Langton Capital – 2021-09-07 – Barclaycard, jobs, costs, labour, cliff edge(s), DPEU, Brewdog etc.:
Barclaycard, jobs, costs, labour, cliff edge(s), DPEU, Brewdog etc.:A DAY IN THE LIFE: Last weekend we had to put the heating on and today and tomorrow it’s going to be boiling. All of which is rather confusing for the flora, the fauna and the human inhabitants round and about with the latter wondering whether it should dig out its shorts and sunglasses for one last outing. And, on balance, why not? The pubs should have a good week – that’s if they can secure the beer and food they want to sell and the staff they need to sell it – and the return to work numbers could stall as many would-be commuters may look out of the window and conclude, nah, maybe next week. Anyway, there’s a bit going on so let’s move 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: • Barclaycard has suggested that consumer spending rose in August, up some 15.4% compared to the same month in 2019. It says there has been an increase in “socialising, shopping and staycations”. It reports that pubs, bars and clubs saw a rise of 43.4% with restaurants up 0.1%. The card processor said that ‘socialising, shopping, and staycations were top of the agenda for Brits in August, as families and friends made the most of the school holidays, giving a welcome boost to hospitality and leisure businesses.’ • Further comment. See premium email • Foodservice analyst Peter Backman says that total spend across the UK hospitality and tourism market for 2020 ‘fell from £137 billion in 2019 to £71 billion last year; It would, of course, have been even worse but for the fact that the (relatively) slow-trading first quarter was approximately normal.’ Mr Backman says ‘a major contributor to this covid-induced fall has been the absence of overseas visitors whose 18% share in 2019 fell to 8% last year (and almost zero during the final few months).’ Consumer demand: • Demand – the outlook for jobs. The Insolvency Service reports that August saw the lowest a reduction in planned job cuts to take it to the lowest figure for that month in seven years. The data suggests that there will not be a surge in unemployment and may indicate the presence of inflationary fears. On that topic, the newest member of the Bank of England’s MPC, Catherine Mann, has said that inflation is not being baked into the system. She says there are ‘historical differences’ with the way inflation behaved in the past. She says that fifty years ago there was a “much stronger relationship between” wages and tight labour markets. Working from home: • The degree to which this sticks clearly impacts demand for Pret, Costa (and new sites, rents etc) but it has other implications. Pragma Consulting, for example, says that suit and tie wearing, already on the slide, has diminished further alongside the pandemic. Goldman Sachs has said it will relax dress codes due to the “changing nature of the workplaces” and M&S is reported to be taking suits for sale out of a number of its stores completely. • Further comment. See premium email • New West End (see also below) says that 91% of the 1001 respondents in a recent survey it conducted, wished to return to the office in some capacity. It says, however, that ‘75 per cent acknowledge that they will continue to work from home for some of the week.’ New West End says ‘an increasing number of office workers are beginning to return to the West End now that restrictions have been lifted, but we need more businesses to heed the wishes of their employees in order to stimulate the capital’s recovery.’ • Returning to work? The Guardian reports the London Underground as saying that this Monday past was the busiest start to any week since the beginning of the pandemic. It says rush-hour trips were up 17% from Tuesday (the first working day) of the prior week. Network Rail says that peak morning footfall at Cannon Street was up 43% on a fortnight ago. Canary Wharf Group says ‘the number of people back at Canary Wharf varies from our tenants. Some businesses have asked for everybody to return and some are asking people to return in phases. In the meantime, our shops, bars and restaurants are doing really well.’ Footfall: • New West End reports that ‘London’s West End footfall rose 12% between the first and last weeks in August’. It says that it is ‘social outlets – including the West End’s world-famous restaurants and bars – that need custom from returning office workers if they are to survive and subsequently thrive.’ New West End adds ‘the last 18 months have undoubtedly forever changed the environments in which people work, but more must be done to encourage workers to return in some capacity.’ • Further comment. See premium email Labour shortages: • These can be ‘fixed’ at the micro level (by paying more wages & attracting staff) but the workforce is a fixed resource and, if staff are attracted from one sector to join another (say from care work to Amazon or from the building trade to HGV driving, there will be labour shortages in other parts of the economy as other problems are resolved. • Further comment. See premium email • James Wroath, CEO of Wincanton, has said that qualification time should be ‘cut from 12 months to three’ to address an estimated shortfall of 100,000 HGV drivers. • The CBI warns that the labour crisis could last for up to two years, and has called for ministers to take action on visas for foreign workers. • The Recruitment and Employment Confederation reported that there were 1.66 million vacancies at the end of August, showing that there is an acute shortage of workers. Various cliff edges: • We haven’t seen the phrase cliff-edge used for a while but the ends of furlough, zero business rates & 5% VAT will all be soon upon us and insolvency firm Mazars says that business closures could be the result. • Further comment. See premium email Company & other news: • Around 9m school children return to the classroom this week. Social interaction will increase and it is likely that infection numbers will rise. • DP Eurasia has reported H1 numbers to end-June saying that system sales were up by 58% (revenue up 50%) on the same period last year. It reports that adjusted EBITDA was up 129.7% with net income swinging to a profit of 34.8m TRY versus a loss of 60.9m TRY in the prior year. Re the outlook, DPEU says ‘whilst the Board is conscious of the potential continued risks posed by the pandemic, the strong like-for-like performance achieved in Turkey in the first half of the year and the expectation of continued buoyant trading enables raised guidance for full year like-for-like growth rates in Turkey. In late March 2021, guidance was set at 21-25%, which is now being raised to 35-40%.’ • CEO Aslan Saranga comments, saying the result ‘shows a marked improvement compared to the same period in 2020. We have increased our adjusted EBITDA by 129.7% compared to the same period a year ago on the back of a 50.3% increase in Group revenue.’ He says ‘our Turkish business continues to expand in record breaking fashion despite the challenging inflationary environment that we have been experiencing’ and adds ‘our Russian business continues to show encouraging signs of improvement and we see positive impact from the implementation of our Russian plan, where we posted positive adjusted EBITDA figures after a loss in the comparable period in 2020.’ • DPEU says ‘the robust franchisee demand has resulted in 16 store openings in Turkey during the first half of the year with a very strong pipeline for the second half of 2021 and beyond. In Russia, we have also added two stores in the first half.’ It says ‘digital continues to be the driving force behind our sales’ and adds that ‘we are increasing our Turkish like-for-like guidance and the Board expects the full year adjusted EBITDA for 2021 to be slightly higher than the market’s current expectations.’ • The Times reports that Brewdog, which is ‘seeking to put recent allegations of a “rotten culture” behind it’, is launching a JV in Japan with Asahi Breweries as a prelude to an initial public offering.’ It says Brewdog’s co-founder, James Watt, has ‘apologised and promised to make changes’ to the way the company is run. The company ‘plans a stock market flotation’ and was recently valued at £2bn. • The Social Market Foundation has called for the development and sale of artificial meat in order to tackle the climate crisis. Animal agriculture currently accounts for 14.5% of the world’s greenhouse gas emissions. • Byron has been accused of creating a ‘hostile environment’ between managers and waiting staff as tips are about to be split between waiters and kitchen staff 70:30 respectively. • The owners of The Tipsy Vegan in Norwich are set to open a new Cambridge site in October. • Megan’s will open the group’s 14th site, and its fourth of this year, this November. The site will be located in Dulwich Village. • Cask Marque is sponsoring the Good Beer Guide. Paul Nunny, founder of both companies said ‘CAMRA identifies some of the best pubs in the UK and those pubs in the guide who are in Cask Marque will have our symbol by the side of their entry as an endorsement.’ • Robert Foye, CEO of Accolade Wines, has told the BBC that a shortage of lorry drivers could impact the upcoming festive season, saying ‘ultimately costs will go up.’ • Bollinger has launched its B13 limited edition vintage champagne with the name as a reference to the 2013 harvest in Champagne, when the producer said it faced ‘turbulent circumstances’. HOTELS & LEISURE TRAVEL NEWS: • Per BBC, Altus Group reports that the number of holiday homes trading as businesses has jumped by more than 20%, with more than 11,000 second homeowners in England have flipping their properties to become holiday lets since the start of the Covid pandemic. • Further comment. See premium email • Gatwick Airport warns that the UK’s travel restrictions are seeing its aviation sector fall behind European rivals. Figures from ACI Europe show that bookings across Europe are at around 60% of pre-Covid levels, compared to 30% in the UK. • British Airways and Deutsche Lufthansa have reportedly restored their flights to key financial hubs from London City Airport, ahead of a predicted increase in business travel. Flights departing the City are set to surge by more than 70 per cent in September, to some 260 trips a week by the end of the month. • In the US per Destination Analyst, since the Fourth of July, Americans’ sense of normalcy and optimism about the pandemic’s course has fallen by half. Americans generally continue to see travel and leisure activities as safe rather than unsafe, air travel, indoor attractions and restaurants have suffered notable declines in safety perceptions. OTHER LEISURE: • 888 Holdings has announced that its ‘all-new Sports Illustrated wagering experience, SI Sportsbook, has launched in Colorado.’ FINANCE & MARKETS: • Markit reports August’s construction PMI in the UK to have fallen to 55.2 from 58.7 in July. Any number over 50.0 implies growth but the number is the lowest since February. • Further comment. See premium email • The SMMT has reported the weakest UK August car sales last month since 2013. It says supply issues continue to undermine the market. The number was down 22% on last year and was 7.6% below the average over the last decade. Sales of electric vehicles, however, continued to move up. • Sterling weaker at $1.383 and €1.1649. Oil higher at $72.58. UK 10yr gilt yield down 2bps at 0.69%. World markets broadly better yesterday but London set to open down around 13pts as at 7am. RETAIL WITH NICK BUBB: • Further comment. See premium email 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 • 9 Sept 21 Morrison’s H1 numbers • 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 • 29 Sept 21 Fulham Shore AGM • 30 Sept 21 New River investor day • 1 Oct 21 JW Wetherspoon • 5 Oct 21 Gregg’s Q3 update • 6 Oct 21 Constellation Brands Q2 numbers • 8 Oct 21 Hollywood Bowl FY 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 • 28 Oct 21 YUM Brands 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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