Just Eat, OTB, Cornish Bakery, SBUX, confidence, sport & other:

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A DAY IN THE LIFE:

We managed to pop out for a late lunch on Sunday and, as we’re a bit further north than usual, we caught the St James’s traffic both going into and out of Newcastle as we fought our way through to Tynemouth.

Which was an experience as, indeed, was watching the first half of the Newcastle-Notts Forest match in a black & white pub in Tynemouth where five goals in 20 minutes or so had us sloshed with beer, deafened and danced with by a number of beefy and very happy Geordies in short order.

But that, of course, is what it is.

And, though the dog, whose affections seem directed to the Magpies was horrified, confused and ultimately bemused by the experience it was not, I’m told, a patch on what was going on in The George in the Bigg Market at 9pm the previous evening.

Quite a lively pub, I’m led to believe.

Anyway, on to the news:

PUBS & RESTAURANTS:

Hospitality business confidence:

CGA has updated on sector business leader’s confidence saying that it is in the balance with [the] squeeze on hospitality set to tighten.’ CGA says that ‘the confidence of Britain’s hospitality leaders has fallen for the fifth quarter in a row as pressure mounts on operating costs. Only 33% of leaders ‘feel confident about prospects for their business over the next 12 months—8 percentage points down from October’s figure of 41%…’

• CGA reports that ‘optimism is now at its lowest point since late 2022, and its second lowest since the COVID lockdowns of 2020. Confidence is even more fragile among independent operators at just 12%.’

• It adds that ‘only 14% of all leaders meanwhile feel optimistic about the future of hospitality in general over the next year—6 percentage points down quarter-on-quarter and barely a third of the level of 41% in January 2024.’

• So it looks as though optimism has slipped despite the ONS saying that hospitality has been one of the drivers of economic growth over recent months. CGA says optimism has slipped ‘despite solid trading for many hospitality groups over Christmas, stability in venue numbers and an easing of inflation in some areas.’

• Some 43% of business leaders say trading in the fourth quarter trading ahead of last year and a further 40% say that it was level. Some 31% had increased their profits and 29% said they had dropped. This implies a deterioration in operating margin, a situation that will come under further strain after NIC rates rise and thresholds fall at the end of next month.

• CGA director Karl Chessell says ‘after a strong end to 2024 and a cooling of inflation, hospitality groups should be looking forward with positivity. However, our latest survey makes clear that leaders’ confidence is being hard hit by a relentless squeeze on margins.’ He says ‘hospitality remains a dynamic industry, but the need for targeted support and a rethink on NIC is now urgent.’

• Langton. There has been some comment from the ONS and other sources recently suggesting that hospitality has traded well and had a good Christmas but this is being tempered by concerns re upcoming cost and tax increases. This may cement certain views. As mentioned on other occasions, the sector is seen, sometimes, as ‘self-healing’ in a way that some other sectors are not.

Current trading, Six Nations:

The Oxford Partnership has reported that the Six Nations’ Rugby continues to drive strong pub sales growth against non-sporting comps, but it also points to year on year declines in sales. The Partnership says overall sales are currently running down 4.6% compared to the same weekend in 2024….

• But sales are up 14.8% versus an average weekend in 2025. The Partnership reports that ‘this contrast is partly due to the Carabao Cup Final being played during the same period last year, skewing direct comparisons.’

• Stout ‘emerged again as the standout performer, experiencing a +12% year-on-year growth and now accounting for 16.6% of all draught sales. However, Premium Lager struggled, showing a 19.1% decline year-on-year, as all beer categories faced overall sales reductions compared to 2024.’

• The Partnership reports that ‘footfall across pubs increased by +3.6%, with Friday and Saturday seeing notable rises of +4.6% and +5.7%, respectively.’ Alison Jordan, CEO of the Oxford Partnership comments ‘the Six Nations continues to be a key driver of pub sales, proving that major sporting events are essential for sustaining footfall and engagement. Despite economic pressures, fans are still making their way to pubs to enjoy the atmosphere, and we expect strong performance as the tournament progresses.’

Other sport:

UKH has commented on the proposal to relax licensing hours if any of the qualifying home nations reach the semi-final or final of the UEFA Women’s Euro 2025 saying that ‘we wholeheartedly support the proposal to extend licensing hours for the Women’s Euro’s this summer, which would be beneficial for both the hospitality sector and fans alike….’

o UKH adds ‘the previous success of the Lionesses has ignited passion for the team across the country, and extending pub hours will allow fans to celebrate together, deliver a welcome boost to businesses and solve any issues presented by the tournament taking place one hour ahead in Switzerland.’

o CEO Kate Nicholls adds ‘the evidence from previous major sporting events, such as the men’s Euros, shows the positive impact extended hours can have on sales – with a 34% increase during the semi-finals and a remarkable 46% boost during the final.’ She says ‘this proposal is positive for hospitality, but it also highlights the need for long-term change to this process.’

Jobs market:

Job ad company Adzuna has reported that under 828,500 jobs were available in January, down 1.9% on December and some 4.5% lower than January last year. It says this is the worst January since 2021.

Food security:

The CBI is urging the government to back the farming industry saying ‘you can’t grow without food….’

• The CBI CEO Rain Newton-Smith will tell the NFU Annual Conference in London later today that farming is ‘a fundamental of our economy and our lives.’ Referring to the security of supply, Ms Newton-Smith will say ‘as the headlines bring more uncertainty abroad, more talk of rising tensions and tariffs, it only mounts the pressure to fire up our own economy.’ She will add that re ‘farming – nothing is more foundational.’ She will tell farmers ‘you are the link and the basis – for so many other sectors. Any growth plan will tumble. Any industrial strategy will fall flat at the first hurdle… if we don’t first back our foundational sectors.’

Other news:

Disposable income levels: OFGEM is set to publish its latest price cap with analysts suggesting that consumers could be in line for the third increase in a row. Prices could rise by around 5%.

Wi-Fi: Sky Business and Wireless Social (part of The Access Group) have announced a partnership to deliver advanced guest Wi-Fi portal services and connectivity support for hospitality, retail, and leisure venues across the UK.

COMPANY NEWS:

Just Eat Takeaway.com has announced that it is to be acquired by Dutch investment group Prosus in an agreed €4.1bn deal that will value the group’s shares at €20.30 a share. The price represents a 22% premium on the highest value of its stock over the past three months. Just Eat was considered a lockdown winner and the group’s shares exceeded €100 in Q4 2020….

• Prosus has a 28% stake in Germany’s Delivery Hero. Prosus CEO Fabricio Bloisi comments ‘Prosus already has an extensive food delivery portfolio outside of Europe and a proven track record of profitable growth through investment in our customer and driver experiences, restaurant partnerships, and world-class logistics, powered by innovation and AI.’

• He adds ‘we believe that combining Prosus’s strong technical and investment capabilities with Just Eat Takeaway.com’s leading brand position in key European markets will create significant value for our customers, drivers, partners, and shareholders.’

• The deal will see the group delisted from the Amsterdam stock market. The group’s shares were delisted from the London market in December last year. The shares rose by over 50% to €19.08 on the announcement.

• Just Eat CEO Jitse Groen says ‘Prosus fully supports our strategic plans and its extensive resources will help to further accelerate our investments and growth across food, groceries, fintech and other adjacencies.’ He says ‘we are looking forward to an exciting future together’ but, it would appear, without outside shareholders.

• Eyes may understandably turn towards UK headquartered Deliveroo, whose shares rose by 5% yesterday on consideration of the Just Eat news.

The Cornish Bakery, which  at its financial year end had 61 bakery locations across the UK including 6 locations under a franchise agreement with Roadchef Motorways, has reported full year numbers for the 52-week period to 30 May 2024 to Companies’ House. 2023 comps are for a 53-week period. The Cornish Bakery reports that revenue rose to £29.4m from £23.7m in the prior year.

• Trading – numbers: The company generated revenues of £29.4m over 52 weeks from a total  – at the year-end – of 61 bakeries. In 2023 it generated £23.7m in 53 weeks from a year-end total of 56 units. EBITDA of £3.4m was up from £3.2m in the prior year. The company reports a GP% up from 71.7% to 71.9%. Admin expenses, however, are up by 28% to £19.9m. This has taken the shine off profits.

• Trading – continued. The Cornish Bakery reports an operating profit of £1.25m compared with £1.48m in the prior year. Interest charges (and, to be fair, interest received) are up on rising interest rates and PBT is down from £1.38m to £1.14m.

• Trading – commentary. The company says ‘in the two years ended 30 May 2024, the business has posted revenue and EBITDA growth of 47% and 21% respectively and has grown its estate from 51 to 61 sites.’ It adds that its ‘directors see a significant opportunity to substantially grow the business.’

• Trading – outlook. Re current trading, the company says it can ‘report continued growth in revenues, EBITDA and bakeries. The directors believe that the business is well capitalised, with a cash rich balance sheet and a platform that is set up for continued expansion. Since the year end, six bakeries have been opened and a further five are under offer with EBITDA on course to exceed £5m.’

• Balance sheet: The accounts show retained earnings rising from £4.2m to £4.6m after profits for the year are added and the dividend of £477k is subtracted. Shareholders’ funds are up from £4.9m to £5.3m. The group has net cash of £1.2m compared to net cash of £1.6m in the prior year.

• Going Concern: There are no going concern issues and the auditor, Forvis Mazars LLP, has signed off on this.

FI Holdings, parent company to the Flat Iron Steak Ltd, has reported numbers for the 52 weeks to 25 August 2024 to Companies’ House.

• Trading – numbers: The company reports revenues up by 38% to £49.6m. Adjusted EBITDA for the 52 weeks ended 25th August 2024 was £5.6m (2023: £3.7m). The company reports that its GP% fell from 36.2% in 2023 to 33.5% in the year under review. Admin expenses rose by 19% to £16.4m and the group reports an operating profit of £245k vs an operating loss of £806k in the prior year. Chunky interest payments have driven the company to an after-tax loss of £1.7m, albeit this is lower than the £2.2m lost post tax in FY23.

• Trading – commentary. The company says ‘with three successful openings launched in the period, the directors are also pleased to report that the existing estate has also performed very well and covers have grown year on year across all restaurants.’ It adds that it ‘has further demonstrated its appeal outside of London with openings in Manchester and Leeds during the year.’ The company now has 17 restaurants in operation.

• Trading – costs & headwinds. FI Holdings reports that it ‘is not alone in facing inflationary pressures from food, wages and utilities costs.’ The company says it has ‘mitigated the impact of this inflation through various operational initiatives in the period under review while also making further investments in the central team.’

• Trading – outlook. FI Holdings reports ‘at period end, the business had a cash balance of £3.5m and the Flat Iron group had net bank debt of £2.0m. The bank borrowings mature between September 2025 and May 2027. The directors believe the business is well funded and well positioned to continue its growth both organically and from further new openings both in and out of London.’

• Balance sheet: The accounts show retained losses since incorporation rising from £22.6m to £24.3m after losses for the year are added. Shareholders’ funds are a negative £5.1m against negative £3.4m in the prior year. The company has net debt – not including ‘other loans’ – of £2.0m, up from £1.6m in the prior year. Other Loans, which are interest free, are up to £10.8m vs £9.9m in the prior year. The company reports that some £2.5m of loans were converted into equity in November 2020.

• Going Concern: The directors have prepared the accounts under the Going Concern convention and the auditor, HaysMac, has signed off the accounts on this basis.

Starbucks in the US has reported that it is to cut 1,100 jobs and reduce its menu in a move aimed at improving profitability…

o Starbucks aims to cut around a third of its products and cut wait times. CEO Brian Niccol says the axed drinks ‘weren’t commonly purchased, can be complex to make, or are like other beverages on our menu.’ The company adds that ‘we’re simplifying our menu to focus on fewer, more popular items, executed with excellence.’ It will be interesting to see if the company cuts prices after it has banked the savings from the above measures.

D&D London is to change its name to The Evolv Collection in April.

HOLIDAYS & LEISURE TRAVEL:

On the Beach has updated on Q1 trading ahead of its Annual General Meeting to be held later today saying that ‘following another record year in FY24, the Board is pleased to report that this momentum has continued into FY25…..’

• The company says that it has ‘delivered Total Transaction Value growth of 10% year-on-year (“YoY”) with Winter 24/25 TTV up 18% and Summer 25 TTV up 10%, reflecting the strength of the On the Beach holiday proposition.’ The company adds that ‘group TTV of holidays scheduled to travel from March through to June is up 17% YoY2, demonstrating that customer demand for holidays, from On the Beach in particular, continues to buck wider UK consumer trends.’

• OTB says that ‘the current positive booking trends provide the Group with confidence that Summer 25 will be significantly ahead of Summer 24. As a result, the Board is confident in delivering FY25 Adjusted PBT in line with the Company compiled consensus.’

• CEO Shaun Morton says he is ‘excited by the progress we have made following the recent launch of our strategic growth initiatives focused on selling City packages and package holidays from the Republic of Ireland. Demand for Cities has been strong with routes to Amsterdam, Paris and Krakow proving particularly popular with both existing and new customers. Similarly, our first marketing campaign in the Republic of Ireland has generated strong bookings growth across both City and beach.’

• Mr Morton adds that ‘the success of these early-stage strategic initiatives combined with the growth in our core beach proposition give me the confidence that Summer 25 will be significantly ahead of Summer 24 and the Group will deliver FY25 Adjusted PBT in line with market expectations.’

Center Parcs in the UK has reported continued buoyant demand saying that there is a “real resilience” being exhibited by its guests. The company operates six Center Parcs’ holiday villages in the UK.

Hotel booking company HotelHub has reported that room rate increases across a number of key global business destinations are slowing down. It adds that lead times are lengthening…

• Despite the slowing rate, a number of headline figures are still inflating more rapidly than is CPI as a whole. HotelHub reports that London rates rose by 8.7% in Q1 2024 against a year earlier but, in Q1 this year, they are up by ‘only’ 6.7%.

The Foreign Office has warned of flight cancellations and delays in Greece on Friday as mass demonstrations are planned.

OTHER LEISURE:

CEO of Vue Tim Richards tells The Evening Standard that Vue has had an “extraordinary” Christmas for UK cinemas but warned it remains in “recovery mode” after Hollywood strikes slimmed down the number of films slated for release….

• Vue picks out Wicked and Gladiator II as amongst its most popular titles. The strong run has continued into 2025 with the release of the fourth Bridget Jones film, which has taken £20.5 million in the UK and Ireland over its first week in cinemas. 2025 will also see the release of films such as Mission: Impossible – The Final Reckoning and Avatar: Fire and Ash, which Mr Richards said are expected to be big hits.

• Vue says ‘we saw independent film production slow down, or stop, and it didn’t really get going until the spring of last year.’ It adds that this led to a “significantly-reduced number of films” in 2024, with the company still expecting “big gaps until the end of the year”.

The Times reports that Regal Cineworld is likely to float this year. It says advisors have been appointed and the ‘options include whether to float only the US arm or the entire group, which was effectively split in two after being forced into bankruptcy protection in 2023. It means that the UK business, known simply as Cineworld, could be sold separately.’

FINANCE & MARKETS:

Sterling mixed at $1.2633 and €1.2067. Oil up at $75.09. UK 10 year gilt yield down one basis point at 4.57%. World markets mixed yesterday and London set to open down around 9 points as at 6.30am.

RETAIL WITH NICK BUBB:

Today’s News: The Online retailer Victorian Plumbing (which calls itself “the UK’s leading bathroom retailer”) has issued a trading update ahead of its AGM at 9.30am, to flag that “Despite continuing UK consumer uncertainty, the Board continues to remain confident in delivering profit in line with full year market expectations”, with overall revenue for the first 21 weeks “anticipated to be up 5% year-on-year, demonstrating the early success of our strategic growth initiatives and the enhanced capabilities that our new distribution centre brings”. Yesterday morning, Just Eat brought forward its scheduled finals from Wednesday (in the Netherlands) to announce a recommended offer of EUR 20.30 per share in cash (equivalent to EUR 4.1bn) from Prosus, the South African global technology company that also owns a big stake in the German business Delivery Hero. The surprise offer was a chunky
premium of 63% to the company’s closing share price on Friday evening. Later on this morning (at 11am to be precise) the CBI releases its monthly Distributive Trades survey, for what it’s worth and, over in the US, the Q4 results from the DIY giant Home Depot will be out at lunchtime.

Today’s Press: The invaluable press summary email from the Guardian about today’s front-page headlines notes that the Guardian itself leads with ““Trump: Putin will accept Europe’s troops in Ukraine after ceasefire”, while the Times has “Trump invites Zelensky to secure peace in weeks”. “France’s nuclear shield for Europe” is the main story in the Telegraph, while the Financial Times goes with “Britain to join EU leaders for talks on continent wide defence funding”. The i says “Stop blaming Putin for war – America’s message to UK ahead of crunch Starmer visit to White House”. “Reeves urged to stop state pension being taxed” is the top story in the Daily Express.

News Flow This Week: Tomorrow brings the Hammerson finals and the Lowe’s Q4 (in the US), with the Ocado finals and the Howden finals following on Thursday.