Business confidence, jobs market, cruise taxes, Papa John’s & other:

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A DAY IN THE LIFE:

Walking around a bit, it’s hard to miss the daffs.

They haven’t flowered yet up here but, when they do, they’ll be even more noticeable and that set me to thinking, just how many are there in the UK?

Well, lots, says AI.

It seems to have developed many and varied ways of saying ‘I don’t know’, which is at least honest.

But it advises that a billion are harvested so, given all those in gardens, parks and by roadways that aren’t, there might be, say, 2-3 billion in total.

That suggests that, whilst humans have got it in terms of weight (there are around 2,000 daffodil bulbs to the human) and, hopefully, in terms of intelligence, in sheer numbers alone, daffodils have it as they outnumber the country’s human population by maybe 30-50 to one.

And they’re the winners when it comes to wedging yourself in the mud and sitting around for months in the rain and snow whilst being trod on by various heavy, incontinent animals.

Anyway, just thinking. Let’s move on to the news:

PUBS & RESTAURANTS:

Trains:

The RMT has suspended planned strike action in the Avanti Train Managers dispute following a new offer from the company. Strikes scheduled for 9 and 16 March will not go ahead while members vote on the deal in a referendum….

• Although the dispute has not been definitively resolved, the suspension of strike action will come as something of relief for the hospitality industry. The RMT says ‘while RMT is suspending industrial action, the union remains in dispute until the referendum is concluded.’

Business confidence:

Lloyds Bank has produced its latest survey of business confidence saying that it has bounced back in February and it now stands at a post-election high. This may come as something of a surprise to some businesses, which are looking forward to NIC and NLW wages in just over a month’s time with some trepidation…

• The survey of 1,200 UK companies reported a 12-point jump in sentiment in February to a level last seen in August last year. All sectors of the economy, services, manufacturing and construction, reported higher levels of optimism as did 11 out of the UK’s 12 regions.

• Companies appear to be more upbeat about both their own prospects (which is often the case) and the general economy (where optimism is usually rarer). Re the latter, the jump was by 18 points to 42 per cent now optimistic, the largest rise since the pandemic.

• Lloyds notes that ‘increased optimism, along with an expected uplift in trading prospects, is prompting businesses to invest in growing and upskilling their workforce, putting them in a prime position to capitalise on increased demand and drive future growth.’ This is important as it should spur recruitment and the state of the jobs market is critical in determining consumer demand.

Jobs market

Aldi is set to cut around 350 roles at its UK headquarters in Atherstone, near Birmingham. Fellow grocers Tesco, Morrisons and Sainsbury’s have already announced plans to cut jobs ahead of the imposition of higher rates of NIC at lower salary thresholds….

• As mentioned in comments on business confidence above, the state of the jobs market is important to hospitality as it tends to influence consumer confidence and therefore spending patterns. Job losses tend to directly influence those that lose their jobs and spook the wider number of people who do not. On a slightly brighter note, less demand for jobs by competing employers, in this case Aldi, should free up a little labour and help fill gaps still present in the hospitality industry.

Other news:

Meaningful Vision has reported that chicken chains tend to discount more than do most other casual diners….

• It says that discounts come in at around 39% compared to the 25% market average. It adds that ‘often, these deals are on pricier items, averaging £8.50. Compare that to burger offers at £4.50.’

COMPANY NEWS:

The MCA reports that Urban Baristas is set for substantial expansion in 2025. It plans to grow its network to over 30 stores by December, a number via the franchise route. Urban Baristas tells the MCA ‘we’ve had a really strong uptake in our first year of franchising.’ CEO Huw Wardrope says ‘our goal is to end the year with over 30 stores across both franchise and equity sites, and that’s looking very achievable….’

• The CEO goes on to say ‘we’re working with local entrepreneurs to bring Urban Baristas to areas where speciality coffee is lacking.’ He says ‘we see a huge growth opportunity outside London – rents are cheaper, yet coffee prices are comparable to the capital.’

Papa John’s in the US yesterday reported Q4 & full year numbers saying that North America comparable sales were down 4% from a year ago. Domestic Company-owned restaurants were down 6% and franchised restaurants were down 4%. Internationally, comparable sales were up 2% on a LFL basis…

• Papa John’s reports that some 122 net new restaurants were opened in Q4, split almost equally between North American and International markets. The company reports system-wide restaurant sales were $1.23 billion in Q4, down 8% from a year ago ‘due to the additional week of operations in the fourth quarter of 2023’. Papa John’s says ‘excluding the additional week, global system-wide sales were flat from the prior year period.’

• Total revenues of $531 million were down 7% compared with the fourth quarter of 2023. Excluding the 53rd week in 2023, Total revenues were roughly flat from the prior year period.

• CEO Todd Penegor says he is ‘pleased with the early progress we are seeing in our transformation as we work to improve our value perception, simplify our operations, and enhance our digital and loyalty experiences. These efforts helped to deliver results consistent with our fourth quarter expectations.’

• Mr Penegor says ‘we have defined our strategic priorities to take market share as we move forward with urgency to execute on initiatives to drive sales momentum in the near-term while meaningfully increasing profitability over time.’ He says ‘we are confident that we have the right plan in place to deliver on our promise to be the best pizza makers in the business.’

Amsterdam-based coffee company JDE Peet’s has posted strong 2024 results after raising prices by 4.5% in the year to partly cover increased costs. Sales were up 7.9% year-on-year to reach €8.8bn ($9.2bn). Adjusted EBITDA roes 11% year-on-year to €1.6bn ($1.7bn)…

• JDE Peet says it will ‘continue to be disciplined on pricing.’ It says it is planning to implement a range of productivity and efficiency measures and adds ‘we are very pleased with this strong set of broad-based results, especially considering the increased green coffee inflation. Our strong 2024 performance positions us well for 2025 and beyond, with stronger foundations and positive momentum.’

A number of investors are reported to be considering taking a stake in Starbucks China…

• The World Coffee Portal, quoting Reuters, reports that ‘five firms have reportedly expressed interest in acquiring a stake in Starbucks’ 7,686-store business in China, with senior executives from the US coffee giant expected to open talks within the next few weeks.’

China bubble tea chain Mixue is reported to be seeking to raise $443m in the IPO that will value the company at some $9.8bn….

• Mixue has 46,000 stores globally, 99% of which are franchised. The company was founded in Zhengzhou in 1997.

HOLIDAYS & LEISURE TRAVEL:

Alix Partners reports in its 2025 Global Consumer Outlook that attitudes to holidays are changing. It reports that consumers across a number of global markets are unwilling to compromise on the quality of their travel experiences. The survey suggests that they would rather travel less often, or shorter distances, than sacrifice standards.

Travel Weekly suggests that an element of the market at least takes the opposite view when it says that ‘cost-conscious consumers appear to be driving increased demand for ‘value’ destinations such as Tunisia and Bulgaria this summer….’

• Tui chief executive Sebastian Ebel says ‘we see Egypt, Tunisia and Bulgaria picking up bookings like we haven’t seen for a long time. Sales to Turkey are slightly more challenging because of costs.’

The Cruise Line International Association UK & Ireland is reported to be in discussions with authorities in Scotland about a potential cruise tax in the country. The Scottish government has begun a consultation seeking views on the potential imposition of a levy….

• The Scottish Passenger Agents’ Association’s annual dinner in Glasgow heard that ‘part of our conversation with the Scottish government over the past eight months has been about the benefits that cruise tourism brings and the challenges that may happen if the cruise levy is imposed.’

• The SPAA heard that ‘we have to take our responsibility in helping tourist destinations to work with the tourism industry to ensure that tourism works not just for the tourists but also for the destinations we visit. In the last eight months alone, we’ve met six MPs from Scotland and met over 20 MSPs because it’s really important that Scotland and the Scottish government and the local authorities understand the economic and the social benefits that cruise tourism brings.’

• Authorities are concerned, as they are in some other destinations internationally, that cruise passengers tend to eat, sleep and spend on board vessels whilst using up landside resources and clogging up resorts.

Saga has announced that, following receipt of funds under new banking facilities, it is redeeming and cancelling existing notes and the existing £50.0m revolving credit facility has been cancelled in full.

On the Beach Group plc has announced that it has tweaked the terms of its share buyback programme due to the limited liquidity in its shares. It says its broker will now be able to exceed 25% of the volume of trade on any given trading day, but remain below 50%.

Norwegian Cruise Line Holdings has reported full year number saying that revenues hit a record of $9.5 billion for 2024, up 11% on the back of 3% capacity growth. Adjusted EBITDA was up 32% year on year to $2.45 billion.

OTHER LEISURE:

Tesla shares are now down 28% year to date. Yahoo Finance reports that boss Elon Musk is asking government employees to submit what they have accomplished in the past week. Tesla investors would like to ask Musk the same question.

FINANCE & MARKETS:

US president Donald Trump has said that he will impose a new 10% tariff on goods coming from China.

President Donald Trump has said that a UK / US trade deal could be settled ‘very quickly’. He says that, if this were to happen, tariffs on UK products would not be necessary.

Sterling mixed at $1.2583 and €1.2118. Oil higher at $73.54. UK 10 year gilt yield up 1 basis point at 4.52%. World markets mixed but heading lower yesterday and London set to open around 47 points lower as at 6.30am.

RETAIL WITH NICK BUBB:

• Today’s News: There is no Retail company news to speak of this morning, but yesterday lunchtime the hyper-active Frasers announced a ‘strategic retail partnership’ with GMG, the retail conglomerate based in the Gulf, where it is a key distributor and operator of Nike stores, as well as its home-grown multi-brand sports chain, Sun & Sand Sports, inter alia. There is an ambitious 50-store expansion plan for Sports Direct, to increase Frasers’ footprint in the Gulf region and Egypt. And Landsecs, the big property landlord, also hosted a Capital Markets event yesterday, with an update on current trading (which has remained positive since its half year results in November: “operational performance has remained strong”) and the next phase of its strategy (“Landsec will further rebalance its portfolio mix, with more investment in growing its market-leading retail platform; the
establishment of a sizeable residential platform, building on the £3bn development opportunity it has created; and, to fund this, a smaller share of capital employed in offices”).

• 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: US workers in Ukraine would be a security ‘backstop’”, while the Times has “Trump: We’ll end war and strike trade deal with UK”. “Trump backs Starmer on Chagos” is the Telegraph’s main story and the Daily Mirror goes with “Keir’s Trump card”. “Charmer Starmer pulls off diplomatic win in White House” is the i’s version, while even the Daily Mail has to give credit with “What an unlikely bromance!”. “Trump backs ‘great trade deal’ for Brexit Britain” – surprisingly there’s no subheading somehow claiming it as a “victory for the Daily Express”! The Financial Times has “Trump dashes hopes over US cover for Europe peacekeepers in Ukraine”.

• News Flow Next Week: As we move into March, the focus next week in Retailing is on the Food sector, with the Greggs finals and the Kitwave finals on Tuesday. Tuesday morning also brings the latest monthly Kantar grocery sales figures, with their rival NielsenIQ following with their own monthly grocery sales figures on Wednesday morning. Over in Europe, there’s quite a lot going on, with the Adidas finals in Germany on Wednesday and the Zalando finals on Thursday. Thursday also brings the Pepco Capital Markets Day (in London), with the focus on the turnaround plans for the troubled UK business of Poundland.