Diageo, Whitbread, Saga, PPHE, Rank, Fuller’s, work from home etc.:

A DAY IN THE LIFE:

Having got down to London late Tuesday and into the office at stupid-o’clock Wednesday morning, it was only yesterday lunchtime that I was able to get out and about and sample just how quiet it was in The City.

Which is a little odd given the direction of travel regarding Covid restrictions.

Still, maybe those working from home are having a last hurrah and, having been perhaps told that they should really get into the office as from next week, they were making a determined effort not to do so this week.

Anyway, the lack of bodies won’t be helping the local tills to sing and, with rising tax, energy, food and VAT bills on the horizon, there may be a few furrowed brows out there to join the Chancellor of the Exchequer’s knitted noggin.

The latter on hearing PM’s answer to a mischievous Keir Starmer’s question as to whether the PM supported his, the Chancellor’s, decision to write off £4.3bn of Covid loans to water-under-the-bridge incompetence.

Nice spinning ball from Sir Keir there, blasted by the PM straight into the face of an ambitious close fielder. On to the news:

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PUBS & RESTAURANTS:

The consumer:

Squeeze on? Sky reports Greg Jackson, the founder of Octopus Energy, as saying that there is some doubt as to whether the options facing companies and government ministers re limiting increases from surging wholesale gas costs will be successful. The cap rose by 12% in October and could rise by 50% in April. Ofgem is set to announce the new level for households on 7 February.

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Working from Home:

The Telegraph reports that ‘commuters will be offered free bacon sandwiches and coffee as part of a government charm offensive to get Britons back on the railways.’ It says ‘a commuter rewards website is being launched that will also offer free audiobooks and discounted theatre tickets. Passengers only need to sign up online and will receive a QR code to claim their perks.’

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Supply issues.

In a signal to us all that supply issues have not disappeared but are rather in abeyance, the concerns about CO2 have bubbled back to the surface. The government subsidy to producers needs to be renewed or prices will rise (and / or supply will fall). CEO of the British Beer and Pub Association says ‘as the threat of further disruption to the availability of CO2 continues to grow, so does the potential impact on brewers and pubs.’

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Scotland:

The Scottish Beer & Pub Association has welcomed moves north of the border to provide a one-off grant of up to £29,500 as part of the Scottish Brewers Support Fund. SBPA CEO Emma McClarkin says ‘the pandemic has hit Scotland’s brewers exceptionally hard due to the restrictions on hospitality and the increased measures over the festive period hitting particularly hard at the worst possible time.’ She adds ‘this support will be vital to many businesses, and we were delighted to work alongside the Scottish Government and other industry colleagues to ensure it is available to Scotland’s much-loved brewers.’

Deputy, a workforce management app, reports that 29% of UK hospitality workers want to leave their jobs, with 22% hoping to switch to a new industry and 7% looking to quit, with a view to retiring or returning to education. Despite the current worker shortages across the sector, 77% of hospitality workers say they are concerned about job security.

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COMPANY & OTHER NEWS:

Diageo has reported H1 numbers to end-December saying that the company has turned in ‘strong net sales growth and margin expansion.’ It says this is the case across all regions, adding that reported net sales were up 15.8% at £8.0bn with ‘strong organic growth, partially offset by an adverse foreign exchange impact.’ It says that organic net sales grew by 20.0% ‘driven by strong double-digit growth across all regions, supported by effective marketing and excellent commercial execution.’

Diageo adds that its ‘growth reflects continued recovery in the on-trade, resilient consumer demand in the off-trade and market share gains, and was underpinned by favourable industry trends of spirits taking share of total beverage alcohol and premiumisation.’ The company adds that it has grown its marketing spend by 27.0% and says there has been ‘continued capex investment in production capacity, digital capabilities and consumer experiences.’

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Fuller, Smith & Turner has updated on the 43 week period to 22 January 2022 saying that ‘we fully reopened the estate on 19 July 2021 and had delivered a steadily improving trading performance, with our managed like for like sales reaching 90% of 2019 levels, prior to the emergence of the Omicron Covid variant in early December.’ It says that, when the enhanced Covid restrictions were introduced by the Government, this ‘impacted our trade during the important festive and new year period.’ It says ‘office Christmas parties were cancelled, and City workers stayed at home, leading to managed like for like sales in the four weeks to 1 January 2022 reducing to 72% of 2019 levels.’

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Britvic has updated on Q1 trading to 31 December 2021 saying ‘we have continued to see strong demand for our portfolio of trusted family favourite brands across all channels and markets, helping us deliver strong year-on-year revenue growth of 16.5% in the first quarter.’ The company comments on cost inflation and the outlook.

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Some sharp upward moves in leisure share prices yesterday. E.g. TUI up 5%, On the Beach +8%, Restaurant Group up 5% etc. Many of these could be reversed today as the market is due to open sharply lower.

Overall shipments of Champagne, which include the domestic market, increased by 31.8% YoY to 321.8m bottles. Overall exports were ahead 37.5% to 179.9m bottles.

Whitbread’s steakhouse brand, Bar + Block, plans to launch two new sites in London, taking the chain to 20 sites. The new openings will be located in Hammersmith and Paddington.

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Embattled BrewDog CEO James Watt has said the allegations of inappropriate behaviour are false. So far, more  than 15 former members of staff have spoken out against Watt with some claiming he made female bartenders feel ‘uncomfortable’.

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Black Sheep Brewery has released its annual 2022 cask beer calendar, choosing a blend of classic British beers and modern, craft styles as part of its limited edition 2022 releases. The brewery has also chosen to bring back fan favourites, such as Velo and Blitzen.

Sky reports that Knighthead Capital Management has notified administrators to Corbin & King, FRP Advisory, that it is ‘prepared to refinance all outstanding loans owed to Minor International.’ Loans to Minor have reportedly been in default since May 2020. Founder Jeremy King has insisted that the group is solvent.

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Shaftesbury announces that six new food and beverage brands have signed or are set to join, the Seven Dials community. These brands include WatchHouse, ANITA, a debut London flagship restaurant from Aspirational Brands, Chai Guys, From The Ashes BBQ, and Longboys.

The World’s Biggest Pub Quiz is being moved from its planned dates in March to May, to give more pubs the chance to plan for the event as they emerge from Covid. PubAid and its charity partner Shelter will run the event from 9-15 May.

Punch’s portfolio pub, Fireside Pub Co, announces a partnership with third-generation family butchers, Aubrey Allen.

The Advertising Standards Authority (ASA) has upheld complaints about some of oat milk brand Oatly’s adverts, telling the company not to repeat some of the adverts. The ads, which used the slogan ‘Need help talking to dad about milk?’, made unsubstantiated environmental claims.

LEISURE TRAVEL & HOTELS:

Whitbread PLC has today announced that Hemant Patel has been appointed as Chief Financial Officer to replace Nicholas Cadbury from 21st March 2022. The company reports ‘Hemant joined Whitbread in 2018, and since then has been Finance Director of the UK Premier Inn and Restaurants business.  Prior to joining Whitbread, Hemant was Finance Director of Greene King Pub Company and held a number of senior finance and commercial roles at Asda and Mars.’

Saga plc has updated on trading saying that it is ‘well-positioned for growth.’ The company says that its ‘travel business continued to be affected by the pandemic’. It has seen ‘strong Cruise bookings.’ CEO Euan Sutherland says ‘Saga has delivered a successful second half of the financial year with our Insurance business remaining in growth and delivering positive momentum across all key metrics, while our cruise ships resumed their international itineraries.’

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PPHE Hotel Group Limited has updated on full year trading saying that ‘demand remains strong and, based on our experience in Q3 in the UK and Croatia, the Group expects a rapid uplift when current restrictions are eased driven by the attractive locations of the Group’s hotels and a strong recovery in room rates across the portfolio.’

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Many labour supply problems are Europe-wide (or even worldwide) issues. STR reports that ‘wracked by chronic staffing shortages, the French hotel industry is negotiating pay raises with unions while calling on employers to improve working conditions and help win back disaffected workers.’

OTHER LEISURE:

The Rank Group Plc has reported H1 numbers to 31 December 2021 saying that the ‘Group returned to profitability in H1 with improving venues performance in Grosvenor, Mecca and Enracha through Q1 and into Q2.’ Group net gaming revenue was up 90% at £333.5m with EPS of 3.0p vs a loss per share of 9.5p in the same period last year.

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Tesla has reported sales up by 71% in 2021 to $5.5bn. The company expects further growth of 50% in 2022.

FINANCE & MARKETS:

PM Boris Johnson has said that he does not agree with Chancellor Rishi Sunak’s decision to write off £4.3bn of taxpayers’ money lost to fraudsters via Covid loans. The question was put to him by Labour leader Sir Keir Starmer at PMQ yesterday. Mr Sunak has said he is not ignoring the mistakes.

UK car production fell to a 76yr low last year as supply shortages, red tape and other factors hit the industry. The SMMT says last year was a dismal one for the sector.

The US Fed chief, Jerome Powell, has said that there is “quite a lot of room to raise interest rates.” A rate rise is expected in the US in March. In the UK, the Bank of England may raise interest rates for a second time on 3 February.

Sterling $1.3432 and €1.1968. Oil price $89.31. UK 10yr gilt yield up to 1.20%. World markets better yesterday but Wall St turned around and fell and the Far East was lower in Thursday trade. London set to open down 110pts as at 7am.

RETAIL WITH NICK BUBB:

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