Section Title

XPF, Shake Shack, Airbnb, InBev, income squeeze, debt, holidays etc.:

A DAY IN THE LIFE:

I’ve decided I particularly dislike the phrase ‘at pace’.

That because anybody saying it has probably heard it on the telly recently and thought, I’ll tell you what, I’ll use that tomorrow.

Maybe subconsciously but there must have been an original source, a Patient Zero who made it up and that was likely a Whitehall Sir Humphrey-type who sniggered when deciding ‘tell them nothing, say you’re moving ‘at pace’’. 

Because the words are meaningless babble.

If I were to race Lewis Hamilton around Silverstone, I’m sure we’d both be going ‘at pace’ but just rather a different pace. And the Marshal who walked behind me picking up bits of my car would also be moving at pace so the only thing that it is definitively does not mean is ‘stationary.’

Anyway, that’s enough of that. I’ll be working at pace today. A kind of Friday pace. On to the news:

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PUBS & RESTAURANTS:

The consumer – income squeeze:

Which?’s consumer insight tracker reports that 2.4m UK households missed or defaulted on essential payments, including for housing, loans or credit cards, in the month to 13 July, significantly higher than was seen in May….

The consumer – mortgage costs:

The Bank of England has hinted in its Monetary Policy Report that it expects borrowing costs to stay high for a lot longer than many had anticipated. See also Finance & Markets below…

Trading:

S4labour figures show hospitality sales up 1.4% YoY in July, with food sales (+5.8%) outperforming drink sales (-2.0%). Sales in London were up 2.9% YoY, with non-London sales -4.3%….

Food availability, cost:

The BBC reports that post-Brexit checks on fresh farm produce coming to the UK from the EU have been delayed again….

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Consumer debt:

Buy now, pay later (BNPL) firms have grown materially in recent years (as did payday loan companies such as Wonga before them). This has widened the customer base for consumer debt and maintained consumption levels, at least for the time being. However, there are some questions being raised as to whether or not this is a good idea….

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Other news:

Property finance specialist Sirius reports that investment demand in hospitality and leisure spaces is currently at just 13.9% (defined as the number of properties under offer as a percentage of properties available), falling as low as 7.5% in the North East….

COMPANY NEWS:

XP Factory, owner of the Escape Hunt and Boom Battle Bar brands, has updated on trading for the six months to 30 June 2023 saying that group turnover .is up 131% at £18.8m…

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Shake Shack has announced Q2 numbers reporting total revenue of $271.8 million, up 17.8% versus 2022, including $261.8 million of Shack sales and $10.0 million of Licensing revenue. It reports system-wide sales of $426.3 million, up 21.2% versus 2022. Adjusted pro-forma net income is $7.9 million, or earnings of $0.18 per fully exchanged and diluted share….

AB InBev Q2 has beat quarterly earnings forecasts as post-COVID recovery in China helped offset the impact of a U.S. conservative backlash against Bud Light over a transgender promotion. Q2 volumes fell 1.4% despite growth in most markets, with average prices up 9.0% YoY  due to price hikes and premiumisation…

DoorDash has reported Q2 total orders +25% to 532m, with total revenue up 33% to $2.13bn, beating expectations of $2.06bn….

The interactive darts chain Flight Club is opening its first site in Scotland, in Glasgow, bringing its total UK estate to 11 sites.The Grade II listed building on George St is a few minutes’ walk from the Glasgow Queen Street train station.

Speaking to Bloomberg, Itsu founder and CEO Julian Metcalfe has said that, though headwinds are as strong as he has ever known them, higher UK interest rates are ‘not the End of the World’.

Amazon has reported quarterly numbers to end-June saying that sales were up by 11% year on year to $134.4bn, which was ahead of expectations. Amazon reported a quarterly profit of $6.7bn, up from a $2bn loss a year earlier.

BrewDog is investing $3m in a new bar in Perth, Australia, located on Gordon Street. The site will become a destination brew pub with capacity for 600 patrons, and will be the company’s fifth BrewDog in Australia.

In China, Luckin Coffee’s Q2 saw it open a net 1,485 new sites, reaching 10,836 with two-thirds being company operated….

Liberation Group has announced the appointment of David Kelly as its new Chair with immediate effect….

French patisserie brand Paul UK is looking to convert its UK estate over to its more coffee-focused format, Le Café, with the c35-strong UK estate set to be converted over the next 12 months….

Wilko is reported close to administration with 12,000 jobs at risk…

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HOLIDAYS & LEISURE TRAVEL:

Flight Centre UK’s head of aviation, Justin Penny, has predicted that fares will fall after the summer and into the first quarter of 2024. According to Penny, airlines are seeing a slight drop-off in demand in post-summer travel, and are trying to fill aircraft for Q1 2024 as early as possible by offering lower airfares…

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Travel Weekly reports agent members of the Advantage Travel Partnership as seeing a “dramatic spike” in ultra last-minute foreign holiday bookings despite rising interest rates and the cost of living crisis…

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Airbnb has reported Q2 numbers saying that revenue rose 18.1% to $2.48 billion, ahead of estimates of around $2.42 billion. Gross bookings rose 13% to $19.1 billion, in line with expectations. The company reported EPS of 98 cents per share, compared with estimates of 78 cents….

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Hyatt Hotels Corp has reported Q2 numbers saying that trading was strong but it held back from raising expectations for the year as a whole. The company narrowed its range of REVPAR guidance from the year from 12-16% to 14-16%.

Travel agents report that demand for Greece has not waned despite the recent wildfires, with no sign of holidaymakers cancelling existing holidays to Greece. Barrhead Travel president Jacqueline Dobson,  said ‘If anything, people planning to go to Rhodes still largely feel strongly about continuing with their trips to support the tourism economy’.

OTHER LEISURE:

Games producer Team17 yesterday briefly updated on trading saying that ‘the Group’s enlarged portfolio of titles across all ages, genres and platforms has performed well in a challenging marketplace and the Group continues to expect to trade in line with full year market expectations.’ The shares rose by around 7% at one point suggesting that a more cautious update had been expected…

Apple yesterday reported fiscal Q3 numbers ahead of forecasts but said that sales declines would continue into the current quarter. The group’s shares fell by around 2%.

FINANCE & MARKETS:

As expected, the Bank of England yesterday raised UK base rate from 5.00% to 5.25%. The Bank said ‘at its meeting ending on 2 August 2023, the MPC voted by a majority of 6–3 to increase Bank Rate by 0.25 percentage points, to 5.25%.’ It says ‘two members preferred to increase Bank Rate by 0.5 percentage points, to 5.5%, and one member preferred to maintain Bank Rate at 5%….’

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The Daily Mail reports that two more interest rate rises are being factored in before the end of this year. UKH responds to the rate rise saying ‘hospitality businesses are particularly exposed to further rate rises, due mainly to the Covid loans many were forced to take out during the pandemic….’

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S&P reported its composite PMI for the UK economy in July yesterday. At 50.8 for the month, it was a shade ahead of the 50.7 flash reading but was down from 52.8 in June.

S&P reports that the ‘Eurozone economy shrinks in July as manufacturing downturn worsens.’ It says the ‘service sector comes close to stalling.’ The composite PMI Output Index for the Eurozone was 48.6 (Jun: 49.9), an 8-month low.

S&P reported its services PMI for the UK in July with the 51.5 bang in line with the earlier-released flash number….

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In an interview with LBC before departing on holiday to California, PM Rishi Sunak has said that the government may not be successful in halving inflation before the end of the year.

Sterling mixed at $1.2729 and €1.1621. Oil up at $85.31. UK 10yr gilt yield up 7bps at 4.47%. World markets lower yesterday but Far East heading better in Friday trade & London set to open around 22 points higher as at 6.30am.

RETAIL WITH NICK BUBB:

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