Langton Capital – 2022-04-05 – Footfall, DPEU, costs, confidence, job satisfaction, airline issues etc.:
Footfall, DPEU, costs, confidence, job satisfaction, airline issues etc.:A DAY IN THE LIFE: So, here’s a kids’ question for you, if you had to be a bird, what would you be? Tricky one, huh? Eagles are majestic and all that, and their eating habits, though pretty brutal (why kill it, it’s not going anywhere…), are more appealing than those of vultures. Same food, different vintage. And a different approach to putting your head inside long-dead roadkill but what about a bullfinch? They eat blossom, berries and seeds. Sweet. And they don’t get up very early in the morning if our bird table is anything to go by. They don’t have to learn much of a song, just a pathetic squeak and they look quite hench in a Lilliputian kind of way. So a bullfinch is a maybe but magpies are definitely not in the running. They look cool but sound awful. Like some footballers we could mention but magpies are worse when it comes to food as they eat ‘sewage, carrion and dog faeces’ and that’s just not OK. Anyway, I’ll leave that with you while you enjoy your bacon sandwich. On to the news: LANGTON EMAIL: The Free Email is now written in short form. Extended versions of many 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: Footfall: Whilst there are risks in micro-analysing this (and it’s also worth bearing in mind that footfall needs translating into spend in order to mean anything). It’s useful to keep an eye on what’s going on. Springboard reports that footfall in the week to 2 April was up 94.5% on last year but down 19.3% on 2019. Shorter term, it was down 12.6% on the prior week. Much of the above can likely be put down to the weather. • See premium. Reply to this email to upgrade. Costs: Affirmation bias means that, once you have alighted on something (shark attacks, travel delays) you see them everywhere. That said, inflation really is everywhere. The Telegraph reports ‘the cost of four pints of milk will jump from around £1.15 to between £1.60 and £1.70, an increase of up to 50pc, according to Kite Consulting, the UK’s leading adviser to dairy farmers.’ It quotes Michael Oakes, the dairy board chair of the National Farmers’ Union, as saying that prices may have to rise by as much as 50%. Energy. We are hearing stories, away from hospitality, of energy hungry manufacturing companies being informed that they will not be able to roll over fixed contracts. Some electricity bills, admittedly now low because of judicious fixing in the past, will triple or quadruple. Industry leaders’ survey: CGA and Fourth have released their latest Business Leaders’ Survey, which suggests that ‘restaurant, pub and bar leaders are increasingly optimistic about prospects for 2022.’ The survey finds that 65% of industry leaders ‘are confident about the next 12 months for the market—an increase of six percentage points since the last survey in December 2021. The number of leaders feeling confident about their own business’ prospects has nudged up by two percentage points to 68%.’ The survey finds that 84% of operators are trading at a profit (up four percentage points on the December survey) with only 5% of leaders saying they are making a loss. Leaders are concerned about inflation and have – or intend to – pass on price rises. • See premium. Reply to this email to upgrade. CGA says ‘after two years of COVID-19-related disruption, our survey shows that multi-site businesses are finding their feet again. Hospitality remains a very attractive sector for consumers and investors alike, and as we move into the second quarter of 2022, we can be cautiously confident that sales and profits will continue to build. However, businesses that were weakened during the pandemic now face more fierce headwinds, and inflation is making it tough to achieve real-terms growth. The end of VAT relief and lack of government support in the recent Spring Statement risks stalling hospitality’s recovery just as it gathers pace. Fourth adds ‘while it’s encouraging to see business confidence climb, the impact of rising costs, supply chain issues and the ongoing recruitment challenge continues to be extremely threatening to the sector. These challenges are amplified by the return to 20% VAT rates and the National Living Wage rise – both of which came into force last week and are set to hit finances hard, at a time the industry can ill afford. It’s vital that businesses continue to do everything they can to plan ahead, in order to protect their bottom line and also maximise efficiencies related to their workforce and inventory.’ Employee satisfaction: Hospitality is a people business. Even travel (see comments on its problems below) need individuals to man security, deal with baggage and fly planes. They do not now have enough to cope with resurgent demand (and a resurgence in absenteeism caused by Covid). In this light, Harri and CGA have commented that job satisfaction across hospitality has slipped with workers calling for more flexibility and appreciation. The latter may come free but the former could involve additional costs. • See premium. Reply to this email to upgrade. Beer sales: Accountancy firm UHY Hacker Young reports that beer sales in the UK are on their way back to pre-pandemic levels. • See premium. Reply to this email to upgrade. Other industry news: Data from real estate adviser Altus Group suggests that over half of the grant money promised to hospitality and leisure businesses in England in light of the Omicron variant has not yet been distributed by councils. Some £330m is yet to be paid out. Altus says 29 Councils had failed to distribute a single penny. It adds the hospitality businesses in question ‘saw one of their most valuable trading periods wiped out and simply didn’t get the support they needed quickly enough.’ UKH has backed the Government’s biodiversity and carbon net zero ambitions – while calling for more streamlined implementation processes. It has ‘cautioned against placing burdensome regulations on businesses already struggling to get their post-Covid recoveries off the ground, urging the Government to strike a balance between protecting the environment and creating too much bureaucratic red tape.’ Bank of England deputy governor Sir Jon Cunliffe has said that the UK should not slide into a 1970s-style inflation environment. He says he does “not think we are yet seeing a psychology of persistently higher inflation emerge”. In the US, the USDA reports its belief that grocery and restaurant prices will continue to rise between 4.5-5.5% in 2022. It says food eaten away from home could rise in price by between 5.5 and 6.5%. Qatar is to relax its drink laws over the World Cup. COMPANY NEWS: DP Eurasia, which has issues with inflation in Turkey and operates in Russia (where it has said it will not suspend operations), has reported full year numbers for the year to 31 December 2021. The period pre-dates the Russian invasion of Ukraine. The co says that it has turned in a ‘record online sales performance’ and it says it is ‘resilient’ as regards the outlook. The group says that revenues were up by 46.9%. The company says this was ‘driven by like-for-like growth and store openings/’ it saw Turkish systems sales growth of 59.4% and Russian system sales growth of 33.5% (7.8% based on RUB). DPEU reports adjusted EBITDA up 58.5% to TRY 208.4 million (2020: TRY 131.5 million) and adjusted net income of TRY 23.9 million versus an adjusted net loss of TRY 94.0 million in 2020. The group says it has a ‘strong liquidity position’ and it opened 38 net new stores in the year. As regards current trading, the company says that system sales growth and like-for-like growth for the twelve weeks ended 27 March 2022 compared to the same period in 2021 were +56% in Turkey and +50.4% in Russia. • See premium. Reply to this email to upgrade. Wetherspoon has published its gender pay report saying that comparisons are skewed because of furloughs and pub closures but it says its ‘calculations showed that the company’s median gender pay gap, is zero, which means that, on average, women earnt the same as men at Wetherspoon.’ The financial owners of Wm Morrison have agreed to sell a £500m property portfolio. Morrison’s for years had differentiated itself somewhat on being a largely freehold-basaed operation. Morrison’s has separately warned its sales and core profits could be impacted this year as a result of the consumer squeeze. It says ‘we are taking steps to mitigate the impact of these developments on our EBITDA (core earnings) for the remainder of the year.’ It adds ‘unless these conditions improve, the impact of these developments could have a material adverse effect on our sales and EBITDA for the year.’ New supply. We mention affirmation bias above. Interesting to note that Fulham Shore (RNS yesterday) is opening more stores. Burger King UK said something similar last week. We hear Chik’n is planning to expand to 17 sites and Wahaca is beginning a period of ‘measured expansion.’ HOLIDAYS & LEISURE TRAVEL: Pressed the ‘go’ pedal, nothing happened. Demand is coming back but BA apparently cancelled 115 flights yesterday due to staff shortages and EasyJet junked 222 flights over the weekend. Both companies blamed staff shortages. There are stories of queues at check-in (Manchester Airport) and problems with not enough baggage handlers and long delays on arrival. There were large queues, mostly lorries but holidaymakers got caught up in it, at channel ports, and there were stories of travellers missing their slots and having to re-book. • See premium. Reply to this email to upgrade. The BBC reports that more cancellations are expected in the coming days. It says 60 flights could be cancelled today. At least strike action at Heathrow looks as though it has been postponed. Other travel news: Hostelworld Group has announced that it is to launch ‘The Solo System’, a ‘set of social features enabling opt-in travellers to connect and meet in real life.’ It says ‘76% of Hostelworld’s customers crave a social hostelling experience, but 30% say they are nervous about chatting to other people in hostels.’ CEO Gary Morrison says ‘we will continue to launch more social products in coming months including LinkUps, a feature that encourages travellers to create gatherings and social activities.’ A poll undertaken by AllClear suggests that almost two thirds of over-50s plan to spend ‘more than £3,000’ on multiple holidays this year. We have commented before on the switch, post-Covid, from things to experiences. Carnival Cruise Line has reported its busiest booking week on record in the seven days to April 3. OTHER LEISURE: Tesla boss Elon Musk has taken a 9.2% stake in Twitter. Twitter shares rose sharply on the news. The government is to privatise Channel 4. Channel 4 has called the decision “disappointing” as there had been “significant public interest concerns” over privatisation. The Committee of Advertising Practice has ruled that footballers and celebrities will not be allowed to appear in gambling adverts. FINANCE & MARKETS: Sterling mixed at $1.3118 and €1.1962. Oil higher at $108.64. UK 10yr gilt yield down 5bps at 1.57%. World markets better yesterday with London set to open down perhaps 14pts as at 7.00am. RETAIL WITH NICK BUBB: • See premium. Reply to this email to upgrade. |
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