Langton Capital – 2022-06-16 – PREMIUM – Whitbread meeting, food prices, Capco & Shaftesbury & other:
Whitbread meeting, food prices, Capco & Shaftesbury & other:A DAY IN THE LIFE: Major IT problems this morning so a shortened email. Never a good idea to let a document get too big. It may crash and, if you get used to it crashing and shut Word down without having saved it, this is what you get. Full version of the email to follow if we can recover lost work. If not, back to normal for tomorrow. 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 WHITBREAD – Q1 CONFERENCE CALL: Following the release of its Q1 trading update, Whitbread hosted a conference call for analysts and our comments thereon are set out below. Trading (including UK trading): • Some competitors have not fully reopened units. It is not clear yet just how many ‘temporarily closed rooms’ are permanently removed from the market. • Labour supply is ‘tight’. There will be ‘targeted pay investment’. £15m or so of the increased investment mentioned in the RNS will go to labour. • Co says pay rises ahead of NMW and NLW can be ‘unwound’ if the labour market cools. This may not be likely to happen in the medium term. • Leisure demand ‘looks set to continue’ at high levels. The co now has visibility for H1. The mix is still towards leisure. CEO Alison Brittain says it is moving towards normality. • Re business travel, co has now seen a ‘strong mid-week return’ of white collar workers. Manual workers’ demand didn’t drop as much during Covid. • Room rate growth, occupancy higher and more rooms operated. • Prices. Rooms. The group has taken price. It has ‘pricing discipline’ in September. But will edge prices back if necessary. • Prices. F&B. The ‘value end’ has lagged. The co has ‘taken price’. No real comment on elasticities. The co is 4% below pre-Covid levels. • F&B volumes must be well down. Co believes behaviour will revert to pre-Covid levels. Less discounting. Older customers reticent. Some top-end operators have done well. F&B is an addition to the accommodation offer. Germany: • This has ‘come back faster than expected’. Co is ‘very pleased’ with trading. More mature hotels are better than more recently opened units. Say 65% occupancy in the last 4wks. • The bounce was led by leisure. • The group has to ‘build on occupancy before it builds on rate’. Co remains very optimistic. • Some 1,192 rooms have opened YTD. Target remains 2,000 to 2,500. Five hotels have been opened YTD. There are 40 now operating. Langton Comment: • As mentioned earlier, WTB is signalling a meaningful – and apparently strengthening – recovery. Germany, having lagged the UK, is returning strongly. • The UK staycation market will still, one would assume, be big this year. • The autumn is a bit of an unknown. WTB says it has been ‘firm’ on price for September. But one gets the impression that this is very much under review. • The group is still under-represented in London, which is perhaps no bad thing at present. • WTB’s comments are upbeat in tone and seem to suggest a greater degree of optimism than was apparent earlier in the year. The company is upbeat and is exceeding its own expectations and the positive share price reaction to the update is a reflection of the above. PUBS & RESTAURANTS: Analysts have suggested that food prices will rise more rapidly this summer and could be up to 15% higher over the year. The Institute of Grocery Distribution says that the Russian invasion of Ukraine has added to existing pressures. • The IGD says ‘sadly, many households in the UK struggled with food bills before the current inflation event began.’ It adds ‘with prices for energy, motor fuel and food rising fast, more households are moving into this vulnerable group.’ There are concerns that families may turn to skipping meals. The Boards of Capital & Counties Properties and Shaftesbury PLC have announced ‘they have reached agreement on the terms of a recommended all-share merger.’ The company’s will come together via an acquisition by Capco. • The terms are 3.356 New Capco Shares for each Shaftesbury Share held and, as a result of the Merger, Shaftesbury Shareholders (other than the holders of the Existing Capco Shareholding) will own 53% of the Combined Group and Capco Shareholders will own 47% of the Combined Group. • The companies say ‘the Combined Group’s portfolio is located in a number of vibrant, high-profile and high-footfall destinations across London’s West End, including Covent Garden, Carnaby, Chinatown and Soho, close to its major cultural and entertainment attractions, employment locations and transport hubs. Their popularity provides a seven-days-a-week trading environment and exposure to an extensive and diverse local, domestic and international customer base which has proven to be resilient throughout economic cycles.’ The Crown Estate has warned that Regent Street could suffer from a large number of empty shops as work-from-home seems to have set in with workers. CEO Dan Labbad says ‘I think we are going to see void rates go up over the next 12 months…but that doesn’t surprise or concern us.’ HOLIDAYS & LEISURE TRAVEL: Whitbread’s AGM yesterday saw a pay revolt with over 38 per cent of voters opposing the Premier Inn owner’s pay awards for its directors. The vote is advisory rather than binding. FINANCE & MARKETS: The Fed raised rates last night by 0.75%, the largest amount since 1994. The Bank of England’s MPC announces its UK rate decision at lunchtime. Sterling bouncing a little at $1.2143 and €1.1631. Oil price down at $118.79. UK10yr gilt yield down 9bps at 2.46%. FORTHCOMING NEWS: Back tomorrow. RETAIL WITH NICK BUBB:
Today’s News: Tons of news today, since as well as the scheduled Halfords finals and the Boohoo trading update, there have been updates from ASOS, N Brown, Music Magpie and Inchcape. The ASOS news is prompted by the news that, as had been rumoured, their CCO Ramos Calamonte has been appointed to take over from Nick Beighton as CEO, but the company also must have been mindful of the need to position the City about its performance relative to Boohoo. The Q1 from Boohoo (the 3 months to May 31st) shows revenue down by 8%, but that was broadly expected and the company sees trading improving from now on and hasn’t changed full-year guidance. ASOS, on the other hand, has delivered better sales over the same period (up 4% ex-Russia), but has warned about the cost of increasing returns and flagged that full-year profits will be well below its previous guidance. The key MPC interest rate decision |
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