Inflation, tube strikes, air fares, McDonald’s, G4M & other:

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A DAY IN THE LIFE:

Have you ever wondered what it would be like to be drawn to a magnet?

Well, we are already, really, because gravity acts like an always-on magnet and, even if you have never had the misfortune to tumble down a flight of stairs, you’ll know just what a powerful force it can be.

And if you don’t then try juggling plant-pots with your eyes closed.

That should do the trick but, for most of us, gravity isn’t something you give much thought to unless, of course, you have a septic tank.

And then you become knowledgeable about all sorts of things where knowledge is best avoided such as the drop-ratio, the viscosity of certain materials and the flow-rate (or lack of flow) of said materials given the above mentioned drop.

Hence, if you have to have a septic tank, best live near a cliff. Or at least a slope and perhaps not in the Vale of York which is a) flat, b) has a depressingly high water table and c) is comprised of boulder clay.

Anyway, although we seem to have been instrumental in relegating Leicester to League One, Hull City seem to be making landing the last playoff spot as hard as possible but, putting that to one side, let’s move on to the news:

PUBS & RESTAURANTS:

Inflation:

The ONS has today updated on CPI in the UK for the year to March saying that prices rose by 3.3% in the year to that date, up from 3.0% in the year to February…

• The ONS reports that ‘on a monthly basis, CPI rose by 0.7% in March 2026, compared with a rise of 0.3% in March 2025.’ This is the first month to show some of the impact of the US and Israeli attacks on Iran.

• The ONS reports, perhaps not surprisingly, that ‘motor fuels made the largest upward contribution to the monthly change in both CPIH and CPI annual rates.’ It says that clothing made the largest, partially offsetting, downward contribution.

• The ONS goes on to say that core CPI (the headline figure excluding energy, food, alcohol and tobacco) rose by 3.1% in the 12 months to March 2026, down from 3.2% in the 12 months to February; the CPI goods annual rate rose from 1.6% to 2.1%, while the CPI services annual rate rose from 4.3% to 4.5%.

• The fact that core CPI actually fell may stay the hand of the Bank of England when it comes to considering interest rate rises. The Bank next comments on interest rates a week tomorrow and, whilst there is the strong feeling that there is more inflation coming down the track, to the extent that it is ‘non-core’, it is hoped that rates will not rise.

Community value:

Charity Plunkett UK has suggested that community-owned pubs are proving to be more resilient – in terms of survival or closure – when compared to traditionally operated rural sites. Plunkett, which has an interest in the outcome as it supports community businesses across the UK, has told the MA that local ownership can create businesses that are more responsive to demand and better embedded within their communities….

• CEO James Alcock says that ‘time and again, we see pubs doing better when they are community-owned.’ He says ‘local people have a genuine say in shaping what the pub offers’ and adds that ‘these businesses are rooted in their communities and reflect what local people want and need, making them more likely to be used by a wider range of people.’

• Alcock says that ‘community-owned pubs are now the fastest growing type of community business we support.’ He says that rural pubs ‘face lower footfall and higher costs of goods and services’ when compared to community-owned pubs. He adds that communities are benefited as they ‘from facing closure [of their local pub] to owning and running their pub themselves, and doing so sustainably.’

• NIQ data has recently shown that pubs have outperformed both restaurants and bars. The ticket price at the former is lower and there are simply more reasons to visit a pub than there are to go to a restaurant or bar.

Tube strikes:

The first of a number of planned tube strikes by members of the RMT is currently ongoing with workers set to return to work at 12.00 today. Commuters yesterday faced disruption and footfall will have been reduced in areas reliant on workers to buy their coffees, sandwiches and snacks throughout the day. And, though figures are not yet available and a Tuesday evening isn’t the biggest of the week, fewer than usually will have stuck around for a drink or a meal after work.

Scotland:

UKH Scotland reports that Scottish pubs and hotels are valued significantly higher than would be units in England. It says this drives higher business rates charges with valuations up to £16,000 higher for pubs….

• UKH Scotland director Leon Thompson says ‘the broken business rates system continues to plague Scottish hospitality businesses, often leaving them with higher bills and at a competitive disadvantage to their peers across the UK.’ He says ‘the Gill Review is an important opportunity to bring forward significant reforms that address these acute challenges, which are stifling growth on the high street, investment and job creation.’

• Mr Thompson adds ‘there has been recognition elsewhere that hospitality should be treated fairly by the business rates system, after decades of overpayment. The Scottish Government also needs to take that approach by looking at lower poundage rates for hospitality, as well as reforming the valuation methodology.’ He says ‘it’s not fair or logical that a typical pub in Scotland could be valued significantly higher than an equivalent pub in England, leaving them with higher bills. The Gill Review can and should put forward significant reforms to fix the broken business rates system.’

COMPANY NEWS:

McDonald’s opened more units in the US las year than in any year since 2002. The company opened some 149 new locations, an increase of just 1.1% to take the chain to 13,706 U.S. restaurants at the end of last year…

• The 1.1% growth was above the Technomic Top 500 restaurant chains, where the median chain grew by 0.8%. CEO Chris Kempczinski said back in 2023 that ‘our strong comp and brand performance has given us the right to build new units at a rate faster than we have historically.’

Drinks Business notes that Pernod Ricard ‘is reported to have secured support from the Brown family in its bid to combine with Brown-Forman.’ This could make a positive difference as ‘the proposed merger of equals is seen as more attractive than a rival takeover offer from US spirits group Sazerac.’

Elsewhere, Bloomberg reports that Pernod Ricard is eyeing a potential IPO of its India business arm….

• The company told Reuters that it ‘regularly assesses and evaluates its strategic opportunities and is continuously exploring options to create value for its shareholders, including optimizing its capital structure.’ It says ‘this is a usual process in line with management’s mission of delivering value to shareholders, employees, clients and stakeholders.’ The company added that ‘at this stage, no decision has been made regarding any particular action or involving ‌any ⁠of these options.’

HOLIDAYS & LEISURE TRAVEL:

Air fares rise sharply. The war in the Middle East and, specifically, its impact on oil prices, has seen air fares rise sharply, with the lowest-priced economy tickets now costing around 24% more than they did a year ago…

• Consultancy Teneo says that, in addition to higher oil prices, airspace closures have increased some route lengths and costs are being passed on to customers. Jet fuel prices have risen from under $90 per barrel to $150-$200 per barrel in recent weeks with fuel accounting for as much as a quarter of total operating expenses.

• As far as supply is concerned, Airlines UK says that ‘airlines continue to operate normally and are not currently experiencing issues with jet fuel supply, but as you would expect we remain in close contact with the DfT given the current external environment.’ It says ‘additional flexibility should it be needed would enable airlines to operate most efficiently to minimise any disruption to customers and maintain long-established global networks.’

• Airlines continue to cut flights with Lufthansa alone reported to have now cut some 20,000 flights from its summer schedule. It is shutting its City Line services and retiring some 27 aircraft and it will not be alone in making such moves.

Hays Travel boss Dame Irene Hays has said that the leisure travel industry is seeing ‘early shoots’ of recovery. Speaking at the 2026 Hays Travel conference in Chester, she said that her own company is witnessing ‘the early shoots of a return to business’.

Business Travel News reports that a number of ‘European and international carriers are accelerating cost-reduction and capacity-reduction measures and raising surcharges in light of rising jet fuel prices….’

• These moves could be contagious, particularly if the oil price does not fall in the near term. BTN says ‘airlines including Lufthansa Group, KLM, Norse Atlantic, Qantas and Air India are taking steps to mitigate rising jet fuel prices, which have spiked since the start of the Iran war on 28 February. Such prices have more than doubled year over year.’

Cornwall is reportedly lagging when it comes to the current upsurge in staycations….

• The Daily Express reports that ‘locals in some of Cornwall’s most popular towns have made a major U-turn and are now begging for tourists to return after previously describing them as “ants”, while accusing them of taking over their communities.’ It says that ‘in places like St Ives, where nearly one in six properties is a holiday home, locals have become increasingly vocal about reclaiming the space they grew up in.’ This now seems to have gone into reverse, at least in the short term. Tourism is thought to be worth around £2bn to the local economy.

OTHER LEISURE:

Microsoft yesterday announced that it is to cut the price of two of its Xbox Game Pass tiers. Competitors are reported to be putting up prices.

GEAR 4 MUSIC – FULLER COMMENT ON FY26 UPDATE:

Gear4Music, which has updated and raised forecasts on a number of occasions for its year to end-March 2026, has this morning updated on trading and our comments thereon are set out below:

Key comments:

• The company commented on trading as recently as 20 January when it commented that peak season trading was ahead of already-raised expectations.

• The company reports on its full year saying that its ‘strong full-year performance’ has once again featured ‘growth ahead of recently upgraded market expectations.’

• The company comments on the current financial year – it is a March year end – saying that it has seen strong revenue growth continue into April 2026.

• G4M adds that FY27 trading to date in line with market expectations…

Debt, cash-flow, balance sheet:

• The company reports that net debt has been ‘further reduced to £5.0m at 31 March 2026 having prepaid £3.6m in relation to the new UK warehouse (31 March 2025: £6.4m; 31 March 2024: £7.3m).’

• The lease for the group’s new UK warehouse was completed on 1 April 2026, as scheduled.

• The warehouse fit-out is ‘progressing on schedule and within budget.’ The company reports that ‘the new facility will provide the additional capacity and efficiency required to support future UK growth.’ Fit out costs in FY27 will be c £10.2m.

FY27 Outlook and trading update

• G4M says that ‘strong revenue growth has continued into April 2026’ and ‘FY27 trading to date [is] in line with market expectations.’

Company comment:

• Executive chair Andrew Wass comments ‘we are pleased to report that strong revenue growth continued during Q4 FY26, contributing to an excellent full-year financial performance, driven by the execution of our revised growth strategy announced in June 2024.’

• He says that ‘higher revenues and improved gross margins, combined with disciplined cost control, have driven at least an 80% increase in EBITDA in FY26 and a significant improvement in profit before tax to at least £9.7m, up from £1.6m in FY25.’

• Mr Wass says that ‘higher revenues and improved gross margins, combined with disciplined cost control, have driven at least an 80% increase in EBITDA in FY26 and a significant improvement in profit before tax to at least £9.7m, up from £1.6m in FY25.’

• He says that ‘revenue growth accelerated from mid-March 2025 and notwithstanding more challenging year-on-year comparatives, strong revenue growth has continued into April 2026.’

• Re the full year outturn, Mr Wass says ‘whilst it remains early in the financial year and the Board has not yet made any changes to FY27 forecasts, it remains confident that the business will build on the substantial financial progress achieved in FY26.’

• He concludes that ‘trading in FY27 to date is in line with consensus market expectations.’

Langton Comment:

• Gear4Music shares troughed at around 100p early in 2025 before trebling on the back of reduced competition (as competitors collapsed), stock acquired from administrators, strong trading and multiple earnings upgrades.

• This has to be good but, as exceptional profits will buoy FY26’s numbers and subsequent earnings will be lower.

• The shares had recently given back some ground but, on the back of today’s announcement, the decline in earnings for FY27 vs FY26 may be less steep than anticipated and, therefore, the base from which the company could grow thereafter is correspondingly higher.

• G4M has seen competition slacken slightly as competitors have either gone out of business or changed their behaviour. The collapse of competitors has proved to be a meaningful tailwind.

• The group has bought stock from administrators and taken market share.

• Whilst the group’s shares have been strong, we have included the five year chart in order to illustrate where the shares, albeit aided by their ‘Covid-lockdown darling’ status at the time, have been.

• The company is sanctioning further upgrades for this year (FY27) and, though there will be a fall compared with a blowout FY26, positive adjustments continue to limit this decline.

• We commented earlier this calendar year that the shares could pause for breath. This has happened and, as FY27 progresses and the company continues to deliver, buyers may return for the shares.

FINANCE & MARKETS:

Oil prices headed lower into today’s trading as US President Donald Trump said he would extend the current ceasefire with Iran until peace talks have taken place.

Sterling mixed at $1.3505 and €1.1507. Oil up by around $2 on yesterday but headed a little lower. UK 10 year gilt yield up 4 basis points at 4.88%. World markets mostly lower yesterday & London set to open down around 16 points as at 6.30am.

RETAIL WITH NICK BUBB:

• Today’s News: No company news was expected today, but there has been a surprise management announcement from JD Sports and a profit warning from Shoe Zone… At JD Sports, the news is that Andy Higginson has said that he will step down as Chairman after the AGM on 21 July, after 4 years in the position. The Board has started a process to look for a successor, but in the meantime, the veteran Darren Shapland will become Interim Chairman after the AGM. The discount footwear retailer Shoe Zone says that it has experienced “challenging trading conditions” over the last quarter, due to macroeconomic factors, which have “increased customer caution, leading to lower footfall, less discretionary spend and additional costs such as container prices and transportation costs, with a resultant reduction in revenue and profit”. It is expected that H2 trading (and costs) will also be impacted and as
a result, the company now expects an adjusted loss before tax for the financial year ended 3 October 2026 to be in the range £1.0m – £2.0m (down from previous expectations of a £1.0m adjusted profit before tax).

• Today’s Press: In terms of the front-page headlines of today’s papers, according to the press summary email from the Guardian, the Guardian itself leads with “Robbins accuses No 10 of applying huge pressure over Mandelson job”. Similarly, the Financial Times reports “Robbins tells of No 10 pressure to approve role for Mandelson”. The Times splashes on “Starmer on the ropes over Mandelson vetting fiasco” while the Telegraph has “Labour MPs vent fury at ‘toxic’ No10”. Gleefully, the Daily Mail reports that “Starmer’s support starts to crack”, while the i paper runs with the signs that Cabinet support for the beleaguered PM is cracking: “Wounded Starmer given public dressing down by his Cabinet”.

• News Flow This Week: Tomorrow brings the Sainsbury finals, the ASOS interims and the WH Smith interims, whilst first thing on Friday we then get the monthly GFK Consumer Confidence index and the ONS Retail Sales figures for March.