Flutter, 888 Holdings, US restaurant trends, airports, leisure travel & more:

A DAY IN THE LIFE:

TGI Friday and, as the heat builds, it’s time for a break. No doubt we won’t be alone in that the rest of August is a bit fractured by holidays.

Langton will be away next week. Probably active on Twitter from time to time and back on 22nd. We’re then a week in the saddle before we’re away again, road-testing the UK hospitality industry from sea to shining sea. It’s hell, of course, but somebody has to do it. On to the news:

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PUBS & RESTAURANTS:

Promises, promises:

Rishi Sunak has vowed to slash business rates if he is elected as the next Conservative party leader. Sunak said he was committed to extending the current 50% discount on business rates in his first Budget. Rival and favourite Liz Truss says she will cut taxes, reverse NIC increases and may subsidise consumers….

Footfall:

Springboard updates on traffic saying ‘footfall across UK retail destinations worsened last month wiping out all of the gains made since April…’

Signals from ‘smaller’ US operators.

Given both the size of the country and the proclivity to eat out rather than cook, there are a lot of restaurants in the US. Around two thirds of a million or more and, given that number, it is hardly surprising that some substantial chains are not familiar to people outside the country in which they operate. Some of the signals they are giving out are nonetheless interesting as, though the markets in which they operate are different to that in the UK, there are also similarities.

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Other news:

GDP drop in Q2. See Finance & Markets below.

Apologies to Tesco but every little helps. Sainsbury is to join some other retailers and stop selling disposable barbecues due to the risk of fire. This could, very much on the margin, benefit the on-trade.

Unofficial strikes are said to be increasing in frequency as workers seek to use the tight labour market to pass the parcel of rising prices…

COMPANY NEWS:

Graphite Capital is selling The Groucho Club to a group of investors which includes Alcuin Capital Partners, the owners of Caffè Nero. According to reports, the sale was worth as much as £40m.

Wendy’s has cut its UK pipeline from 50-60 restaurants by the end of 2022 to 35, despite remaining bullish about the market…

Chief Investment Officer of Oakman Group Steve Kenee will leave his role after three years in the job.

McDonald’s says it will reopen some outlets in Kiev and western Ukraine to restore a “small but important sense of normalcy”.

JKS Restaurants is set to open a second Arcade Food Hall at Battersea Power Station in 2023. The first food hall is located in Tottenham Court Road’s Centre Point. The new food hall will be situated at the heart of Battersea Power Station and will be a 24,000 square foot space.

China coffee company Luckin has said it will continue to open stores in the country to meet rising demand. The operator has some 7,195 outlets in the country. Q2 revenues were RMB 3.3bn, up 72% on the same period of 2021.

Autogrill has reported H1 numbers saying that revenues grew year-on-year by 78% to €1.7bn. Revenues are still some 22% below pre-pandemic levels.

HOLIDAYS & LEISURE TRAVEL:

Strikes by airport workers in Portugal could cause August bank holiday disruption, with Lisbon, Faro, Porto and Funchal airports set to be affected by the disputes.

Heathrow Airport reports that it saw over 6m passengers in July, with the airport expecting 16m travellers between the July-September period. The airport said that its cap on departing passenger numbers has led to fewer last-minute flight cancellations.

GMB members of security staff at Leeds Bradford airport have voted to strike in a dispute over pay…

Michael O’Leary, CEO of Ryanair, has said that the airline’s trademark 10 euro fares will not be seen for a ‘number of years’ due to soaring fuel prices…

Travel management company CWT and the Global Business Travel Association have reported that the cost of corporate travel will continue to rise during the remainder of 2022.

Manchester Airports Group has reported that its three airports handled 85% of pre-Covid volumes in July, up from 82% in May and 84% in June…

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STR reports that the US hotel industry slipped a little week on week in the week to 6 August. Versus 2019, occupancy was down 5.7pps at 69.9% and average daily rate was up 15.1% at $154.48. The resulting revenue per available room was up 8.5% at $108.04.

OTHER LEISURE:

Flutter has reported H1 numbers saying that revenue is up 11% at £3.4bn with adjusted EBITDA down 20% at £476m and an adjusted profit after tax down by 42% at £177m. The earnings per share are down by 43% at 97.2p. The group says that its reported loss after tax is due to charging for the amortisation of acquired intangible assets.

Re the outlook, Flutter says ‘H2 has started in line with expectations.’ It adds there are ‘no discernible signs of a consumer slow down currently, but we are closely monitoring key spend indicators given the uncertain macro-economic outlook.’ It says that, ‘assuming normalised sports results, we anticipate full year EBITDA to be in line with market expectations.’

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888 Holdings has reported H1 numbers. It has provided pro-forma figures as the acquisition of William Hill will only complete on 1 July 2022. Pro-forma revenue was down 1% at £943.2m with adjusted EBITDA, also on a pro-forma basis, up 26% at £142.3m. The company reports adjusted EPS down 43% at 7.5p.

Re the outlook, 888 says ‘the business is on a stable trend, with Q2 2022 pro forma revenue growth of 1% compared to Q1 2022, including sequential growth in UK Online revenue across both 888 and William Hill brands.’ It adds that ‘revenue in the second half of 2022 is expected to be in line with revenue in the first half of 2022.’ Commenting on the balance sheet, the company reports that it has a ‘long-term debt structure’, with £1.8 billion in gross debt, with maturities ranging from 5-6 years. It adds ‘cash interest costs are currently expected to be approximately £65 million in H2 2022, and £130-140 million in the full year 2023.’

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Spotify has launched a new site to sell fans tickets to live gigs directly from its platform instead of redirecting users to partners like Ticketmaster and Eventbrite.  Users will need to have a Spotify account in order to buy tickets on the site.

FINANCE & MARKETS:

The ONS has reported that the UK economy shrank by 0.1% between April and June (Q2). It has registered growth in Q1. The economy shrank by 0.6% in June, largely as a result of the Platinum Jubilee.

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Although US inflation eased in July, various officials have been briefing that the Fed is “far, far away from declaring victory” on inflation. It is still believed that the Fed funds rate will be around 4% by the end of next year.

The RICS has pointed to a drop in enquiries from would-be purchasers in the UK housing market. It says it still expects prices to rise due to a shortage of supply.

The Telegraph quotes ‘experts’ and reports that ‘house price falls are imminent as soaring mortgage rates and spiralling living costs finally catch up with the housing market.’ it says ‘the crunch point will hit at the end of this year and bring a year-long downturn in 2023 with prices falling by 4% according to the Centre for Economics and Business Research.

Sterling mixed to down at $1.2194 and €1.1815. Oil up at $99.15. UK 10yr gilt yield up 12bps at 2.07%. World markets mixed yesterday and London set to open little changed as at 6.30am.

FORTHCOMING NEWS:

Today we have numbers from Flutter and 888.

Next week, its mostly economic stats with UK unemployment and average earnings data, inflation numbers for the UK along with government borrowing stats. On Friday, we have consumer confidence data from GfK.

On the corporate front, mostly quiet but there are scheduled updates from Carlsberg (which has just upgraded expectations) and from Rank Group.

RETAIL WITH NICK BUBB:

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