SSP, AG Barr, PPHE, output prices, financial distress & other:

A DAY IN THE LIFE:

No great revelation here but don’t you think that language is a tricky thing?

I mean, from childhood negotiations with parents, you learn that, on a bad day, ‘no’ means ‘no.’ But ‘maybe’ also means ‘no’ and ‘possibly’ means ‘unlikely’ and ‘yes’ means ‘leave me alone’.

However, on a good day, all of the above mean ‘yes’, except for a straight ‘no’, which likely means ‘later’.

And things get worse as, if you ever do, you achieve maturity. For example, you learn that words have to be carefully interpreted. ‘I hear what you’re’ saying means ‘shut up’ or ‘I don’t believe you’ and likely it means both with ‘go away’ thrown in there for good measure.

And ‘interesting’ means ‘ridiculous’ and ‘fascinating’ means leave my presence immediately whilst ‘wicked’ means good but ‘evil’ means, well, ‘evil’.

Anyway, there’s a lot more to be getting on with but we’ll leave it there for the moment and move on to the news:

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PUBS & RESTAURANTS:

Output price rises:

Official data interpreted by the MA suggests that last month ‘saw the lowest annual increase for beer prices since 2020.’ ONS date shows that the average price of a pint of draught lager in pubs rose by only 2.5% between December 2023 and December 2024, bang in line with CPI across the economy as a whole. In the year to December 2023, prices rose by 9.7%. Putting the above in context, prices are up 29.2% since December 2019.

Gen X, Gen Z & drink:

The Times reports that a poll of over 2,000 adults shows that some 43% no longer drink alcohol. The survey finds that older demographics are sticking more to their established habits. Some consumers have never drank alcohol regularly whilst others have cut down, the prime reason given being to improve health or to lose weight.

Wines & Spirits:

The Wine and Spirit Trade Association has said that “substantial rises” are likely when duty hikes announced in the Autumn Budget come into effect on 1 February. Duty will rise by RPI, which was 3.6% at the record date, and the Budget introduced a new system taxing wine by strength. By way of example, alcohol duty on a bottle of gin will rise by c32p whilst that on a bottle of 14.5% abv wine will increase by 54p….

Financial distress:

More on Begbies’ Red Flag Alert report (for Q4 2024). The report cites a ‘historic jump in the number of firms in critical financial distress’. Begbies’ report has been running for some time. It says that ‘less than three months after the Budget, critical financial distress climbs by 50.2% to 46,853 businesses.’ Some 31,201 were reported to be in ‘critical distress’ in Q3 last year….

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Competition from the off-trade

Price elasticities are important. And competition does not just come from one’s peers. Summary: Whilst lines are obviously rather blurred these days, here we look more at food (restaurants) than drink (pubs). Passing on price rises to the consumer is a) maybe desirable but b) not always possible….

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Demographics:

Rents, which tend to be more of a burden for younger and less well-off consumers, are reported by Rightmove to have fallen for the first time in five years. Outside London, at least, prices are said to have fallen by around 0.2% month-on-month. In the Capital, rents have continued to rise, moving up for the 13th consecutive quarter at the end of last year. Rightmove nonetheless says that this is a ‘key milestone’…

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SSP GROUP Q1 TRADING UPDATE:

SSP has this morning updated on Q1 trading ahead of its AGM and out comment thereon are set out below:

Headline numbers: SSP reports that ‘the positive trading momentum we saw in the first eight weeks of the new year, as highlighted in our FY24 Results on 3 December 2024, continued through the remainder of the first quarter, and our expectations for the full year remain unchanged.’ It adds that ‘for Q1 as a whole, Group sales were up 14% on last year, on a constant currency basis, including like-for-like sales growth of 6%, net contract gains of 5% and a contribution from acquisitions of 5%.’

LFL sales in North America in constant currency terms were up 3%. Europe was up 3%, the UK & Ireland were up 9% and the RoW was up 11% to give a 6% rise overall. Including purchases, SSP says ‘on a constant currency basis, in North America sales grew by 17% year-on-year.’ It adds that ‘in Continental Europe, sales growth of 5% reflected a solid performance notwithstanding an impact of (1)% from the previously announced exit of 13 unprofitable MSA sites in Germany, with further exits expected through the year as part of the regional recovery plan’. The company says ‘in the UK, sales rose by 9%, driven by a strong like-for-like sales performance, reflecting good passenger numbers in the air sector and a lower incidence of industrial action in the rail sector compared with last year.’

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COMPANY NEWS:

Soft drinks company A.G. BARR has updated on trading for its full year to 25 January 2025 saying that revenue in 2024/25 is expected to be c.£420m (2023/24: £400m), representing c.5% year-on-year growth. It adds that ‘full year adjusted operating margin is expected to show strong improvement to c.13.5% (2023/24:12.3%), helping to drive double digit profit growth….

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Comptoir has formally announced the appointment of Richard Kleiner as Non-Executive Chair, with immediate effect. It says ‘Richard Kleiner brings a wealth of relevant experience and knowledge to the Company, having previously served on the Board as Non-Executive Chair between March 2014 and August 2022’. Comptoir adds that it ‘continues its search to identify a suitable independent Non-Executive Director to join the Board.’ The company concludes that ‘further to the announcement on 14 January 2025, the formal appointment of Chaker Hanna, as Chief Executive Officer of the Company, is expected to be announced imminently upon his return from a period of overseas travel in Asia.’

Fast food chain German Doner Kebab is opening its first mainline train station restaurant in London at Victoria. The site will be the group’s 144th opening, and its 55th site in London.

Urban Pubs & Bars, which currently has 53 sites, has reported revenues up 16% to £60.5m, with like-for-like sales of 4%. EBITDA is up 26% to £8.7m for the year to 28 April 2024. Regarding FY25 trading, the company adds that LFL sales were up by 16% in the month of December 2024….

Competitive socialising group Red Engine is celebrating 10 years since the launch of its first concept, Flight Club.

HOLIDAYS, HOTELS & LEISURE TRAVEL:

Hotelier PPHE has updated on full year trading saying that it is ‘growing occupancy with full-year results in with market expectations.’ The company says that its total revenue and EBITDA is expected to be in line with market expectations. It adds that ‘trading momentum in Q3 continued into Q4, with like-for-like room revenue growth in Q4 of 2.6% and like-for-like RevPAR growth of 2.5%, which reflected a stronger performance in the UK and occupancy growth in the quarter vs Q4 2023 across all operating markets….’

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Consumer body Which has reported that the price of the average European package holiday this summer is up by 4.2%.

Doncaster Sheffield airport is reported to be edging closer to reopening having found an “international airport operator” that will run the airport. Doncaster mayor Ros Jones has said that the as-yet-unnamed operator has been secured.

Amex has reported a Q4 14% y-o-y increase in spending on travel internationally.

OTHER LEISURE:

Amazon is reported to be seeking permission to launch drones from its warehouse in Darlington, County Durham, to deliver to consumers in the area.

Some $700 billion was wiped off the value of Nvidia yesterday on the emergence of a cut-price Chinese rival to ChatGPT.

US President Donald Trump has said that Microsoft is in discussions to buy TikTok. He says ‘we’ll see what happens. We’re going to have a lot of people bidding on it.’ He adds ‘if we can save all that voice and all the jobs, and China won’t be involved, we don’t want China involved, but we’ll see what happens.’

Sky News reports that Fairline Yachts, one of the UK’s largest luxury boat builders, has collapsed into administration only two months after it was sold to new investors.

FINANCE & MARKETS:

Sterling up at $1.2445 and €1.1930. Oil lower at $77.48. UK 10 year gilt yield down 5 basis points at 4.59%. World markets mixed yesterday & London set to open around 8 points better as at 6.30am.

RETAIL WITH NICK BUBB:

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