that food-to-go will be worth £15.6bn at the end of 2021, 82.5% of its 2019 value. It is forecast to return to its pre-Covid levels in the second half of 2022, six months earlier than expected. Nicola Knight, Senior Analyst for Food-to-Go, said ‘by 2026, the market will be worth £22.7bn which is 20.5% more than 2019.’

• However, IDG also found that in retail, the share of the food-to-go market is forecast to reduce to 21% in 2021 from 24% in 2019. Nicola Knight said ‘In 2021, retailers have faced increased competition from foodservice operators who adapted quickly to changing consumer habits and demands. And, due to the decrease in demand and shift in shopping habits, retailers reallocated space to other categories.’

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Staffing shortages:

• The COVID operations sub-committee of Cabinet will meet later to discuss extending the rollout of daily COViD testing sites to ease the concerns of industry and frontline services by allowing further exemptions from isolation. The hospitality industry is not expected to be covered.

• UKHospitality warns that hospitality ‘faces a summer of venue closures and reduced service’ as workers will not be exempt from self-isolating if they are ‘pinged’. Kate Nicholls, CEO of UKHospitality, said ‘We now face a summer of venue closures and reduced service, when we should be at a seasonal peak. The sector will do all it can to provide great service, but it will be with one hand tied behind our back.’ 

• Ranjit Singh Boparan, owner of casual dining chains and 2 Sisters Food Group, warned that even the Christmas turkey was under threat because of a wider shortage of skilled workers, such as butchers, in the wake of Brexit, in an interview with Sky News.

Company & other news:

• The Guardian looks at how the new normal could differ from the old. Time will tell but it points to increased pavement drinking, table service and the use of apps. It says there could be fewer independent pubs and more chain outlets.

• The NTIA is calling on supporters of the late night industry to write to their MPs to call for more support for venues and for fewer restrictions on trade.

• NewRiver Q2 updated. Having announced yesterday that it had agreed to sell its pub business, Hawthorn Leisure, to Admiral Taverns, NewRiver has this morning updated on Q2 trading saying that ‘our operational metrics including rent collection, leasing activity and occupancy have remained strong throughout the first quarter and, most significantly, the Company has agreed terms to dispose of its Hawthorn pub business, which delivers on a key strategic priority announced in April 2021.’

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• In the US, Boston Beer’s latest numbers reportedly suggest that the boom in sales of hard seltzers could be abating. The company reported Q2 sales of US$602.8 million, up on last year but below Wall Street’s expectations. The company says ‘the hard seltzer category and overall beer industry were softer than we had anticipated.’

• Black Box Financial Intelligence in the US has confirmed that June sales across the US restaurant industry have recovered to pre-pandemic levels. The sector analyst reports that spend per head is up but declining guest counts could still be a cause of concern.

• Albert Schloss is reported set to open a unit in Birmingham, perhaps in November as a part of the Paradise development. The company says this is ‘set to be a retreat from the modern world, where guests are invited to discover new things, celebrate one another, and revel in the wünder of Schloss. Expect roaring fires, raucous performances, tankards of Europe’s finest bier, and endless naughtiness’.

• HGEM research shows that consumers are divided over the removal of facemasks in hospitality settings, with 50% of respondents saying they believed masks should be worn in pubs, restaurants, and other foodservice venues. Almost four out of five consumers believe staff must continue to wear facemasks, and moreover, 58% would be less inclined to visit a venue if they knew mask wearing was not required for staff.

• Per MA, nightclubs in the UK are set to require vaccine passports in the style that is about to be enforced in France for all hospitality venues. Ariane Lapègue, Charles Wells country manager France, said ‘From August, to go into a pub or a restaurant you need to show your Covid passport on your phone and the bar or restaurant will need to scan it…We will need to have more staff otherwise the staff won’t be able to check.’

HOTELS & LEISURE TRAVEL NEWS:

Traveller numbers. Signs of life but only partial recovery

• Ryanair reports a surge in bookings over recent months, leading the airline to be hopeful of a ‘strong recovery’. In its Q1 the firm saw a 196% increase in revenue as well as customer numbers rising from 500,000 to 8.1 million.

• Research by York Aviation for Airlines UK shows that more than half a million jobs are reliant on the aviation sector’s revival, with average salaries 22-60% above national average. The organisation’s chief executive Tim Alderslade added ‘Almost every constituency in the UK is impacted, and many are truly dependent on the well-paid jobs aviation generates.’

• Heathrow will introduce a £5 drop-off fee in October for arrivals by car, taxi or private hire vehicle. Blue badge holders and emergency service vehicles will be exempt. Heathrow reported an adjusted pre-tax first-half loss of £787m and cumulative losses from Covid-19 of £2.9bn. 

• Airlines UK maintains that international travel from the UK is yet to “meaningfully” recover, despite the easing of some restrictions. Us visitor numbers to the UK are running at around 20% of pre-pandemic levels. Visitor numbers from the EU are at around 65%.

US travel:

• In the US, Destination Analyst reports that optimism about the pandemic in the U.S. has plummeted and regression in safety perceptions has caused Americans to feel like normalcy is now further away. Expectations that the pandemic will get worse rose to 43% this week, compared to 19.6% last week. A quarter of Americans have postponed an upcoming trip and 18.9% have cancelled a trip specifically due to the Delta variant.

• Reuters reports that the US is to retain its ban on travellers into the country from the UK in light of rising infection numbers in the US and remaining high numbers here. It quotes an official at the CDC as saying ‘given where we are today with the delta variant, the United States will maintain existing travel restrictions at this point.’

Hotels:

• STR reports that ‘the U.K. continues to lead Europe in hotel occupancy with four straight weeks above 60%.’ It says ‘demand is almost exclusively leisure-driven as the U.K. has benefitted from a successful vaccination program, a phased reopening and improved travel sentiment overall.’ STR adds ‘other countries are showing improvement in recent weeks for those very same reasons, but this is still far from a normal summer in Europe.’ The highest occupancy level in the UK, some 63.5%, came in the week to 18 July.

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OTHER LEISURE:

• Games Workshop Group has reported full year numbers for the year to 30 May saying that revenue for the year rose to £353m from £270m last year with PBT up to £150.9m from £89.4m.

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• Tesla has reported a surge in profits during Q2. The company reports that sales rose to $12bn in Q2, up from $6bn a year ago – admittedly at a time when its US factory was shut down. The carmaker delivered a record 200,000 cars in the quarter. Tesla says ‘we continue to work hard to drive down costs and increase our rate of production to make electric vehicles accessible to as many people as possible.’

• Playtech has updated on trading saying that its ‘very strong online performance continues.’

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FINANCE & MARKETS:

• The EY Item Club has reported that the British economy is growing at its fastest rate in 80 years. It says that it could recover its pre-pandemic size by the end of this year. The economy contracted by 9.8% last year and could grow by 7.6% this.

• The Item Club goes on to warn of the rising threat from inflation saying that this could impact growth. It says inflation could hit 3.5% by the end of this year and the unemployment rate could rise to 5.1% before falling back to 4.6% in 2022. EY says ‘while consumers have accumulated their largest stockpile of savings since the second world war, the big question is whether they will actually start to spend these funds once restrictions on activity are lifted. The assumption is that they will, but this is not guaranteed. The picture for consumers is not entirely positive: savings are concentrated among higher-income households, while higher unemployment and inflation will weigh on real income growth.’

• Zoopla points out that UK house prices have almost tripled in the last 20yrs.

• Sterling stronger at $1.3827 and €1.1715. Oil up at $74.76. UK 10yr gilt yield up 1bp at 0.58%. World markets mixed yesterday. London set to open down around 17pts.

RETAIL WITH NICK BUBB:

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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

• 27 Jul 21 NewRiver H1

• 27 Jul 21 Campari Q2

• 28 Jul 21 Marston’s Q3 trading update

• 29 Jul 21 M&B Q3 trading update

• 29 Jul 21 Diageo Q4 & FY

• 29 Jul 21 Compass Q3 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

• 3 Aug 21 Marriott Q2 numbers

• 5 Aug 21 Bank of England MPC meeting

• 5 Aug 21 Shake Shack Q2 numbers

• 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

• 15 Sept 21 Restaurant Group H1 numbers

• 21 Sept 21 Compass Group full year update

• 22 Sept 21 Ten Entertainment H1 numbers

• 23 Sept 21 Playtech H1 numbers

• 1 Oct 21 JW Wetherspoon

• 22 Oct 21 Intercontinental Hotels Q3 numbers

• 26 Oct 21 Campari Q3 numbers

• 23 Nov 21 Compass Group FY numbers

• 24 Nov 21 Marston’s FY 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.