Langton Capital – 2022-06-10 – Fuller’s meeting, debt, cost of living, flight chaos, Parkdean & other:
Fuller’s meeting, debt, cost of living, flight chaos, Parkdean & other:A DAY IN THE LIFE: In addition to fighting off the unwanted attentions of the local deer, rabbits, foxes, marauding birds and hordes of unnamed insects, we keep a couple of window boxes where, I have had to conclude, I’m less of a gardener and more a keeper of a few well-fed snails. Because the slow-moving-but-insatiable beasts seem to have munched everything down to a stump before stopping for what looks either like a well-earned rest but could just as easily be them trying to procreate in order to eat more of the marigolds provided by that nice man with the permanent scowl. So, it might be that plastic flowers and concrete are the answer. Have a good weekend and 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 are £345 for one subscription, £595 for multiple, both plus VAT. Reply to this email to order & request invoice. Or sign up for easy in, easy out monthly option HERE QUESTION OF THE WEEK? Question of this week: What will happen to the delivery market now that restaurants are open again, times are getting hard and there may be some discounting? This is a vitally important, real-world question, the answer to which may determine whether delivery – or more specifically some of the companies within it – have much of a future. Answer of the week: There does, it has to be said, appear to be some scepticism as to whether there is enough money in delivery to keep everyone happy. Whilst there is demand – and there is certainly supply – there isn’t currently much profit to share around, and that is putting it mildly. A test of investor appetite for and belief in delivery would come if any of the major players needed more funds. At that point, investors may suggest that, whilst they’ve got deep pockets, for delivery they have rather short arms. PUBS & RESTAURANTS: Cost of living crisis: With the cost of filling up the average motor car now above £100 and higher fuel bills starting to land, many analysts are on the lookout for signs of belt-tightening elsewhere in the economy. • See premium. Reply to this email to upgrade. Labour issues. Fuller’s yesterday said that it had overhauled its recruitment platform in order to be more inclusive and to foster a sense of belonging. In a tight labour market, this will be more and more necessary. Elsewhere, UK Hospitality CEO Kate Nicholls told UKH’s Summer Conference that easing immigration laws and lifting the apprenticeship levy would help tackle the sector’s staffing crisis. • See premium. Reply to this email to upgrade. Travel disruption: Train drivers look set to join other rail workers in striking later this month. Aslef has announced strikes at three train operating companies, Hull Trains, Greater Anglia and Croydon Tramlink. RMT workers are set to strike much more generally across the country on 21, 23 and 25 June. • See premium. Reply to this email to upgrade. FULLER’S FULL YEAR NUMBERS – ANALYSTS’ MEETING: Following the release of its full year numbers, Fuller’s hosted a meeting for analysts and our comments thereon are set out below: Trading – sales, sales mix, costs: • See also earlier email. • Fuller’s commented that, given its heavy presence in Central London, it was perhaps the most directly impacted UK pub operator. Disruption continued through FY22. • Slide 4 illustrates that the company recovered strongly post the full unlocking in July last year but were very badly knocked over Christmas by Omicron. • Although current trading is up 4% (first 10wks, total sales rather than LfL), it’s clear that volumes are down. The co says they will not recover in FY23. The may recover for FY24. • The tenanted business performed very solidly. • See premium. Reply to this email to upgrade. HOLIDAYS & LEISURE TRAVEL: Concerning ongoing airport chaos, the House of Commons Business, Energy and Industrial Strategy (BEIS) committee has launched a survey to canvas views on where the blame lies. The survey is only open until 12 June. MPs on the committee will then question airline bosses, unions and aviation industry bodies about the problems. • See premium. Reply to this email to upgrade. Research by All Clear Travel Insurance suggests that there is still significant demand for overseas holidays and it goes on to say that people are prepared to pay more. They may have little choice. • See premium. Reply to this email to upgrade. Travel Weekly reports industry debt specialist Travlaw as saying that there has been a “huge increase” in moves to oblige travel companies to pay back some debt following the end of government protections against insolvency at the end of March. Travlaw reports ‘a number of our clients have received notice of winding up actions. Sky reports that the sale of Parkdean Resorts has been called off. It says talks with prospective buyers have been suspended, despite the company and its Canadian owner Onex Corporation having taken part in an auction lasting more than six months. • See premium. Reply to this email to upgrade. Eurocontrol forecasts that air traffic across the continent should reach 9.5 million flights this year, representing 85 per cent of 2019 levels. This is a slight downgrade on earlier forecasts of around 89 per cent of pre-Covid numbers. The latest travel survey by Cheval Collection has suggested that serviced apartments have risen in popularity with lodging guests. Cheval finds that 68% of respondents were likely or very likely to book a serviced apartment, when staying in either London or Edinburgh. This was only two percentage points lower than during 2020, when demand for serviced apartments was at a peak. • See premium. Reply to this email to upgrade. FINANCE & MARKETS: The European Central Bank, in describing inflation as a ‘major challenge’, has said that it will raise its key ECB interest rates in July. It adds that if ‘the medium-term inflation outlook persists or deteriorates, a larger increment will be appropriate at the September meeting.’ The US Fed updates on inflation later today (Friday). The RICS reports that UK estate agents saw seen a sharp drop-off in inquiries for new homes last month. The net balance of buyer inquiries was minus 7 per centage points in May compared with plus 8 the previous month. A net 73 per cent of respondents still said house prices increased in May. Sterling mixed at $1.2494 and €1.1749. Oil lower at $122.39. UK10yr gilt yield sharply higher, up 9bps, at 2.33%. World markets lower yesterday & London set to open down around 57pts as at 6.30am. FORTHCOMING NEWS: A bit busier next week. Vianet reports full year numbers on Tuesday with Everyman Media’s AGM to be held on the same day. Whitbread hosts its AGM on Wednesday, when it will update on Q1 trading. Tortilla’s AGM is also Wednesday and 888 Holdings also hosts its annual meeting. 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