Covid, inflation, supply, Budget, Just Eat, football etc.:

A DAY IN THE LIFE:

You’re never lonely with a pair of squeaky shoes.

And that can’t be a bad thing, I tell myself, as I put on once more my five plus million step rubbishy brogues, where one sole is hanging off and the other has a hole in it the size of a ten bob bit.

Not that it would be a good idea, no matter how much they squeak at you, to actually talk back to your shoes. No, that would just be odd. You’d have people chucking you ten pence on the Tube and, looking at my footwear in a fresh light, you could argue that the laces are frayed, they’re scuffed, pretty much unpolishable and, let’s face it, they’re downright ugly.

And maybe the defence that they’re somehow familiar isn’t much of a defence at all. The smell of the fish-docks and the rattle of trains from 5am in the badly-located flat were familiar too. And they weren’t long lamented so yes, maybe it’s time to sling them out after all.

Anyway, it’s half term next week and the tension over whether we will or will not have a cottage holiday looks like continuing to the 11th hour. This because the schools are a cauldron of Covid right now. Daughter’s positive (for the second time) but the timings there are still OK so fingers crossed on negative PCRs for the rest of the household. That could be a deal breaker but, for the moment, let’s move on to the news:

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PUBS & RESTAURANTS:

A fourth lockdown?

Until recently, this would have been unthinkable. But the needle, no pun intended, has moved and, if you substitute the word ‘Plan B’ for ‘lockdown’, it is now being openly discussed. The government has said that Plan B is not a lockdown. But infections are near record levels with a quarter of recorded infections globally being found in the UK. They may be well into new territory if it is true, as is to be hoped, that vaccinated people are less impacted and may not even take a test but deaths are running at around a sixth of their all time highs.

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Inflation:

Headline CPI dipped in September to 3.1% from 3.2%. The ONS says restaurants & hotels ‘made the largest downward contribution to the change’ due to the upward jolt in Sept 20 dropping out of the yearly figures (post the EOTHO discounts). The ONS says transport costs went the other way. The upward push is likely to be more pervasive than the one-off downward move, leading economists to suggest that further rises in inflation are likely before the end of the year. The October number, which will include the 1 Oct hike in VAT, will be released on 17 November.

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Commenting on latest inflation figures, Kate Nicholls, Chief Executive of UK Hospitality says the numbers ‘are extremely concerning for the sector, with costs for hospitality businesses across all lines rising by 11-13%. Such rising costs have the potential to seriously derail the sector’s recovery – and its ability to boost national recovery – due to a heady cocktail of substantial increases in the cost of essential goods and services crucial to their businesses.’

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Supply (incorporating inflation):

Manufacturers are facing higher costs and, in many cases, they are trying to pass them on. Own-label household goods company McBride plc on Tuesday said ‘raw material and packaging costs have moved faster and to a higher level than previously expected.’ It adds that, ‘in addition, the shortage of haulage capacity and higher fuel costs has continued to substantially inflate distribution costs – again ahead of the Board’s expectations – which show no sign of abating in the near term.’

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Labour:

Cost rising, availability patchy to bad. City AM quotes Indeed Flex as saying that 47% of HR directors have raised pay rates ‘faster than usual’ whilst others have been prioritising non-financial perks.’

The consumer:

Inflationary cost increases, particularly those of essential products (and other unavoidables such as rates, National Insurance payments etc) will reduce the amount of money consumers have available to spend on leisure. The Petrol Retailers Association has said that petrol and diesel prices are likely to reach all time high levels in the next week or so. It says record prices (142p for petrol and 148p for diesel) were ‘almost certain to be eclipsed before the end of October.’ It says the ‘primary reason is the rise and rise of crude oil costs which recently hit $85/barrel for Brent crude.’

Elsewhere, there are allegations that Net Zero and Levelling Up will cost trillions and other promises that they will cost nothing. The ICAEW, rather a sober bunch, says that Net Zero will have ‘significant implications for public spending and tax revenues in meeting the costs’ whilst Kwasi Kwarteng says it is ‘not true’ to say that the move to more environmentally friendly transport and energy production would ‘cost us’.

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Budget lobbying.

Publican Jodie Kidd is calling on the Government to reform what she says is an unfair tax burden in order to help Britain’s pubs and breweries. In support, Long Live The Local says ‘pubs are the heart of our communities across the nation, bringing people together, and providing the largest social outreach service in the UK helping tackle social isolation and loneliness.’ It adds ‘although pubs fully reopened in July many are still operating at less than 90% of their 2019 trading levels and have large debts to pay and increasing costs.’ It is ‘calling on the Government to lower VAT, Beer Duty and Business Rates. In return thriving pubs and breweries will help Britain level up by delivering stronger economic growth, new investment and jobs help create more connected and vibrant communities.’

The MA says ONS data suggests ‘business rates for pubs in England are predicted to rise by more than £23m next year.’ UKH says ‘of all the measures the Government could take to help the hospitality sector secure a more rapid recovery and rebuild resilience faster, the most effective would be to address the unfair business rates system, which requires the sector to overpay by 300% relative to its turnover; the £2.5 billion in rent debt accrued during the pandemic that currently weighs on the sector’s shoulders.’

COMPANY & OTHER NEWS:

Just Eat Takeaway is to host a virtual capital markets day today. The company reports that the Capital Markets Day event will focus on a) vision & strategy, b) market leadership, c) innovation and d) a changed reporting structure with a ‘clear path to a long-term group adjusted EBITDA margin in excess of 5% of GTV.’ The company says ‘there will be no new disclosures on current trading conditions, with management reiterating its guidance for the full year 2021.’ It has previously guided on order growth (excl. Grubhub) above 45% year-on-year and GTV (incl. Grubhub) of between €28 to €30 billion. Just Eat says its EBITDA margin should be between minus 1% and minus 1.5%.

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The Times reports that chancellor Rishi Sunak may be ‘planning an extension of a coronavirus loan guarantee scheme to help protect businesses next year amid signs that Britain’s economic recovery has lost momentum.’ It says ‘the chancellor is expected to use his budget speech next week to announce a six-month extension of the government’s recovery loan scheme that had been due to end on December 31. The planned delay to the end of the scheme was first reported by Bloomberg.’

Deliveroo shares rose 3.4% to just over £3 yesterday on the back of strong Q3 trading. The company’s shares were listed at 390p.

Hall & Woodhouse has reported a drop in revenue of 38.7% to £71.5m for the year ending 30 January 2021. Chairman Anthony Woodhouse comments ‘Hall & Woodhouse is not only surviving the pandemic but is well placed to recover quickly.’ He says ‘the company has been built over many generations on a freehold basis with limited borrowings, the fabulous work under Matt Kearsey’s leadership has done in getting us into battle formation and then back open safely a number of times, and the family culture that has supported our team, our business partners and the communities in which we operate through the dark days.’ Mr Woodhouse says ‘since reopening post year end, the managed pubs, with the exception of those in London, have traded strongly, albeit hampered in some locations by seasonal team shortages and supply issues. The business partnerships pubs reopened without a single
vacancy.’

The Telegraph says ‘if BrewDog wants to be taken seriously, it has to grow up.’ It says gimmicks and ‘false claims of solid gold beer cans are just the latest in a series of adolescent stunts undermining brewer’s stock market dreams.’ The Telegraph opines ‘one can’t help but feel that the time for BrewDog to float was before it got too big for its boots. When the craft beer frenzy was in its nascent period – rather than as it barrels towards middle-age.’ It says it is ‘empty vessels make the most noise.’

Hammerson said yesterday that ‘footfall in all territories now stands at c.15-20% below 2019 levels, although some centres in the UK exceeded 2019 comparable levels around the key August bank holiday weekend and have continued to perform strongly since.’

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City AM says that ‘London distilleries have urged the Chancellor not to hike alcohol duty at the upcoming Budget.’ It never hurts to ask.

The BBC reports that a push to ‘shift dietary habits’ away from meat was dropped from government research papers on changing behaviour to hit net-zero climate targets.

West End landlord Shaftesbury PLC yesterday afternoon updated on its portfolio valuation and vacancy rates saying that it had seen an increase in the former and a further reduction in the latter. CEO Brian Bickell said ‘the rebound in footfall and trading across our locations reported in our August update has continued, boosted by the rapidly growing return of the local office-based workforce. Occupancy levels are benefitting from the robust recovery in occupier demand and leasing activity for both commercial and residential accommodation across our meticulously curated, popular West End locations.’

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Hospitality charity, Only A Pavement Away, is calling on the industry to get behind its Stability Through Employment Crowdfunding Appeal. Founder & CEO Greg Mangham says ‘we’re urging the industry to get behind our Stability Through Employment Crowdfunding Appeal and pledge to help give someone who has been homeless, the confidence and skills they need to get back into work.’ He adds ‘by supporting Only A Pavement Away, you can help get someone’s life back on track whilst filling the industry with hard-working, committed employees.’

Black Box in the US reports that US restaurants grew sales by 6.1% in September against the same month in 2019. This compares with the c5.7% growth seen in August. This was more than all driven by an increase in spend. Black Box reports that ‘traffic growth’ was minus 6.3% in September, the worst month since March. Industry observers expect these trends to remain in place for at least the rest of this calendar year.

Brook Leisure has purchased the Aysgarth Falls Hotel, a pub-restaurant with letting rooms in the North Yorkshire Dales. CEO of The Brook Group Jason Brook says ‘we have some exciting plans for the hotel over the coming months and look forward to bringing these to life.’

LEISURE TRAVEL & HOTELS:

Travel stocks slid yesterday on concerns over rising infection numbers and the impact that might have on the propensity to travel. On the Beach was down 6.6% late afternoon. IAG (British Airways) and TUI were both down 4.8% and Jet2 shares were 3.4% lower. The move by BAA to jack landing fees did not help.

Morocco has suspended flights from the UK over concerns re infection rates in the latter.

OTHER LEISURE:

Visit Britain has said that football is becoming increasingly important in attracting overseas visitors. It says Old Trafford in Manchester and Anfield Stadium in Liverpool attracted the most international visits, 226,000 and 213,000 respectively.

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Facebook has been fined £50m by the UK’s Competition & Markets Authority for failing to co-operate in an investigation into its purchase of gif library Giphy. The company is reportedly considering changing its name in a major rebrand.

PayPal is exploring the potential purchase of Pinterest reports Bloomberg. Bloomberg says ‘PayPal Holdings Inc. is exploring a $45 billion acquisition of social media company Pinterest Inc., in what could be the biggest technology deal of the year and move the payments company closer to its ambitions of becoming a “super app.”’ It says ‘San Jose, California-based PayPal recently approached Pinterest about a potential deal, said people with knowledge of the matter, who asked not to be identified because the details are private. The companies have discussed a price of around $70 a share, the people said.’

Tesla has reported better-than-expected sales but it has warned that “outside factors” could restrict further growth. Tesla delivered just over 241,000 vehicles in the year. The company is having difficulties in sourcing computer chips and raw materials.

FINANCE & MARKETS:

The ONS reports a slight dip in CPI. This may stay the Bank of England’s hand for a little while when it comes to interest rate rises. See Pubs & Restaurants above. Manufacturers have reported a rise of 11.4% in input costs. The British Chambers of Commerce says the dip is due to ‘temporary data distortions rather than the reality on the ground.’ The ONS says ‘the costs of goods produced by factories rose again, with metals and machinery showing a notable price rise. Road freight costs for UK businesses also continued to rise across the summer.’ No kidding.

Bloomberg reports the Atlanta Fed as saying that the U.S. economy is now growing at an annualized rate of barely 0.5%.

The Halifax is to allow those who earn over £75k to borrow up to 5.5 times their annual income, up from a previous five times.

The ONS reports that the average price of a house in the UK rose by 10.6% in the year to August.

Sterling up slightly at $1.3814 and €1.1856. Oil price higher at $85.65. UK 10yr gilt yield down 1bp at 1.15%. World markets better for choice yesterday but the Far East was down in Thursday trade & London set to open down around 23pts as at 7am.

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