Langton Capital – 2022-07-11 – The consumer, trading, Hostmore, DOM, JW Lees, travel disruption etc.:
The consumer, trading, Hostmore, DOM, JW Lees, travel disruption etc.:A DAY IN THE LIFE: Back from hols where we did our bit to make the tills sing. First impressions? Prices are up materially, menus have been trimmed (margin management and staff shortages), portion sizes (and food quality) are, as always, variable, lack of labour is still an issue and there are a lot of yet-to-reopen units or operations with restricted opening hours or ‘food only at the weekend’ etc. Some operators are great and, though succeeding, perhaps deserve to do even better still. Others, however, may find they aren’t offering what customers want (and will pay for) and therefore may struggle. More thoughts later in the week 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. Prices for the Premium at time of writing are £345 for one subscription, £595 for multiple, both plus VAT. Or sign up for easy in, easy out monthly option HERE PUBS & RESTAURANTS: The Consumer: The latest UN Food Price Index reports that wholesale food commodity prices fell by 2.3% in June compared with May… • See premium. Reply to this email to upgrade. The ONS reports 49% of people in the UK said they had purchased less food than normal between 22 June and 3 July, up from 8% of those polled last September… The CMA will investigate petrol and diesel pricing after it discovered a sharp rise in prices once fuel had been processed by oil refineries… The pub market: Last week, UK Hospitality CEO Kate Nicholls responded to data showing that 7,000 pubs have closed in the past decade by saying ‘The current economic crisis increases the chances of further decline, with soaring costs in energy, food and drink, a higher VAT rate, falling consumer confidence and an acute labour shortage… S4 Labour reports that hospitality sales figures in June increased by 0.5% when compared to 2019 levels. London experienced the most growth across the sector, with sales rising by 17% when compared to 2021. CGA’s Drinks Recovery Tracker suggests that ‘Britain’s On Premise drinks sales stayed just short of the pre-pandemic levels of 2019 last week’ (the week to 2 July). It says total sales were down by 3% after having been down by 7% in the prior week on the back of train strikes… • See premium. Reply to this email to upgrade. The FT reports ‘ British companies are preparing for a recession this year as they face the double hit of slowing consumer demand and rapidly rising costs from inflation on their own businesses…’ Estate management: Press reports suggest that Stonegate (Slug & Lettuce, Walkabout & EI Group tenancies) is looking to sell around 75 pubs. Marston’s is thought to be looking to sell in the region of 50 units. COMPANY NEWS: Hostmore plc has this morning updated on trading for the half-year to 3 July 2022 saying that trading is in line with expectations. It says that ‘growth opportunities remain, despite consumer caution…’ • See premium. Reply to this email to upgrade. Domino’s Pizza Group has announced the appointment of Edward Jamieson as Chief Financial Officer. It says it ‘is anticipated that Edward will join Domino’s and the Board of Directors in October 2022…’ The Times reports that ‘Naked Wines could be at risk of breaching one of the covenants on a new lending facility, as repeat customer sales fall short of its own forecasts…’ JW Lees has reported results to end-March 2022 to Companies House showing revenues up from £21.3m in the Covid-impacted year to March 2021 to £75.4m in the year under review… Young & Co updated last week on Q1 trading saying that ‘the strong trading momentum achieved in the final quarter of last year has continued, with an excellent start to the current financial year. In the first thirteen weeks, revenue was up 39.7% in total and up 34.9% on a like-for-like basis against last year…’ The Oakman Group Plc reports FY total group sales up 79.0% to £65.1m, with LFL sales up 51.2% YoY… HOLIDAYS & LEISURE TRAVEL: EasyJet CEO Johan Lundgren has commented that cancellations and delays have “stabilised” recently. He adds that travel disruption would continue until winter… The Mail reports that ‘Heathrow’s foreign shareholders could be forced to fund a cash injection into the business as the UK’s largest airport battles with an ‘uncertain’ future…’ IATA director general Willie Walsh has said the price of airline tickets will go up ‘without doubt’ as fuel costs rise… Per Travel Weekly, Holidaysplease boss Charles Duncombe says that the post-Covid ‘bump’ is still ‘winning’ against the impact of rising living costs in terms of holiday sales but that may not last. Jet2 reported full year numbers last week saying that ‘although seat capacity increased to 7.01m (2021: 2.00m), and average load factor % increased to 69.2% (2021: 66.0%), fragile consumer confidence arising from the three-weekly UK Government “traffic light” reviews during Summer 21, meant customer bookings were significantly closer to departure than normal, leading to a reduction in average flight-only ticket yield per passenger sector of 29% year on year…’ • See premium. Reply to this email to upgrade. Parkdean Resorts is working towards achieving the Armed Forces Covenant Employer Recognition Scheme Gold Award. Earlier this year Parkdean Resorts partnered with SSAFA – the Soldiers, Sailors, Airmen and Families Association – the Armed Forces charity, and has so far raised almost £6,000 for the charity. Leaked files suggest that Uber has courted top politicians in order to get its way. The company says its “past behaviour wasn’t in line with present values” and it is a “different company” today. Founder Travis Kalanick was forced out in 2017. OTHER LEISURE: Elon Musk has backed out of the $44bn takeover of Twitter after claiming a ‘material breach of multiple provisions of that agreement’… Ten Entertainment Group last week updated on H1 trading saying that it had seen ‘52.6% total sales growth in the first half of 2022 compared to 2019…’ Former FIFA president Sepp Blatter and former UEFA president Michel Platini have been acquitted of corruption by a Swiss court. Criminal proceedings were launched into the pair after a payment of two million Swiss francs (£1.7m) from FIFA to Mr Platini was uncovered in 2015. Macau’s casinos have been forced to close for the first time in more than two years as a result of a coronavirus outbreak. FINANCE & MARKETS: EY UK Chief Economist Peter Arnold has said that Covid and the war in Ukraine have made inflation inevitable. Regarding a potential recession, EY says ‘we know that in downturns, all consumers (particularly the low paid, who are typically most affected) tend to cut back on discretionary spending and trade down to cheaper brands and goods.’ The OBR has said that tax cuts, which seem to be a central theme for many would-be successors to ousted PM Boris Johnson, may not be possible… The US economy created 372,000 jobs in June, ahead of estimates. Ports across the UK, which have spent millions on building border control posts, are threatening to sue the government if it does not compensate them. Sterling trading at $1.1988 and €1.1805. Oil price $106.31. UK 10yr gilt yield 2.22%. World markets mixed to lower on Friday with London set to open down around 92pts as at 7.15am. FORTHCOMING NEWS: A bit of life this week before the pace of announcements busies up later this month. Hostmore has updated on H1 trading today and Pepsi updates on Tuesday, JD Wetherspoon comments on full year trading on Wednesday and DP Poland hosts its AGM on Friday. RETAIL WITH NICK BUBB: • See premium. Reply to this email to upgrade. |
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