FSTA, Premier Foods, trading, inflation, discounting, strikes etc.:

A DAY IN THE LIFE:

Too mean to take a cab at virtually any point, I took the Central Line during rush hour last week and, if it was less horrible than it had been prior to the opening of the Elizabeth Line, it wasn’t discernible by the naked eye.

But it must be a little less crowded, surely.

Because the Elizabeth Line itself is now quite busy and where were all those people before it opened? Incredible though it seems having stood, wedged into position by my fellow travellers in stationary carriages in 35 degrees of heat last week, they must have been on the Central Line.

That’s unless they’ve taken some trains out of service, that is. Which is entirely possible because to do so would allow them to keep crowding up to historic levels – always a winner in some people’s books – whilst saving on fuel.

On to the news:

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FULLER’S – Q1 TRADING UPDATE:

Fuller’s has this morning updated on Q1 (15 week) trading and our comments thereon are set out below: Headline numbers: Fuller, Smith & Turner updates on trading for the first 15 weeks of its current financial year, saying ‘the Company has continued to make strong progress with total sales for the first 15 weeks rising by 17.1% and like for like sales for the same period rising by 15.1%.’ Fuller’s says ‘increased tourism and events, along with workers returning to their offices, have contributed to like for like sales growth of 17.9% in our City and Central London sites.’ Dividend & share repurchase: It adds ‘given the strong start to the year and having declared a total dividend of 14.68p per 40p ‘A’ and ‘C’ share for FY2023 (an increase of 30% on the previous year), the Board has decided to commence the repurchase of up to one million ‘A’ shares in line with our capital
allocation framework.’

Company comment: Chief Executive Simon Emeny comments ‘we are very pleased to have delivered a strong start to the year. The hard work of our teams, coupled with London’s continued recovery, is driving strong sales momentum.’ He says ‘our comprehensive strategy, combined with the investments we have made in our people, infrastructure, marketing and estate, is delivering excellent results; and while cost inflation and the ongoing train and tube strikes continue to present challenges, we are pleased with our progress.’

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PREMIER FOODS – Q1 UPDATE:

Premier Foods has updated on Q1 trading and our comments thereon are set out below: Headline numbers: Premier Foods has updated on trading saying that Q1 Group sales are up 21.1% versus prior year (including bolt-on acquisitions) with Branded sales up 17.5%. The company says it has achieved ‘further Grocery market share gains in the quarter, up another 94 basis points’. Re new products and markets, the company reports ‘Mr Kipling delivered record market share in Australia and continued to build further distribution in the US’ and adds that ‘new categories progress continues; sales of Ambrosia Porridge pots and Cape Herb & Spice more than doubled.’ It concludes that ‘FY23/24 Trading profit now expected to be at top end of market expectations.’

Outlook: PFD says ‘the Group has started the year off well, delivering strong sales growth across its brand portfolio and further Grocery market share gains.’ It says ‘looking ahead, revenue growth in the Grocery business is expected to moderate in forthcoming quarters, as year on year effects of higher prices reduce, while the trajectory for Sweet Treats is expected to build through the second half of the year.’ PFD says…

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PUBS & RESTAURANTS:

Impact on trading:

The Oxford Partnership reports that the UK is beginning to see the impact of the Bank of England’s 13 interest rate hikes on the hospitality industry, with the decline in trading outlets accelerating to -1% compared to 2022. It states that 2.4m households will have had to refix mortgages at higher rates by December 2023, with this increasing to 4.4m by December 2024….

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Consumer fragility:

A report by Hargreaves Lansdown and Oxford Economics indicates that a third of consumers don’t have emergency funds, up from a quarter just 18 months ago as inflation erodes savings….

Inflation:

UKHospitality CEO Kate Nicholls commented on the CPI figures, saying it ‘ is good news for hospitality businesses, but it remains the case that food and energy costs are incredibly high…there needs to be more action to bring down those twin pressures of food and energy costs’.

The Morning Advertiser reports that government figures show summer seasonal vegetable prices have increased by 31.3% YoY. Overall, summer fruit and vegetable prices have climbed by 21%. However, when considered as a separate category, fruit prices have actually dropped by 9.7%.

Staffing:

UKH has commented on the Work and Pensions Committee’s new report into addressing economic activity, which recommends a number of measures, including devolving the delivery of support to local authorities and producing a hiring guide to encourage flexible working, saying this ‘highlights several areas where hospitality can help get people back into work….’

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Other news:

Rents. The ONS reports that rents grew 5.1% across the UK in June, with sharp increases set to have a big impact on consumer budgets.

Mortgage rates. The ONS also reports that UK CPI inflation fell by more than expected to 7.9% in June, down from 8.7% in May. As a result, market expectations for the terminal Bank of England interest rate fell from 6.25% to 5.75%…

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In the US, Uber is facing a lawsuit in California claiming it should have covered UberEats drivers’ work-related expenses….

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Business fragility. EY Parthenon has said that profit warnings are spiking in the UK and have now reached levels last seen in the financial crisis, excluding the pandemic.

COMPANY NEWS:

Hawksmoor is to offer meals for £15 when the rail or tube is on strike. It says that the offer is valid between Monday to Saturday from noon to 6pm, and is only for their steak & frites. The usual cost of Steak and Frites is £25.

Per MCA, Beds & Bars is targeting expansion in Europe rather than the UK due to a much more attractive return on investment of 25%, compared to the UK’s 15%….

The steakhouse group Hawksmoor has opened its second international restaurant and 12th overall restaurant which is in the former National Irish Bank in Dublin.

Founders Will Beckett and Huw Gott launched Hawksmoor in London’s Spitalfields in 2006 and the brand has been steadily growing since then.

The Dublin menu is distinct from others in the group, featuring Dublin Bay Monkfish that are landed nearby by small day boats, as well as Duncannon smoked salmon with Guinness bread and Dublin Lawyer which includes a whole Lobster baked with Micil Inverin whiskey.

HOLIDAYS & LEISURE TRAVEL:

Airbnb etc.:

UKH has commented on the proposed scheme to more closely regulate short term property lets in London saying ‘the Mayor is absolutely right to raise the issue of short-term lets in the capital. Whether it’s a lack of visibility preventing checks of basic standards of safety and accessibility or the impact it has on housing stocks, it’s clear that action is needed….’

Euro-heatwave:

Travel Weekly has suggested that would-be holidaymakers are not being deterred from travelling…

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Strike threats at Luton:

Workers are threatening to strike for two days on July 28th and August 1st. The Unite union warned disruption would be inevitable to passengers and staff should the walkouts go ahead.

Travel jobs, fewer vacancies:

Statistics from C&M Travel Recruitment report that the number of new travel jobs created in June fell by 40% on the month prior. Yet, the number of candidates placed in new jobs has increased for the second consecutive month.

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OTHER LEISURE:

Streaming service Netflix sent shares decreasing nearly 9% in after-hours trading with a second-quarter revenue that disappointed both Wall Street and analysts. Shares of Netflix were down 8.9% after the results at $435.

There has reportedly been a spike in people signing up for Netflix this spring on the back of the company’s crackdown on password sharing.

TikTok is said to now be the most popular single source of news for teenagers in the UK.

Mark Zuckerberg’s Meta is now creating a commercial version of its AI model freely available, this is primarily to compete with OpenAI’s ChatGPT and Google’s Bard….

FINANCE & MARKETS:

Inflation:

The market took yesterday’s drop in inflation as unequivocally good news. Bond rates dropped and the estimate for the ‘terminal Bank of England interest rate also fell…

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The Telegraph opines ‘like it or not, Brexit is a part of Britain’s inflation problem…’

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The Institute of Economic Affairs has said that, whilst inflation is lower, ‘we should not…get our hopes up for a quick economic revival….’

The Bank of England, despite its asking that employers should show ‘restraint’ in awarding pay rises, has reportedly paid out £25m in bonuses to staff over the past year…

The National Office for Statistics (NOS) said on Wednesday that British house prices increased by 1.9% in the 12 months to May, this is the smallest increase since mid-2020.

RETAIL WITH NICK BUBB:

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