Saga, Santio, Pizza Hut, confidence, football, politics, margins & other:

PREMIUM EMAIL – PLEASE DO NOT FORWARD:

A DAY IN THE LIFE:

Our house rambles around a bit and, as it used to have five kids in it with their associated clutter living in it, it’s not particularly small.

Which comes with ‘complications’.

Trying to avoid the word ‘problem’ there as, apart from it, the house that is, not the people within it, seemingly trying hard to crumble to the ground at every opportunity, it does mean that there is no pressing need to throw away junk.

Until, of course, there is.

Because the conveyor belt of items from usefulness to a spare bedroom to the cupboard by the front door to the garage does mean that the latter becomes the recipient of virtually everything over time and, as space is finite, it fills up.

And then what do you do with five mattresses, two broken microwaves, two non-functioning parasols, various other electrical devices, pieces of garden equipment and the like if you can’t fit them in your car to move them anywhere?

Well, the council will collect – up to 10 pieces of dry, clean, non-vermin infested pieces of large rubbish – for a fee but, even then, as you have to put the stuff out for 24 hours or so, it’s tough to retain your dignity when your front garden looks as though a crack den has been tipped upside down and the contents strewn across it.

Anyway, subsequent resolution, easier to say than enforce. Don’t let quite so much rubbish accumulate. Either that or hire a skip. On to the news:

PUBS & RESTAURANTS:

Pubs & football:

The latest Oxford Partnership and Dojo Market Watch data suggests that, over the three FIFA World Cup games that England has played to date, an additional 5.5m pints have been sold across the country’s pubs. The 2-0 victory over Panama saw sales up around 20.9% on a typical June Saturday in 2025 and 13.0% above average Saturday trading this June…

• The Oxford Partnership reports that, in money terms, ‘spending at pubs and bars increased 17.3% during England’s opening two weeks of the tournament (15-28 June) compared with the preceding fortnight, suggesting the World Cup has created lasting demand rather than one-off matchday spikes.’

• Alison Jordan, CEO of The Oxford Partnership, says ‘England’s Group Stage campaign has demonstrated exactly why major sporting events remain so important to Britain’s hospitality sector.’ She says ‘as attention now turns to the knockout stages, the opportunity for hospitality businesses continues to grow.’

• And Charlie Ashworth, Head of Data and Insights at Dojo, adds ‘England’s World Cup campaign continues to deliver tangible benefits for hospitality businesses. The spending data shows fans aren’t simply coming in to watch the football – they’re staying longer, spending more and continuing to celebrate after the final whistle.’

Politics, business rates:

Likely new PM Andy Burnham revealed some of his ideas for the country when the former Manchester mayor told a gathering at the People’s History Museum in Manchester that he would push ahead with establishing a new Downing Street team based in, well, Manchester. The ‘number 10 North’ will ‘oversee the biggest rebalancing of power our country has ever seen’, said Mr Burnham. He promised an overhaul of the UK’s system of business rates…

• Burnham went on to say that, in addition to redistributing power across the UK, he would push ahead with the biggest council house building programme since the post-war period, a ‘complete rethink’ of education and cuts to welfare.

• Whilst Tory leader Kemi Badenoch said Mr Burnham did not know what to do, CBI boss Rain Newton-Smith says ‘business will welcome Andy Burnham’s clear focus on growth and delivery. Taking the positive, dynamic and collaborative approach that has helped public and private sectors drive growth in Manchester and applying it at UK level would give industry a practical agenda it can get behind.’

• Ms Newton Smith says ‘business will welcome the commitments to sound public finances, upholding fiscal rules and maintaining investor confidence. Backing innovation and scale-ups, boosting international trade and tackling youth unemployment by strengthening apprenticeships are practical steps that can help unlock growth.’ She says, however, that there will need to be ‘a clear delivery plan – particularly on business rates.’

•  Proposals for greater intervention in markets such as transport and utilities must avoid deterring investment. Public-private partnerships remain the most effective and affordable route to upgrading critical infrastructure, crowd-in vital private capital and deliver long-term growth.’ She says ‘if firms are to be the engine of growth, the government must first tackle the cost of doing business, which has already reached a tipping point.’

• And Michael Kill, CEO of the NTIA, says ‘there is no doubt that he faces an immense challenge. The economic headwinds remain significant, and businesses across the UK’s night-time economy continue to grapple with rising costs, regulatory pressures and fragile consumer confidence. The decisions taken in the months ahead will be critical.’

• He says ‘what gives our sector confidence is the consistency of that narrative. Throughout our engagement, Andy has remained focused on recognising the value of business, empowering local leadership and understanding the pressures facing industries like the night-time economy. It’s reassuring to hear those same priorities reflected so clearly in his vision for government.’

Business confidence:

Lloyds Bank’s latest survey of business confidence in the UK suggests that confidence in the economic outlook fell although survey respondents were less downbeat about their own prospects. Lloyds says ‘while cost pressures and global uncertainty continue to weigh on business confidence, international firms are much more confident with many seeing signs of supply chain disruption easing and strengthening customer demand…’

• Overall business confidence fell by 3 points to +44, below its 12-month average of +47. Firms’ optimism about their own trading outlook decreased by 2 points to +56, still close to its 12-month average of +57. Hiring intentions, in a move that should be helpful for demand, rose for the first time in three months for the year ahead.

Cash vs percentage margins:

The financial impact of the US and Israeli attacks on Iran may be abating but, when costs change rapidly and prices have to follow, it is important to consider the difference between cash and percentage margins. For example, if prices rise for a decade at 2% per annum and costs have done likewise, then it is maybe sensible to put prices up by a similar amount. In this case, the gross margin percentage will remain unchanged. However, in the case of an economic shock such as one driven by an increase in oil prices (or labour), the situation could be more complicated…

• But if the cash margin is maintained, that is if the sales price rises by the same cash amount as does the cost in question, then gross margins will fall. This may be most apparent, say, with petrol retailers. They would face intense criticism if they tried to maintain a 3% or 5% or 10% margin on fuel at £3.00 per litre, the same as they had earned at £1.50. But the same factors are at play in hospitality.

• A rock and a hard place: Indeed, if percentage margins are maintained, customers may go on strike. That is, unless they had no choice but to buy the product.They may not refuse to buy if their wages have also risen, but bill-shock is a real thing and they maybe would. If cash margins are maintained, this will produce the same cash profit after a cost and price rise.

• If the price of a single input, say energy, has tripled, then the cash margin will be worth broadly the same in real terms (admittedly it will be somewhat less) as it was before the cost and price increase. However, if all costs have risen by 300%, then there is an argument that the percentage margin should be maintained.

• In reality: Inflation currently, and in the near future, should not approach levels seen post the Ukraine invasion. The precedent from, say, wine lists is that the more expensive the wine, the lower the percentage margin but the higher the cash margin. This, although it is by no means a perfect read-across, may give some indicator as to how the market may work. Post Ukraine, operators attempted to maintain cash margins and then to build back up percentage margins over the medium term. This could lead to short term margin and liquidity problems.

Other news:

Licensing solicitor Harrison Drury updates on licensing rules over the period of the World Cup saying that England’s match tomorrow ‘is covered by the government’s automatic extensions…so for qualifying premises, alcohol sales will automatically be permitted up to 01:00.’

• Harrison Drury adds ‘the extension will also apply to England’s last 16 fixture if they progress that far, but that game is scheduled for 01:00 UK time on Monday 6th July which means many premises would still require a TEN.  If that is the case, it is to be hoped that a TEN is already in place given that the deadline for issuing a TEN (standard or late) has now passed.’

Employment taxes. The Resolution Foundation, which cannot be said to be agenda-free, has said that the government should not reverse employment tax increases as it would not materially boost employment.

COMPANY NEWS:

Santio Limited, which is a large, Essex-based Domino’s franchisee, has reported results to 30 Sept 2025 to Companies’ House saying that that revenue for the year rose by 1.4% to £308.4m. The GP% slipped to 10.2% from 10.5% and GP in absolute terms was down by 0.8% at £31.6m. Admin expenses rose by a fractional 0.1% and PBT was down to £124k from £464k in the prior year…

• The group has shareholders’ funds of £1.9m (broadly unchanged on the prior year) and it paid no dividends during the year (FY24: nil).

• The company reports that its increase in revenue ‘was driven by the Company’s continued expansion in the number of sites operated. A further 16 sites were opened during the year, taking the total estate to 270 sites as at 30 September 2025.’

• It is likely that pre-opening costs are holding down reported profits. These are not split out.

• The company reports that ‘gross profit fell marginally year on year to £31.6m (FY 2024: £31.8m) driven by a margin decline from 10.5% to 10.2% as the Company incurred higher fees due under its Service Agreement.’

• It adds ‘pleasingly though the Company was able to improve its two largest cost of sales components as measured as a percentage of sales, these being i) food and drink purchases and ii) wages.’

• The company has adopted the Going Concern principle. Its auditor, Xeinadin Audit Ltd, has agreed with this treatment and it signed off on the accounts dated 10 June 2026.

Pizza Hut UK has reopened its flagship Marble Arch restaurant after a major refurbishment scheme. The company has launched a social media campaign to stimulate demand and says that the first 100 people to post about the site will receive a £19.73 voucher, 1973 being the year in which Pizza Hut first opened in the UK.

SAGA

Saga has this morning updated on trading for its Q1 and our comments thereon are set out below:

Headline comments:

• Saga reports that it ‘traded in line with expectations for the first four months of the year and remains on track to deliver its full year guidance.’

• It says that ‘travel continues to trade strongly, with Cruise performing ahead of expectations and a resilient customer base underpinning bookings in Holidays.’

• Saga notes that ‘Ocean Cruise had a strong start to the year, with revenue for the first half expected to be ahead of the prior year, driven by 13% growth in booked per diems and a booked load factor of 93%.’

• It says ‘River Cruise also started the year well, with revenue for the first half of the year again expected to grow when compared with the prior year. Booked per diems are 4% higher than the prior year and the booked load factor is in line year-on-year, at 93%.’

• Overall, ‘holidays revenue and passenger numbers for the first half of the year are both expected to be ahead of the prior year.’

• The company says that ‘for the full year, based on current booking levels1, we expect revenue to be marginally ahead of the same point last year, albeit with passenger numbers potentially slightly behind and a higher proportion of short-haul holidays as a result of the conflict in the Middle East.’

• Trading in Insurance Broking ‘remains in line with expectations’.

• The company reports that ‘Net Debt continues to reduce, standing at £464.7m at 31 May 2026, £104.8m lower than the £569.5m at 31 May 2025 and £34.8m lower than the £499.5m at the year end.’

Company comment:

• CEO Mike Hazell says ‘Saga has made a strong start to the year, building on the significant growth we achieved last year.’

• He says ‘our momentum in Travel has continued, demonstrating the resilience of our customers and our diverse offering, despite the current geopolitical uncertainty.’

• Mr Hazell adds re the insurance business that ‘at this early stage of our partnership with Ageas, we are already seeing encouraging signs to support our long-term growth ambitions.’

• Re the outlook, the CEO says ‘we are focussed on continuing to grow our Travel businesses and completing the transition to our new Insurance model.’

• He concludes ‘we remain on track to deliver our full year guidance and continue to make clear progress towards our medium-term targets of at least £100.0m Underlying Profit Before Tax and a Leverage Ratio of below 2.0x by January 2030.’

Langton comment:

• After a momentous run, the group’s shares have recently paused for breath.

• That said, the magnitude of the re-rating should not be understated as Saga’s shares risen from around 100p to above 600p in little more than a year.

• To the clear approval of the market, Saga has simplified its business model and it is now focused on leisure travel. The group’s shares have quintupled since their low points touched around the beginning of 2025.

• The company established an insurance JV with Ageas and, as it says, this has simplified and de-risked the business.

• There remain major adjustments to get to ‘underlying’ numbers but, with the major restructuring now behind it, this should not recur going forward.

• We mentioned earlier in the year that, ‘with strategic moves changing the nature of the business it is a) possible that a re-rating will now occur but b) comparisons remain cloudy.’

• A re-rating has most certainly taken place with the scale of it surprising many.

• This has been warmly welcomed by investors but, as always with turnarounds and restructurings that are accompanied by upgrades, the question may be ‘how much is enough?’

• Today’s update does not seem to sanction upgrades and, good though the company is, some investors may be tempted, at least on the margin, to lighten holdings.

HOLIDAYS & LEISURE TRAVEL:

Cruise demand. The Cruise Lines International Association reports that a record 2.54m passengers from the UK and Ireland took a cruise last year with demand set to increase further in the current trading period.

OTHER LEISURE:

The Guardian reports that ‘all-night slot machine shops and casinos could face a £460m tax rise if Andy Burnham acts on his concerns about the gambling industry as prime minister, after an influential thinktank found the policy would have public support….’

• The ‘slot sheds’, officially deemed ‘adult gaming centres’ (AGCs), are reported to have ‘flooded UK high streets in recent years, disproportionately targeting economically deprived areas.’ AGCs were left unaffected by recent duty increases on physical slot machines.

• The Social Market Foundation says that 43% of the public would support any move by a future Labour administration to raise taxes affecting AGCs, which offer a £2 slot machine spin every 2.5 seconds. The Guardian reports that ‘the sector’s rapid growth has brought record takings for operators, according to official figures released last year by the Gambling Commission.’

Comcast, owner of Sky in the UK, is to split its company with Sky set to become a part of NBC Universal.

Former Tory MP Craig Williams has pleaded guilty to gambling offences when he knew the date of the 2024 General Election. Mr Williams was PPS to then=PM Rishi Sunak between October 2022 and June 2024.

Google has said that it is ‘disappointing’ that its YouTube subsidiary has been included in the government’s planned ban on social media for under-16s.

FINANCE & MARKETS:

The Bank of England reports that the level of mortgage approvals in the UK fell to 56,205 in May from 66,034 in April. This is the lowest number of approvals since December 2023.

Sterling up slightly at $1.3232 and €1.1610. Oil little-changed at $72.26. UK 10 year gilt yield down 1 basis point at 4.73%. World markets lower yesterday but mixed into Tuesday and London set to open around 14 points higher as at 6.30am.

RETAIL WITH NICK BUBB:

• Today’s News: The Sainsbury Q1 update covers the 16 weeks to 20 June and so it is ‘bang up to date’ (as the former CEO, Justin King, used to say). The headline is “Consistently great value drives continued volume growth and market share gains” and the sales figures look a bit better than the City had expected. Grocery sales were up 3.6%, General Merchandise and Clothing sales were down 3.7%, and Argos sales were down 0.5%, giving overall Retail sales +2.7%, with total LFL sales up by 2.1%. CEO Simion Roberts says that the combination of value, quality and operational excellence is “really delivering at the big customer moments and we outperformed the market at Mother’s Day, Eid al Fitr, Easter and the May heatwave”. The company says “We have had an encouraging start to the year but the impact of the conflict in the Middle East on our customers and our business remains uncertain and we
continue to expect to deliver Total underlying operating profit of between £975m and £1,075m”. Today’s finals (for y/e March) from Cake Box, ‘the UK’s largest retailer of fresh cream celebration cakes’ (with nearly 300 stores), are headlined “Strong growth in revenue and underlying EBITDA, supported by 37 new store openings and a maiden full year contribution from Ambala”, with 4.5% LFL sales growth and the company says that “Trading in 2027 has started positively and ahead of 2026, supported by continued momentum in system sales performance”.

• Today’s Press: In terms of the News headlines on the front-pages of today’s papers, according to the press summary email from the Guardian, the Guardian itself leads with “Burnham puts No 10 North at heart of bid to ‘rewire’ Britain”. The Times says “Burnham pleads for ten years to ‘rewire’ UK”, the Daily Mail has “Burnham wants to ‘rewire’ Britain from Manchester base” and the i paper writes “Burnham pledges growth, housing and No 10 North in his vision for ‘rewired Britain’”. The FT, on the same topic, says “Burnham pledges rewiring of state in bid to spread growth across country” and the Metro has “Sparks fly over Andy’s ‘radical rewiring’”. Elsewhere, the Telegraph leads with “Junior doctors’ pay to hit £100,000”, the Daily Express has “Britain facing summer of ‘no plan’ chaos”, and the Sun leads on its own investigation with the headline “Migrant street”.

• News Flow This Week: As June/Q2/H1 finally draws to a close, the Nike Q4 results (to the end of May) will be out this evening in the US. And as we move into July/Q3/H2, tomorrow morning brings the Topps Tiles Q3 update. The shops will be quiet (and the pubs will be busy) at the end of tomorrow afternoon, as England take on DR Congo at 5pm in the last 32 of the World Cup… On Thursday we get the Currys finals, the ABF (Primark) update and the Sainsbury AGM.