Brighton Pier / Entain (profit warnings), economy slows, consumer etc.:

A DAY IN THE LIFE:

We say below, in commenting on KFC, that ‘as with many companies, Covid has accelerated some changes and introduced others’ and we’ve certainly seen that with the use of cash.

Indeed. I got £100 out of a supermarket cash point over the weekend and, looking back, it was my first cash withdrawal since April.

And yes, I might be a bit mean, but that’s not the main reason for the big gap in withdrawals – I used to draw out £200 virtually every week, heaven knows where the money went – but rather the massive shift to spending on cards, particularly contactless and, wait for it, I’ve burst into the twenty-first century, on my phone.

Which is what it is, I suppose, but here’s a question for you: How many coins will King Charles get his face on as a percentage of those adorned by his mum?

And stamps, for that matter.

We’ve no inside knowledge as to his life expectancy or social trends but it could be 5% or less. On to the news:

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PUBS & RESTAURANTS:

The economy:

S&P on Friday released Flash PMI numbers for the UK that have led to further suggestions that a recession may be more likely than not. It says its composite index fell to 46.8 (from 48.6 last month and a 32 month low). It says its important Services PMI fell to 47.2 (from 49.5 last month and also a 32 month low). Manufacturing is up slightly from last month but only to 44.6, a number below the critical 50.0 mark at which contraction is indicated…

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The consumer:

Regarding the consumer and what disposable income he/she has left at the end of the month, NatWest, Nationwide and TSB cut the price of mortgages on Thursday amid mounting optimism that rates have peaked. The Bank of England opted to hold interest rates at 5.25% last week after inflation figures were lower than expected….

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Stealth taxes still to bite. Chancellor Jeremy Hunt has called the prospect of tax cuts ‘virtually impossible’ until there is more economic improvement. The calls for cuts had been prompted by falling inflation figures and the interest rate being held at 5.25%….

Some diehards may still hope that ditching levelling up in the shape of HS2 in the North could make room for tax cuts.

Other news:

Energy costs. A number of businesses including Iceland and Burger King have complained to Ofgem that some major gas and electricity suppliers have been profiteering….

Inflation. The MA reports that action is needed to tackle spiralling costs in brewing….

Shortages. Asahi CEO Atsushi Katsuki has told the FT that that climate change could create beer shortages as rising temperatures reduce barley yields and quality of hops. Katsuki said ‘Although with hotter weather the consumption of beer may grow and become an opportunity for us…There is a risk that we may not be able to produce enough beer.’

Research commissioned by Greene King has found that 8 out of 10 drinkers see cask ale as an essential part of UK pub culture, with 43% saying it is the freshest drink you can order at the bar….

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Alcohol free beer: Heineken has suggested that alcohol-free beer should take around 10% of global beer sales if it is to become an established form of consumption. At the moment, it estimates alcohol-free products account for 2% of the global beer market….

Discounting. TGI Friday has brought back its ‘Kids eat free, all day, everyday’ offer. Whitbread’s Beefeater brand is offering 30% off mains until 28 September.

COMPANY NEWS:

Profit warning from Brighton Pier Group:

Tough trading, guiding down. PIER has announced H1 numbers for the 6 months ended 25 June 2023 saying that ‘total revenues for the Group were £16.2 million (2022: £17.3 million), following a challenging second quarter as previously announced.’ The company says ‘the majority of this sales decline was from the Bars division which faced tough comparable numbers, following exceptionally strong trading from a post-pandemic surge in demand in the first half of 2022.’

PIER says ‘ongoing inflationary pressures, in particular to food, beverage and staff costs have had a significant impact on the Group’s operating margins in the first half of 2023, resulting in lower earnings than in the previous year.’ The company reports a loss before tax of £1.0m against a PBT in the same period last year of £0.7m….

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The MCA reports that KFC UK&I is accelerating its expansion plans, aiming to reach 1,500 sites in the next 10 years. Chief development officer James Whitehorn said ‘It’s been a strong year for us in a turbulent sector’ with ‘most formats holding up strongly…each is in relative growth’….

• Langton. As with many companies, Covid has accelerated some changes and introduced others. The company said delivery is now between 20-30% of sales on average, although this depends on the location. It says ‘prior to Covid, delivery was probably just touching double digits on a percentage basis. It’s a huge increase from a base of almost nothing.’

Rosa’s Thai has secured permission to open in Cheltenham, in the former TM Lewin shop in the Promenade.

Keurig Dr Pepper has announced that Tim Cofer is to be its new Chief Operating Officer ahead of taking over as CEO in the second quarter of 2024.

Treetop Golf will open its fifth UK site on 6 October, located at Metrocentre, Gateshead. A spokesperson said ‘There’s a host of new features and characters to explore on the two indoor 18-hole courses.‘

HOTELS & LEISURE TRAVEL:

Mayor of Doncaster Ros Jones and the Cabinet at City of Doncaster Council have given their unanimous support to reopen Doncaster Sheffield Airport…;.

OTHER LEISURE:

Profit warning from Entain.

Entain has updated on trading saying that ‘post the summer, Online Net Gaming Revenue (NGR) has been mixed across the Group, but in aggregate, softer than anticipated. Q3 Online NGR growth is now expected to be up high single-digit percent, and down high single digit percent on a proforma basis…’

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The CMA has said that Microsoft’s revised offer to buy the Call of Duty maker Activision Blizzard ‘opens the door’ to the deal being cleared….

UK customers of Amazon’s Prime Video streaming service will see adverts from 2024, unless they subscribe for an ‘ad-free’ package at an additional cost. At the moment, a Prime subscription, which includes free one-day delivery on goods as well as access to its streaming service, costs £8.99 per month, or £95 a year, in the UK.

FINANCE & MARKETS:

See Pubs & Restaurants for comment on Flash PMI numbers.

Recession fears resurface: The CBI Industrial Trends survey has found that output volumes fell more quickly than expected in the three months to September (weighted balance of -10%, from -19% in the three months to August). Output is expected to be unchanged in the three months to December (0%)….

As the Press has pointed out, it was a year ago last Saturday that ex-Chancellor Kwasi Kwarteng stood up in the House of Commons and introduced the mini-Budget that risked blowing up the economy….

The northern section of HS2 may be scrapped – see comments on potential pre-election tax cuts above.

The state-owned British Business Bank has reported an annual pre-tax loss of c£147m saying that wider economic problems led to a fall in the valuation of its investments. It says it made £1.6bn of loans in the year “despite the challenging economic environment”. Speaking of its investments, CEO Louis Taylor says ‘given the longer-term 10-year horizon for most of our investments we would expect an overall upward trajectory despite these in-year fluctuations.’

Sterling lower at $1.2239 and €1.1491. Oil down a fraction at $93.79. UK 10yr gilt yield down 3bps at 4.26%. World markets weaker on Friday & Far East mixed in Monday trading. London set to open around 30pts lower as at 6.30am. Sterling has now fallen to a six month low against the dollar. The move suggests traders have cut their expectations for peak rates in the UK.

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