Langton Capital – 2021-08-23 – Confidence, supply issues, Shaftesbury & W End, Covid passports etc.:
Confidence, supply issues, Shaftesbury & W End, Covid passports etc.:A DAY IN THE LIFE: Why is it, and I ask this as a man myself, that men believe they deserve a medal if they empty the kitchen bin? Is it that we assume the bin magically emptied itself for the three weeks between us stepping up to do it or is it the familiarity bias, such that we are familiar with the work we do ourselves but fail to recognise all of that done by others? Maybe the latter but, more importantly, when trying to keep out of the rain and being dragged into The Range over the weekend, I noted that the summer and camping stuff had pretty much disappeared and there were shelves and shelves of Halloween and even Christmas bumph cluttering up the shop. Hence, with 4mths or so to go to the big day in the real world, it’s just around the corner in retail and, now that I’ve seen the evidence with my own eyes, I know where to go if I want to stock up on baubles in good time. Anyway, when we commented a week or so ago that Hull City was starting its relegation battle earlier, we had meant it as a joke. The team, apparently, thought otherwise. 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 now largely written 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: Trading:
• A UKH survey using data provided by CGA suggests that consumers returned to the pub more rapidly this July (Freedom Day, lockdown 3.0) than they did last summer. UKH is still warning, however, that the industry remains in a fragile state with businesses fighting for survival on a number of fronts, not least the critical shortage of staff. CEO Kate Nicholls says ‘the hospitality sector is by no means out of the woods.’ She adds ‘Hospitality venues are struggling to return to pre-pandemic levels of revenue with staff shortages hindering their recovery. In order to rebuild, the sector needs the Government to put in place a supportive landscape which includes an extension of the business rates holiday until at least October and a permanently lower rate of VAT for the sector. Such measures will allow the hospitality sector and the people it supports to play a full role in the UK’s economic • Property company Shaftesbury has updated on trading this morning saying that it has seen a ‘significant reduction in vacancy as West End footfall and trading recover, and operating environment improves.’ It says ‘so far, weekly West End footfall has recovered to 50%-60% of pre-pandemic levels as Londoners, domestic day trippers and staycation visitors have returned in growing numbers.’ It says it anticipates the ‘return of the West End’s exceptionally large office-based working population…from early autumn.’ • Further comment: See premium email. Demand: • Confidence is much in the news with data out from GfK, Lloyds Bank, the ICAEW (business confidence) and comments from UKH and CGA. UKH, using data provided by CGA, reports that the bounce-back in trade in July this year was partly due to the fact that there is ‘growing consumer confidence when it comes to hospitality experiences.’ It says there is ‘consumer confidence in the extensive hygiene and safety measures put in place by hospitality venues’ and adds that, ‘at the end of the first lockdown last summer, hygiene and cleanliness were the number one consideration for people when deciding which venue to visit. This year, that has slipped to fourth place behind price, convenience and quality of food. Pre-pandemic, hygiene and safety was the fifth priority for customers of the on-trade.’ • GfK on Friday reported that consumer confidence was holding ‘fast to pre-pandemic levels at minus 8 in August.’ It says ‘expectations for personal finances in coming year are holding up well’ and adds that, of its five measures, ‘two measures were up in comparison to the July 23rd announcement, two measures were down and one stayed the same.’ • Further comment: See premium email. • Some consumer caution. CoMix has suggested that there is still some consumer caution when it comes to meeting people face-to-face. • Further comment: See premium email. Supply – staff: • With the pingemic abating, it’s to be hoped that the worst of pub closures and reduced opening times are behind us. Brexit shortages may still be felt, however. KAM Media says that it ‘seems like the combination of Brexit and Covid have caused many issues in the UK Hospitality industry- from a shortage of drivers to deliver products to a shortage of staff to cook, pour and serve them.’ It calls for a greater appreciation of the degree of job satisfaction that can be derived from a career in hospitality. However, in the short term, there is work to do as KAM says its ‘research told us that only 1-in-5 UK adults consider Hospitality to be an appealing industry to work in.’ • Further comment: See premium email. • The latest Lloyds Bank UK Recovery Tracker has reported that the tourism and recreation sector, which includes pubs & restaurants, saw growth slow, as the impact of staff shortages led to sales being lost. • Further comment: See premium email. Supply – goods: • The MA reports that two thirds of hospitality businesses are ‘not receiving goods’. It quotes UKH as saying that there are “enormous challenges” in the supply chain. UKH says that a shortage of stock ‘has the knock-on impact of reducing the menu they can offer customers and hitting sales.’ • The government is coming under pressure to sort out the shortage of lorry drivers and, though the immediate concerns re strike action have abated, there are residual fears that some UK pubs could run out of beer this weekend. • Further comment: See premium email. Demand – working from home: • Where people are, physically, will have an impact on what hospitality goods and services are demanded and where, geographically, that demand is likely to be felt. There is a stuttering return to work going on. This is not all going one way and Bloomberg reports that Apple has delayed recalling staff to the office until January next year at the earliest. Covid cases in the US are currently rising (as they are in the UK). The tech giant had previously indicated that staff would be expected back in the office from early next month. Twitter has also paused the physical reopening of its offices and has closed offices in San Francisco and New York again. Demand – red tape, lack of clarity & other: • The Times reports the nightclub sector as saying ‘there were “clear signs” of a slowdown in bookings from the end of next month amid conflicting signals from the government over vaccine passports.’ It quotes The Sunday Telegraph as attributing to No10 that the government was “planning to make full vaccination the condition of entry to nightclubs”’. • Further comment: See premium email. Other Covid news: • Vaccine passport policy unclear. The Sunday Telegraph says that hospitality leaders have told ministers that they have ‘no idea what their policy actually is.’ PM Boris Johnson has said passes would be required to attend large venues. Sajid Javid has said that “no final policy decision has yet been taken,” leaving the industry somewhat in the dark. Kwasi Kwarteng toes the no10 line saying vaccine passports are “certain to happen now, in certain limited, restricted areas” but adds “I’m just not committing to what those areas are. But I’m ruling them out for pubs.” • Further comment: See premium email. • In the US, spend per head is said to be up 20% in Q2 this year compared with two years ago. • Further comment: See premium email. Company News: • Leon has announced that Nick Ayerst is to step down as MD of the restaurant business. Glenn Edwards will take up the role. • Busaba Ethai expects to be cash generative at the operational level this year. The company has just reported full year numbers to Companies House. • Mark Davies has stepped down as CEO of Hawthorn following the completion of the sale of the business to Admiral Taverns. Mr Davies says ‘running Hawthorn has been a great honour in my career. In seven years, we have built a leading and well-respected community pub company with a high-quality management team, a best-in-class operating platform and industry-leading licensee satisfaction scores. This is a testament to my team, the culture that we have created, and the way we run our business.’ • Gordon Ramsay is rumoured set to take Drake & Morgan’s Refinery site in Edinburgh. • See comments on M&S and its potential recovery under Nick Bubb below. • Taking money out of the punters’ pocket. Bus fares outside London are reported to have risen by two thirds since 1995. • Pizza Pilgrims’ ‘at home’ DIY pizza kits will be available to buy from Ocado from 20 August. Co-founder James Elliot said ‘we’ve been so amazed at how many people from Scotland all the way down to Exeter have discovered the brand through our kits’. • FIXR has partnered with Eclectic Bars to provide the bars with advanced ticketing services. Visitors to the venues will now be able to purchase tickets directly on the venue websites or via FIXR’s website and mobile app. • Doordash has pulled out of talks with fast-growing German grocery start-up Gorillas. The potential $400m investment was abandoned after Gorillas attempted to find another backer at a higher valuation. • Tim Hortons is reported set to open a new drive-thru in Speke Liverpool. HOTELS & LEISURE TRAVEL NEWS: • Fosun Tourism Group, owner of Club Med and the Thomas Cook brand, reported a loss of $308m in the first six months of 2021. The company said ‘travel in the UK was significantly restricted, our business focused on upgrading digital platforms and launching brands in core European markets to gain awareness and scale.’ Club Med resumed the operation of 39 of its 63 resorts globally by the end of June. • Club Med reports that UK trade bookings for ski resorts are up 40% year-on-year. UK and northern Europe managing director Estelle Giraudeau said ‘ we’re excited Club Med is continuing to push ahead and diversify its resort offerings with four new ski resorts opening by winter 2021-22’. • The Business Travel Association reports that the UK lost £4.09 billion in GDP last week due to the decline of business travel trips following Covid-19. There was a fall of 314,477 international and domestic business travel trips in the past week, compared to the same week in pre-pandemic 2019. • National Express has created a new business focusing on the UK holiday and leisure travel market called National Express Leisure. The new entity will consist of businesses and brands including Fareham-based Lucketts and Woods Coaches of Leicester. OTHER LEISURE: • Betting shops & poverty. The University of Bristol has found that betting shops are ten times more likely to be found in deprived towns than in affluent areas. The Gambling Commission maintains that ‘tackling gambling harm is a number one priority’ and says ‘we will carefully consider the issues raised by any gambling-related research and any actions will be taken through the national strategy to reduce gambling harms.’ The University of Bristol says its ‘research highlights the clear mismatch between the amenities available in ‘left behind’ areas, compared with those that are more affluent.’ It says poor areas have less access to ‘services and opportunities that help people to improve their lives.’ FINANCE & MARKETS: • Government borrowing fell in July compared to the same month in 2020. The government was some £10.4bn short when it came to paying its bills. Though down on last year, the figure was the second-highest for July since records began. Government debt is now over £2.2 trillion, or about 98.8% of GDP, the highest level since the early 1960s. • Chancellor Rishi Sunak says ‘the last 18 months have had a huge impact on our economy and public finances, and many risks remain.’ He has fuelled tax rise and spending cut speculation when he added ‘we’re committed to keeping the public finances on a sustainable footing.’ Sky says ‘borrowing is falling but Sunak faces the most challenging situation for a chancellor in decades.’ • The ICAEW has commented on business confidence, saying it ‘is at a record high for the second consecutive quarter…despite staffing challenges and the threat of a resurgence in COVID-19 cases as the economy reopens.’ • Further comment: See premium email. • Sterling mixed at $1.3645 and €1.1641. Oil lower at $66.42. UK 10yr gilt yield down 2bps at 0.53%. World markets better on Friday with Far East higher in Monday trade. London set to open up by around 43pts as at 7am. RETAIL WITH NICK BUBB:
• Saturday’s Press and News (2): In terms of Retailing stories, the headlines were split between the reaction to the latest developments in the Morrisons bid situation (after the 285p CD&R counter-bid on Thursday night) and the surprise M&S profit upgrade on Friday morning, but Morrisons won out. The FT flagged that “CD&R sweetens bid in fight for Morrisons” and had a background article on how “Fuel potential energises contest for supermarket”, whilst Lex column in the FT noted that “Whoever wins will have to wring a lot of value out of this low-margin, low-growth supermarket chain”. With the shares closing Friday at 291p, the Guardian highlighted that “Morrisons shares driven higher still as investors bet on bidding war” and the Telegraph flagged that “Investors bet Morrisons battle will escalate again”. The Telegraph also had a background article headlined “Leahy’s latest • Further comment: See premium email. TRADING STATEMENTS & EVENTS: Upcoming results are set out below: • 17 Aug 21 Fulham Shore FY results • 17 Aug 21 Just Eat Takeaway.com H1 numbers • 18 Aug 21 Carlsberg H1 numbers • 19 Aug 21 Rank FY numbers • 20 Aug 21 GfK UK Consumer Confidence numbers • 25 Aug 21 Adnams AGM • 1 Sept 21 PPHE H1 numbers • 2 Sept 21 Jet2 AGM • 9 Sept 21 Gear4Music 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 • 25 Sept 21 (est) GfK UK Consumer Confidence numbers • 1 Oct 21 JW Wetherspoon • 5 Oct 21 Gregg’s Q3 update • 13 Oct 21 Marston’s FY trading update • 22 Oct 21 Intercontinental Hotels Q3 numbers • 26 Oct 21 Campari Q3 numbers • 23 Nov 21 Compass Group FY numbers • 24 Nov 21 Britvic FY numbers • 30 Nov 21 Marston’s 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. |
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