Langton Capital – 2022-04-02 – Inflation, Just Eat, Nichols, Hotel Chocolat, Domino’s (US), Safestay etc.:
Inflation, Just Eat, Nichols, Hotel Chocolat, Domino’s (US), Safestay etc.:A DAY IN THE LIFE: We could have done with a bit of sunshine yesterday. It would have lifted spirts somewhat, but what we got was rain, a bit of blustery wind and plenty of filth-spreading puddles by the side of the road just waiting for busses to splash through them and share the love with pedestrians trying their best to cope with the first of a couple of Tube strikes. But, looking at the headlines, we shouldn’t lose perspective. We can cope with a bit of drizzle as everything’s relative, of course. On to the news: LANGTON EMAIL: The Free Email is now written in short form. Full stories are in the Premium Email. Reply to this email if you would like to upgrade. See Twitter for in-day comment. Let us know if you would like an example of the Premium Email or to comment on the new format. Prices for the Premium, unchanged for 2yrs, are £295 for one subscription, £495 for multiple, both plus VAT. Reply to this email to order & request invoice. Or sign up for easy in, easy out monthly option HERE PUBS & RESTAURANTS: The market yesterday: Some big moves in leisure yesterday, considerably larger than those for the market as a whole. Travel and the gaming stocks were most impacted, the latter impacted by results from Flutter, which showed that punters had had the better of it in recent months. SSP down 4%. Marston’s, M&B, Rank Group & JD Wetherspoon all down 5%. On the Beach down 6%. Coca Cola HBC, Intercontinental Hotels & Tet2 down 7%. Cineworld, Restaurant Group & Whitbread down 8%. TUI & Carnival down 9% 888 Holdings down 10% and Flutter down 12% Government aid: The Morning Advertiser reports that local authorities have yet to distribute more than £550m worth of the Omicron Hospitality and Leisure Grants. When broken down into regions, the southwest was allocated the most amount of funding (£123,887,322) and has only spent 12% of it, leaving £119,238,333. Sporting fixtures: The Oxford Partnership comments on the impact of the Six Nations’ rugby tournament on pub sales, saying that the third round saw sales across hospitality operators boosted by as much as 20%. It says some 111 extra pints more than average were sold, per pub, over the weekend, as a result of the rugby. Some 187 extra pints were sold in Wales, 126 in England and only 87 in Scotland. Dwell time increased by 38 minutes. Stout saw the biggest boost to sales (up 30%) but volumes are still down some 10.8% on 2019 levels. In the USA, data from Square shows that tips from diners at quick-service restaurants fell to 18.6% in August 2021, compared to a median of 19.73% in February 2020. Median tip percentage at full service restaurants was 19.45% in February 2020 and by August 2021 had fallen to 19.1%. • See premium. Reply to this email to upgrade. Inflation: The latest BRC Nielsen Shop Price Index shows that shop prices rose at their fastest rate in over ten years last month. Retail prices rose by 1.8% in the year to February (up from 1.5% in January). Rapidly-rising food prices were one of the main drivers. • See premium. Reply to this email to upgrade. Contract catering sales: CGA has reported in its latest Contract Caterer Tracker that the sales of the sector are ‘still below pre-Covid levels despite [a] fourth quarter rise year-on-year.’ CGA says ‘contract catering sales saw a modest recovery in the last quarter of 2021…but COVID-19 concerns continue to hold them well below pre-pandemic levels.’ It says ‘sales were 26% below the fourth quarter of 2019, when businesses were trading as normal—though this marks an improvement on a shortfall of 36% in the third quarter of 2021.’ COMPANY & OTHER NEWS: Just Eat Takeaway has reported full year numbers. Large losses that it says have now peaked. CEO Jitse Groen says ‘after a period of significant investment, and with adjusted EBITDA losses having peaked in the first half of 2021, the Company is now rapidly progressing towards profitability. While the Northern European segment, with an adjusted EBITDA of €256 million in 2021, is the most profitable segment in the industry already, we also concluded the year with much improved adjusted EBITDA in our other operating segments. The team is working hard to make 2022 a successful year for both the Company and all our stakeholders.’ The group reports total revenue of €5.3bn with an EBITDA loss of €350m. • See premium. Reply to this email to upgrade. Nichols has reported FY numbers saying that revenues rose by 21.6% to £144.3m with an adjusted PBT of £21.8m vs £11.6m in the prior year. The headline reported number is a loss of £17.7m due to an impairment review of assets. It says Vimto outperformed its market and says that some markets, such as Africa and Rest of World, were ‘significantly ahead’. A final dividend of 13.3p is being proposed, taking the full year pay out to 23.1p. • See premium. Reply to this email to upgrade. Hotel Chocolat Group has reported H1 numbers saying that revenue rose to £142.9m from £101.9m and that PBT was £24.1m vs £15.5m in the prior year. The MCA reports that Rekom UK chairman Peter Marks says that the pandemic has had a detrimental effect on both staff and guests’ mental health and it’s important for society to return to normal. Jens Hofma, CEO, Pizza Hut Restaurants, echoed this sentiment, saying ‘The consequences of people going out are not necessarily that positive and I think we need to be aware of that as a society’. In the latest edition of Wetherspoon News, chairman Tim Martin says that it may have been an error ‘to grant emergency powers to the government, during the pandemic, so that vital policies, with far-reaching consequences for civil rights, health and economic systems, were decided on at ‘party central’ – No. 10 Downing Street.’ Chapel Down has announced the appointment of Robert Smith as Chief Financial Officer. He will commence his role on 1 September 2022 and Richard Woodhouse, the current Chief Financial Officer & Chief Operating Officer will remain in position until the end of August 2022. In the US, Domino’s CEO Ritch Allison is to retire on April 30. It says Russell Weiner, Domino’s COO and president, will be promoted to CEO effective May 1. Young’s has acquired the Guiting Power pub The Hollow Bottom in Cheltenham from Julian Dunkerton’s Lucky Onion Group. The sale of up to seven pubs and hotels seems to leave the Lucky Onion Group with just its flagship No 131 in the Promenade in Cheltenham. Coors Light has announced that it will eliminate plastic rings from packaging globally, where Molson Coors owns brewing operations. The company will invest $85m to begin the transition to fully recyclable and sustainably sourced cardboard-wrap carriers later this year. Arc Inspirations has announced that Russian vodka will no longer be served in any of its bars. Meanwhile the co-founder of Bundobust, which has venues in Leeds, Manchester and Liverpool, suggested operators willing to show support for Ukraine should stop serving Russian products. One of the leading vodka brands in the world, Stolichnaya has frequently been cited in the move to boycott Russian vodka. DoorDash has announced its intention to acquire startup ordering and payment solutions platform, Bbot, with the deal expected to be finalised by the end of this quarter. Drinks brand Bodega Bay has announced plans to raise £400k via a crowdfunding campaign, using the capital to drive growth in the UK and export markets, and launch new flavours. Bodega Bay is the largest independently owned hard seltzer brand in the UK. The Botanist is to open a unit in Edinburgh St James Quarter in the Scottish capital. Domino’s brand owner in the US has commented on slowing sales saying that ‘we saw staffing challenges intensify across the country and urban markets were much more impacted than rural markets.’ It says ‘we saw significant headwinds on orders and sales in the fourth quarter over the third quarter and earlier in the year’ and adds this was especially acute as ‘omicron put more pressure on our business than ever before.’ Also in the US, Wendy’s Co. saw breakfast sales rise to 8.5% of U.S. sales total in Q4. It believes this will reach 10% of sales by the end of this year. CEO Todd Penegor says ‘we continue to be extremely pleased with our breakfast business.’ He says ‘this growth was primarily driven by successful promotions, which not only drove significant trial of our breakfast daypart, as evidenced by a meaningful increase in buyer penetration in the quarter, but also increased overall breakfast awareness to record levels.’ Sainsbury’s will cut around 2,000 jobs as part of a wide-reaching shake-up of its cafes and hot food counters. LEISURE TRAVEL & HOTELS: TUI’s major shareholder, Alexey Mordashov, has told TASS in Russia that he does not know why he has been sanctioned by the EU. He says ‘I have never been close to politics and have always focused on building economic value at the companies I have worked for.’ He says ‘I have absolutely nothing to do with the emergence of the current geopolitical tension and I do not understand why the EU has imposed sanctions on me.’ • See premium. Reply to this email to upgrade. Safestay reports that it has concluded its strategic review. It says it received tentative bid approaches and would like to have proceeded but ‘following discussions with certain shareholders of the Company, whilst a number indicated that they would be prepared to commit to accepting such an offer at the Expression of Interest Price, it became clear that there was not sufficient shareholder support to satisfy the third party making an announcement.’ Safestay says ‘as a result, the Board has decided to terminate the Formal Sale Process with immediate effect.’ IATA has said it does not believe passenger numbers will exceed pre-Covid levels until 2024. It expects 4bn (or 103% of 2019 numbers) in the latter year. Jet2.com is dropping its rule for passengers to wear face masks on flights. Riviera Travel has withdrawn tours to Russia, joining many others in the trade responding to the Russian military invasion. A spokesperson said ‘We will be contacting customers with existing bookings.’ Dalata Hotel Group reports a pre-tax loss of €11.4m in 2021, with revenue up 40% YoY to €192m. Pre-pandemic revenue was €429m. CEO Dermot Crawley said ‘Virtually all restrictions in Ireland and the UK were removed at the end of January which resulted in a rise in bookings, with ‘like for like’ group occupancy increasing from 38% in January to 62% in February’. FINANCE & MARKETS: Inflation expectations. An update from Citi & YouGov suggests that inflationary expectations in the UK are rising. This could be hard to shake off. The February survey suggests expectations for the next 12mths are up to 5.6% (from 4.8%) and the estimate 5-10yrs out is now 4.1% (was 3.8%). Bank of England MPC member Michael Saunders has said that the ‘recent strength in energy prices is likely to lift CPI inflation further in coming months. This effect is likely to be temporary. But there are also clear signs of pressures.’ • See premium. Reply to this email to upgrade. Markit has released its manufacturing PMI for the UK saying that ‘the growth rate of UK manufacturing production accelerated to a seven-month high in February, aided by stronger domestic demand, fewer raw material shortages and easing global supply chain pressures. The seasonally PMI rose to a three-month high of 58.0 in February, up from 57.3 in January. Export orders decreased. Markit comments on inflation in the manufacturing supply chain saying ‘input price inflation remained elevated’ but it says its ‘latest survey also signalled that cost increases were starting to moderate.’ They may be given something of a boost by rising energy prices. Jaguar Land Rover has ‘paused’ delivery of vehicles to Russia. Apple will halt sales in Russia. A number of shipping companies have said they will not land in the country. Sterling weaker at $1.3301 and €1.1965. Oil price sharply higher at $109.88. UK 10yr gilt yield down sharply at 1.12% (was 1.44%). World markets weaker yesterday. London pre-open prices pinging around between minus 24 and plus 24 as at 7am. RETAIL WITH NICK BUBB: • See premium. Reply to this email to upgrade. |
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