Langton Capital – 2021-09-02 – WFH, trading, inflation, Jet2, Gym Group, Oakman, Domino’s etc.:
WFH, trading, inflation, Jet2, Gym Group, Oakman, Domino’s etc.:A DAY IN THE LIFE: Our office plants died, what, a year ago? And, shame on me, I haven’t chucked them out yet because, though I like to tell myself, they represent some sort of retro, steam punk comment on the fragility of life or the impact of events over which we have no control, I just haven’t got around to it. Who knows why because it would take two minutes to chuck them out and another hour or so to pop out and buy some replacements – or much less if I abandoned my Yorkshire roots and paid £100 or so for some flashy office knickknack company to deliver them to our door. Anyway, I’ll leave that one with you. 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: Labour issues: • Business groups and unions have called the furlough scheme warning of a spike in redundancies as employers prepare to take back staff on the coronavirus job retention scheme. Up to 1.7 million workers were on furlough at the beginning of August and many of their jobs are expected to be in jeopardy when employers are forced to pay all their wages. Vaccine passports: • The government has confirmed it will move forward with plans to introduce vaccine passports for nightclubs from the end of September. The requirement will be based on use of the existing NHS app. A Downing Street spokesman for the PM says ‘we set out broadly our intention to require our vaccination for nightclubs and some other settings and we’ll be coming forward in the coming weeks with details for that.’ The PM mentioned nightclubs and venues ‘where large crowds gather’ earlier in the summer. • Per the MA, Sacha Lord, a night-time economy adviser for Greater Manchester and operator said that ‘there remain countless unanswered questions around the implementation and legality of [vaccine] passports and their discriminatory nature on those who are not eligible for medical reasons, or who choose not to have a vaccine.’ The NTIA echoes these vies. • Further comment: See premium email Trading: • S4 Labour has reported that hospitality Like-for-Likes saw a slight increase in August. It reports that they ‘increased by a small 1.6% when compared to August 2019’ and it adds that food like-for-likes were up 16%. It says this is ‘something we have been used to seeing throughout August in our weekly like-for-like analysis. However, the decline in drink like-for-likes of 12.5% clearly contributed to the small overall increase. Food sales outperforming drink sales occurred within both dry-led and wet-led sites for August.’ • Further comment: See premium email • No shows. Hospitality companies such as Zonal, CGA, UKHospitality, Bums On Seats and Wireless Social have joined forces to educate customers on the impact of not turning up for bookings, as well as to provide insight, tools and tips to operators to help mitigate the impact. • The report identifies a strong correlation between no-shows and age, with 28% of 18-34-year-olds having not honoured their bookings, compared to just 1% of those aged 55 or over. However, younger adults are more frequent bookers in comparison to other age demographics. • Further comment: See premium email Working from home: • The Telegraph reports that the ‘muddle’ over home working risks sparking a crisis in customer service.’ Conservative peer Dame Helena Morrissey has said ‘employers would like it if it was clear from a government point of view what the policy is… There is a muddle.’ She adds that it ‘would be helpful to have a less ambiguous message. But in the absence of that, I think companies are, particularly in the City, doing what they think is right for them.’ • The Prime Minister has repeatedly said that he wants the “bustle” to return to town and city centres. This wasn’t a good idea when Covid was spreading rapidly but it is hopefully less of an issue now. There is a danger that we end up with a two tier workforce (per James Dyson) and it is possible that younger employees will miss out on opportunities to network (often whilst spending money in city centre bars or restaurants or simply popping out for a coffee or a sandwich during the day). • There does not appear to be a clear lead. Neither in the US where companies are doing what they see fit. Google owner Alphabet has extended its voluntary return-to-office policy through January next year, reports Reuters. CEO Sundar Pichai says ‘beyond January 10, we will enable countries and locations to make determinations on when to end voluntary work-from-home based on local conditions.’ Google is not a traditional employer, by any means, but it may offer a lead that some other employers may feel obliged to follow. Google had earlier delayed its return-to-the-office policy from September to October. • Further comment: See premium email Inflation: • See also comments from Markit on inflation below and from The Nationwide on house prices. The BRC has said that UK shop prices rose last month. Data from the research body &% Nielsen shows a 0.4% rise in August over July. Deflation had been the norm but that is changing. The BRC says ‘there are some modest indications that rising costs are starting to filter through into product prices.’ It says ‘food retailers are fighting to keep their prices down as far as possible. But mounting pressures – from rising commodity and shipping costs as well as Brexit-related red tape, mean this will not be sustainable for much longer, and food price rises are likely in the coming months.’ • The BRC adds that ‘disruption has been limited so far, but in the run-up to Christmas the situation could get worse, and customers may see reduced choice and increased prices for their favourite products and presents.’ It calls upon the government to sort out the HGV driver shortage and says ‘without government action, it will be the British consumers who will pay the price.’ Stock (and labour) shortages: • Per Sky, Wetherspoons warns some beers will not be available due to supply shortages. A spokesman said the pub chain’s supply problems with Carling and Coors were the knock-on effect from industrial action by delivery drivers working for another brewer. • Further comment: See premium email • The MA quotes the ONS as saying that some 20.4% of accommodation and food service operators have had issues with getting goods or services. Some 11.4% had to change suppliers or find alternative solutions and a further 9% stated they had been unable to get the materials, goods or services they required over the past fortnight. • Further comment: See premium email • Tough travel restrictions and the spread of the Delta variant in Vietnam are causing concerns over the global coffee supply. The Vietnam Coffee-Cocoa Association has urged the government to ease restrictions after traders were reportedly struggling to transport beans to ports due to restrictions. • A McDonald’s store in Oregon, US, is reported to be employing 14 and 15 year olds in order to cope with the shortage of fast food workers. The BBC quotes a store as saying ‘we offered people a $300 bonus to work for us’ – and still they were short of staff. Company & other news: • Domino’s Pizza Group has updated on its agreement to sells its entire shareholding in Domino’s Pizza GmbH (“Domino’s Switzerland”), saying that ‘the Company can advise that the transaction to sell Domino’s Switzerland completed on 31 August 2021.’ It says ‘the disposal of Domino’s Switzerland is the final part of DPG’s planned exit from all directly operated international markets and allows management to focus on its core UK and Ireland operations, as announced by the Company in October 2019.’ • Pernod Ricard reports FY21 sales of €8,824m with organic growth of 9.7%, with sales growing in all regions with the Americas up 14%. Pernod Ricard chairman and CEO Alexandre Ricard said ‘The business rebounded very strongly during FY21 to exceed FY19 levels. We expect this good sales momentum to continue in FY22’. • Oakman Inns has said that it is looking to convert to a PLC. It says it is raising money. • Further comment: See premium email • Hogs Back Brewery is predicting its best ever crop from the 8.5-acre hop garden adjoining the brewery. The brewery, in Tongham, Surrey, said ‘we’re keeping our carbon footprint at virtually zero, which is part of our drive to become a more sustainable brewer.’ • WineBusiness.com reports that California is on track to harvest approximately 3.6 million tons of grapes this year, down from a four million average. • A new Covid mutation named Mu is reported to have been detected in the UK, with 55 cases identified. • Guinness has brought back its 0% stout after an earlier launch was pulled. • Simon Wilkinson is to step down as CEO of Famously Proper, the owner of the Byron Burger outlets. He will be replaced by Gavin Cox. • Thai restaurant chain Busaba is to open its first site in Wales. HOTELS & LEISURE TRAVEL NEWS: • Jet2 comments on shorter booking windows, Winter 21/22 and Summer 22. • Further comment: See premium email • Portugal will now no longer require travellers from the UK, who cannot show that they have had two vaccinations, to self-isolate for 14dys. The Tourist Board says ‘Visit Portugal can confirm that British visitors to mainland Portugal now only need to show a negative PCR or antigen/lateral flow test on entry, and don’t need to be fully-vaccinated.’ • Dalata reports revenue of €39.6m and a pre-tax loss of €37.8m in H1. The company reported increased demand for staycations as hotels reopened in the UK in May and Ireland in June. Dalata said ‘It is expected the improved trading environment will deliver an increase in earnings with adjusted ebitda for July and August projected to be approximately €24 million’. • The WTTC has said that the government has just until the end of the furlough scheme to ‘save travel businesses which are struggling to survive’. There have been calls to extend the furlough scheme in some industries that are still feeling almost the full force of the pandemic. • In a landmark achievement, STR reports that estimated U.S. hotel gross operating profit for July 2021 was 111% of the 2019 comparable. There are some near term concerns that leisure demand could be abating as the Delta Variant moves across the country. OTHER LEISURE: • Gym Group has reported H1 numbers saying that it has seen a ‘strong recovery since re-opening and [it has identified] opportunities for accelerated growth.’ • Further comment: See premium email • Figures from Deloitte show that England’s top-flight football clubs spent £1.1bn during the transfer window, down 11% from 2020. FINANCE & MARKETS: • The August Markit PMI for UK manufacturing has shown that the sector (small these days at around 10% of the economy) is still in growth at 60.3. Any number above 50.0 implies growth. The number is a five-month low (July was 60.4). Markit says ‘the outlook for the UK manufacturing sector also remained bright in August. Almost 66% of companies indicated that they expect output to rise over the coming year, compared to only 4% forecasting a decline.’ • Further comment: See premium email • House prices rose unexpectedly in August given that the end of stamp duty relief was meant to have put a bit of a brake on the market. The Nationwide says house prices rose 11 per cent annually in August, up from July’s 10.5 per cent increase. Values are now 13% higher than before the pandemic. The Nationwide says ‘August’s price rise is a surprise – and may be down to homeowners trying to take advantage of the smaller tax saving still on offer. A lack of supply is another factor.’ • Sterling mixed at $1.3771 and €1.1636. Oil price lower at $71.32. UK 10 year gilt yield up 8bps at 0.70%. Markets mixed yesterday & London set to open down by around 6pts as at 7am. RETAIL WITH NICK BUBB:
Today’s News: If you thought that the new panel assembled by the wretched CMA to reconsider its negative view of the acquisition by JD Sports of its rival Footasylum in early 2020, after a successful appeal by JD, would take a more relaxed view of the situation, then think again…because, unaccountably, despite assembling more data on the market, the CMA still thinks the deal will lessen competition and has again provisionally ruled that JD should sell Footasylum. JD has issued an angry response, to flag that it “…nevertheless remains committed to its transaction goal of improving Footasylum’s resources, access to product and differentiated customer proposition”, arguing that the CMA has failed to consider “the impact that COVID-19 has had on Nike’s and Adidas’ DTC strategies”. JD boss Peter Cowgill urges the CMA to re-consider, fuming that “clearance would enable JD to invest in FTSE Index Watch: Yesterday evening the latest FTSE index quarterly review was announced and Morrisons, as expected, made it back into the FTSE 100 index, given its much-improved £7bn market cap, at the expense of the Dutch-domiciled Just Eat. The changes take effect from the start of trading on Monday, 20 September. On a less happy note, Wickes was demoted from the FTSE 350 index, reflecting its disappointing share price performance since the demerger from Travis Perkins at the end of April, with the current market cap of £630m nothing to write home about… This Week’s News Flow: At lunchtime today the US jeweller Signet (which owns the UK chains of H Samuel and Ernest Jones) announces its Q2 results. TRADING STATEMENTS & EVENTS: Upcoming results are set out below: • 1 Sept 21 PPHE H1 numbers • 1 Sept 21 888 Holdings H1 numbers • 2 Sept 21 Jet2 AGM • 2 Sept 21 Gym Group H1 numbers • 7 Sept 21 DP Eurasia H1 numbers • 9 Sept 21 Gear4Music AGM • 15 Sept 21 Restaurant Group H1 numbers • 16 Sept 21 C&C H1 trading update • 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 • 30 Sept 21 New River investor day • 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 • 25 Oct 21 DP Poland H1 numbers • 26 Oct 21 Campari Q3 numbers • 18 Nov 21 Jet2 H1 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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