CCR, ROO, Just Eat, Hornby, trading, tariffs, hotel values, GDP & other:

PREMIUM EMAIL – PLEASE DO NOT FORWARD:

A DAY IN THE LIFE:

There was a saying in the old, more leisurely days of stockbroking, that you shouldn’t organise a meeting for Wednesday’s as it would spoil both weekends.

Which wasn’t strictly true, of course but, as anyone who’s had a ten minute internet outage at an inconvenient time of the day – and when, frankly, would it be convenient – knows, the ten minutes can do a lot more than ten minutes’ worth of damage.

Hence, when I spilled some milk in the office microwave and inadvertently cooked it until it was a pungent, blackened mess, I shouldn’t have been surprised that it ruined my day.

Because chiselling solidified milk off a Pyrex plate isn’t the easiest of tasks. Fingernails and spoons won’t cut it and where’s that Brillo pad when you finally need it.

Simpler maybe to throw the whole machine in the bin and go without warmed up soup for a day or two but, having spent a quarter of an hour in cleaning the thing, you feel you’re invested and, sunk-costs be damned, you’re going to finish the job.

And so, an hour and a half and a trip to the shop (Brillo pads) later, you do. On to the news:

PUBS & RESTAURANTS:

Trading outlook:

ResDiary reports in its Beyond the Booking: UK & Ireland Hospitality Trends Report 2025 that some 49% of operators believe that revenue this year at their sites will be higher than it was last year. With inflation moderating, this means more than it did when inflation was floating most boats, at least in terms of reported sales…

• ResDiary reports that markets will remain challenging, but it says that both businesses and consumers continue to be resilient. It says that 44% of operators intend to offer seasonal promotions and 42% will run more events with a similar number saying they will feature special offers.

• ResDiary says that 59% of businesses are negatively impacted by no-shows with as many as 7% of bookings not leading to a transaction. Half of operators take a booking deposit for larger numbers of covers. It says that its research suggests that 71% of prospective diners are happy to provide card details when booking and 65% would not mind paying a deposit.

• ResDiary commercial director Colin Winning says ‘despite the challenges that the hospitality sector is continuing to face, there is clear evidence of determination and resilience across the industry, with plenty of opportunities for operators to boost trading and drive revenue beyond last year.’

•  He says ‘our report indicates there is proof from operators that technology and smart solutions should be viewed as a driver of revenue and growth.’ He says ‘ultimately, the overall key to unlocking revenue growth in 2025 is resilience against ongoing challenges and an optimistic outlook for the year to come. Operators should concentrate on impactful initiatives that deliver high rewards and returns, instead of spreading themselves too thin to drive real results.’

Tariffs:

Bemoaning retaliatory action by the geographies that he has targeted with his tariffs, US President Donald Trump is now threatening 200% tariffs on alcohol sold into the US from the EU. The EU has proposed a 50% tariff on US whiskey in retaliation for earlier US tariffs. Whilst he has called tariffs that he levies ‘beautiful’. Mr Trump called the 50% retaliatory tariff ‘nasty….’

• Trump has previously said that the EU was only ‘formed for the sole purpose of taking advantage of the United States’. He says the EU is ‘hostile and abusive’. Mr Trump says the 200% tax would be ‘great for the Wine and Champagne businesses in the US’. However, in order to be labelled champagne, wines need to be produced in the Champagne region of France.

• Trade association the CEEV has said that a 200% tariff would effectively shut off the US market to European products. Just Drinks reports the body as saying that ‘if the proposed 200% tariffs on EU wines are implemented, it would effectively shut down the US market for EU wines – a devastating hit for our industry.’ It adds ‘the US accounts for 27% of our total exports and there is no alternative market that could compensate for such a loss.’

• Spirits Europe, an association representing distillers, says it is ‘deeply alarmed’ by developments and it says ‘we urge both sides to stop using our sector as a bargaining chip in conflicts that have nothing to do with us.’ The US industry association DISCUS says ‘we urge President Trump to secure a spirits agreement with the EU to get us back to zero-for-zero tariffs, which will create US jobs and increase manufacturing and exports for the American hospitality sector.’

COMPANY NEWS:

C&C shares fell by around 17% yesterday on the group’s earnings update (and downgrade). The company remains cash generative and it is to press on with the return of €150m to shareholders – via dividends and buybacks – before the end of 2027.

Shares in Deliveroo fell by 4% yesterday despite the company reporting that 2024 was the first full year in which it had made a profit.

The MCA reports on Papa Johns’ brand relaunch in the UK, which is intended to steer the UK business back to profitability….

• Papa Johns’ head of marketing Simon Wallwork says ‘the brand has quite frankly been through challenges, and over past 10 years it’s not grown hugely.’ He says ‘it’s more or less where it was 10 years ago. We’ve got a challenge but an even greater opportunity to make a shift.’ Mr Wallwork says ‘our brand has high awareness, but our consideration is lower than where it needs to be.’ He adds ‘there’s not many reasons for people to come to us over our competitors. Our major competitor has grown, with a huge marketing spend. I think we need to be smarter, and can be.’

Just Eat Takeaway.com yesterday announced that it had partnered ‘with PHOENIX group for on-demand delivery of health and personal care products.’ The partnership will begin with ‘pharmacies in Belgium and Rowlands Pharmacies in the UK, with the ambition to roll out to more markets across Europe.’

Ole & Steen has addressed delivery issues, reports the MCA. Speaking at the MCA’s Food To Go Conference 2025, UK MD Graham Hollinshead says that, post restructuring, LFL delivery sales are up 95%.

HOLIDAYS & LEISURE TRAVEL:

The EU is set to introduce its several-times-delayed electronic border control system in October 2025….

• Advantage Travel Partnership CEO Julia Lo Bue-Said says the delays have caused confusion. She says ‘it is crucial that authorities now commit to the latest timeline rather than continuing with recurrent delays, or alternatively, reconsider whether the ambition is beyond implementation.’

• Ms Lo Bue-Said adds ‘there is currently limited public awareness of these changes which is why there needs to be clear guidance in place from the government and the travel industry ahead of their introduction in order to minimise any disruption and ensure a smooth transition period to the new system.’

HVS has reported that hotel values across Europe rose by 2.0% in 2024, broadly in line with inflation in most territories. It says the rise was supported by lower interest rates and small gains in REVPAR….

• HVS says ‘although cost pressures remain a point of concern for hoteliers, margins have felt more secure now inflation has normalised. RevPAR growth, albeit more modest than in previous years, and lower interest rates have been positive for hotel values.’ Paris remains the top market in terms of valuation followed by London, Zurich, Rome, Florence, and Geneva.

• HVS says ‘the on-going desire for European travel puts the region firmly at the centre of the world in terms of tourism appeal, with more than 50 million additional overnight stays taken in 2024, compared with 2023, nearly half of which were international visitors.’ It does add, however, that ‘geopolitical shifts such as the breakdown of the transatlantic alliance could have a momentous impact on the hotel industry going forward.’

Airport trade body ACI Europe says that European airport passenger numbers rose by 6.9% in January this year compared to the same month last year. International passenger numbers were up by .8.3% whilst domestic air travel passenger volume was up by just 2.7%….

• Istanbul, at 6.4m passengers, beat Heathrow, at 6.3m, into second place. Paris CDG had 5.3m passengers and Madrid handled 5.2m.

The longest ski slope in the UK is set to be built in the Welsh Valleys. Plans to construct the site near Merthyr Tydfil have been approved by councillors.

The RMT has called for a ban on e-bikes across London Underground after one caught fire on a station last month. It says ‘the incident could have been far worse if the e-bike had been inside a tube train, putting those on board at severe risk.’

OTHER LEISURE:

Models and collectibles company Hornby is to be taken private in order to cut costs and avoid regulation. The shares have been weak in recent months….

• The company says its ‘directors are confident that operating as a private entity will provide Hornby with the necessary agility for swift decision-making and efficient execution of strategy whilst not depriving shareholders of material benefit.’

Niantic Labs, which produces the Pokemon Go and other games, is to sell its video game division for $3.5bn to Scopely, which is Saudi Arabia-owned.

Games platform Roblox has said that parents who are worried about their children being on Roblox should not let them use it. The BBC reports that the site has been ‘dogged by claims of some children being exposed to explicit or harmful content through its games, alongside multiple reported allegations of bullying and grooming.’

The FT writes that Formula 1 is ramping up its off-track commercial activities as the global car racing series leans into pop culture to pull in new fans, keep their interest and increase revenues….

• The FT writes that ‘under Liberty Media ownership since an $8bn takeover in 2017, F1 has reached new audiences by putting the focus on the drivers, showcasing their personalities through the likes of the Netflix docuseries Drive to Survive. There is said to be a ‘huge focus’ on efforts to engage with fans and audiences outside the racetrack, in a cost-efficient and tangible way.

German sports-wear company Puma reported disappointing numbers and saw its shares fall by more than 19%. The company says that ‘geopolitical tensions and macroeconomic challenges will continue, especially trade disputes and currency volatility, which is expected to weigh on consumer sentiment and demand.’

FINANCE & MARKETS:

The ONS has reported that the UK economy shrank by 0.1% in January. The news will not help sentiment though it may bolster hopes that the Bank of England’s MPC will cut interest rates when it meets next Thursday…

• The CBI responds with Lead Economist Ben Jones saying ‘after a surprisingly strong performance in December, some pay-back was always a possibility in January. But the mixed picture across different sectors in recent months suggests the recovery is still fragile.’

• He adds ‘there are signs that the drop in business and consumer economic confidence following the Autumn Budget is bottoming out. But downside growth risks remain from the potential for a softer labour market and an uptick in inflation. And rising global trade tensions could also keep business investment on the sidelines.’

• Mr Jones says ‘amid a very fluid international environment, the government’s domestic growth agenda can serve as a North Star. Yesterday’s announcements to reduce regulatory burdens in a variety of sectors were welcome. But businesses are still struggling with high energy costs, increased labour costs and the possibility that the Employment Rights Bill makes hiring riskier and more costly still.’

ECB president Christine Lagarde has warned that there is ‘exceptionally high’ uncertainty regarding the outlook for inflation and interest rates as a result of US flip-flopping on tariffs (which have, in most cases, been met by retaliatory measures).

The NIESR has reported that the UK has slipped down the rankings of wealthy nations….

• The NIESR says ‘UK regional income growth has been among the slowest in Europe, whilst real incomes in the majority of European regions have grown at a faster rate than those in UK.’

The CBI has responded to the PM’s comments on reducing regulation. It says ‘businesses will be encouraged by today’s [Thursday’s] announcement to reduce the cumulative regulatory burden and tackle the conflicting priorities and duplication that stifle innovation.’ It says ‘government must consider regulation in the round and, when viewed in tandem with the measures in the Employment Rights Bill, it’s more important than ever that the government works to find a landing-zone that commands the confidence of businesses.’

The RICS has said that it expects London house prices to be weaker than those in the rest of the UK over the near term.

Sterling mixed at $1.2942 and €1.1942. Oil lower at $70.49. UK 10 year gilt yield down by 6 basis points at 4.66%. World markets mixed yesterday and London set to open up around 27 points as at 6.30am.

RETAIL WITH NICK BUBB:

• Today’s News: There is no sign of the Asda Q4 results yet, but the hyper-active Frasers has stepped into the breach, as yesterday it edged up its stake in ASOS from c23.4% to c24.2% (by fiddling around with its derivative positions) and also backed the decision of another of the many companies it has a stake in, the toy company Hornby, to de-list from AIM and go private (given “the limited liquidity of the company’s shares on AIM, balanced against the regulatory burden and cost of maintaining the public quotation”).

• John Lewis Partnership Profit Watch: We flagged yesterday that JLP management sounded very confident about more profit recovery in the year ahead, despite the Budget cost increases (given the scope to continue with big improvements in productivity) and after the analysts call about the finals we played around with our P&L model to see what sort of upside could be on the cards. After doubling profits in Waitrose last year, it will be hard to make that much more progress, but c10% growth from last year’s base of £227m operating profit should be possible and with a big profit jump likely at John Lewis, as it gets its margins into better shape and enjoys the benefit of the operational gearing to improved top-line sales, we would confidently expect c50% growth to £190m PBT at JLP, from the £126m announced for last year (pre-exceptionals).

• Today’s Press: The invaluable press summary email from the Guardian about today’s front-page headlines notes that the Guardian itself leads with “Streeting scraps NHS England in ‘high-stakes’ push to improve care”, while the Daily Mail enthuses “Finally! patients to be put before NHS bureaucrats!” The i says “NHS revolution: Streeting seizes control of £192bn health service to force change” and the Financial Times has “Starmer axes NHS England in big health service revamp”. The Metro calls it “Starmer’s shock NHS takeover”. There is unsurprising news in the Times (“Putin backs ceasefire in Ukraine but on his terms”) and the Daily Express (“Putin: I will agree truce but only on my terms”) and the Daily Telegraph (“Peace on my terms, warns Putin”).

• News Flow Next Week: The builders merchant giant Travis Perkins has its finals on Tuesday, with the US jewellery giant Signet following with its Q4 results on Wednesday. On Thursday we get the Wickes finals, the latest MPC interest rate decision, as well as the Retail Week Awards event in the evening, along with the Nike Q3 (in the US). The widely followed GFK Consumer Confidence index figures are then out first thing on Friday.