Langton Capital – 2020-03-23 – Fuller’s, Fulham Shore, Britvic, Ten Ent. & other Covid-19 updates:
Fuller’s, Fulham Shore, Britvic, Ten Ent. & other Covid-19 updates:A DAY IN THE LIFE: Langton has yet to get the hang of this ‘pantry preparation’ (aka panic buying) lark. Indeed, we popped out yesterday (a necessary trip to pick up a prescription for a relative) fully intending to buy some necessaries and there did seem to be at least some stuff on the shelves. Which threw us right off our game such that we ended up buying only one packet of powdered milk, The Sunday Times, two bottles of beer, a banana, a clove of garlic, an edible dog mirror, that was on special offer & some purple hair dye for school-aged daughter who reckons if she’s ever going to dye her hair some exotic colour or other, it had better be now. Clearly, none of the above will do us much good if there’s a total lock-down but at least I’ve got a beer to drink whilst alternately shouting in outrage at something or other in the newspaper and sniggering when I feel brave enough at our daughter’s hair. On to the news: LANGTON 240-PAGE PREMIUM COMPENDIUM, £300 PLUS VAT: Langton’s Premium Email launched around 12mths ago and, during its first year in operation, it has comprised a body of research & published opinion on a wide range of topics. Here, we have curated a large number of those articles in order to logically sequence the major issues that are currently impacting the hospitality subsector or the wider leisure sector. The piece is available now. Please drop us a line. LANGTON PREMIUM EMAIL: Corporate Offer: Premium email just £295 (plus VAT) for a single subscriber or £495 (plus VAT) for multiple subscribers. Drop us a line to get involved. Retail Offer: Easy in, easy out. £30 per month (inclusive of VAT, £25 net) via PayPal. Email us for details or check here. ADVERTISE WITH US: Langton’s free email now carries adverts. See front page of website for today’s copy & contact us for further details. JD WETHERSPOON – H1 CONFERENCE CALL: Friday seems like an age away. It was before the pub closure mandate, before Chancellor Sunak’s job preservation package was announced etc. Following the announcement of its H1 numbers on Friday, JD Wetherspoon hosted a conference call for analysts and our comments thereon are set out below: H1 trading: • LfL sales were up 5.0% on the half-year. Wet +4.2%, food +5.6% and machines up by 20.3%. Wage costs are up, staff retention is better. See Premium Email. THE COVID-19 OUTBREAK: Introduction: • The email is a bit bitty. Not because there are too few stories but rather because there are too many. Having said that, there really is only one story in town. Government diktat on closures (at last): • Pubs, clubs, cafes, restaurants, casinos, museums, galleries, gyms to close. Not shops. • The press has pointed out that ski slopes, the royal parks, beaches etc remain open. Some parks are now closing. • In Italy, the lockdown has progressed in stages. The same may happen in the UK. The impact of the closure mandate: • See Cask Marque comments below on shutting down and re-commissioning cellars. • Millions of pounds worth of food may go off. We hear staff are eating some, some will be given to NHS and other blue-light services, some may go to charity and some may go in the bin. It is not clear if any of this will be recoverable under firms’ insurance policies. • Insurance companies are insisting in some cases that shut units are boarded up. This will incur substantial costs. There are plenty of pics on Twitter of boarded up Soho streets. Trading while insolvent: • Directors may have one eye on the fact that they can be held personally liable for the debts of their companies if they trade while knowingly insolvent. • Arguably, they shouldn’t be insolvent if the government, as it promises, is standing behind them. In addition, they are not strictly speaking trading at the moment. • The definition of trading, however, would include entering into new contracts or even continuing with existing ones (leases) if they involved running up more liabilities. The job protection package & other government support: • ‘Unprecedented’ was the word of the day during the Friday coronavirus update from Chancellor Rishi Sunak. • The government is extremely keen that employers do not lay off their workers. For restaurants & pubs, all of which are now closed, that’s a big ask. The Chancellor therefore says the government will pay 80% of wages via a ‘job retention scheme’. • Any employer is eligible. They will need to contact HMRC for grant. The grant is capped at £2,500 per month. The payback will be backdated to 1 March. It will run for at least 3mths, but the Chancellor is ‘putting no limit on the duration’. • There are no details yet. As rent day is this Wednesday and the monthly payroll for many companies is the day after (the last Thursday of the month), employers will be taking a lot on trust. • There are up to £330bn of loans available. Again, details are unclear. • Re cash flow support, the payment of this quarter’s VAT (calculated on the quarter to end-March and due about 8 May) will be deferred to end-June. Corporate cash flow, it has to be said, could easily be worse in June than it is now. • There was some talk of payment being spread over a year. • If there is a feeling that this is being made up on the hoof, that’s because it is. But needs must. Details can be filled in later – but cash has to change hands very quickly if hundreds of thousands more hospitality workers are not to be laid off. • The measures will be financed via debt. Sunak says the gilts market is supportive. • Now’s not the time for an enquiry but Government policy U-turned around ten days ago. We tweeted last Tuesday ‘BBC says No10 has U-turned as ‘the science has changed’. I mean, really? Why did all other countries behave differently? Smells initially of Cummings & now of lost bottle.’ The Sunday Times yesterday says that the policy of protecting the economy at the expense of lives was pushed by Dominic Cummings. He about-turned some time after pushing the idea of herd immunity. Tim Shipman suggests that PM Boris Johnson is seeking to distance himself from this policy. What more is needed? • The government is being pressed to introduce a moratorium on lease forfeitures. • It needs to get the money that it has announced already moving quickly. • Banks and Local Authorities need to similarly move quickly. More company updates: • C&C updated on trading on Friday saying ‘the Group’s supply chain and production network remains fully operational and we remain committed to supporting the trade.’ It says, however, that ‘market conditions have deteriorated and it is now clear that COVID-19 will have a material impact on Group performance in the current financial year.’ • C&C says ‘we are unable to accurately quantify the expected impact of COVID-19 on our financial and trading performance at this stage. However, we expect a material reduction to our prior expectations for FY21. The scale of this reduction will depend upon how the situation develops, over what timeframe, and the impact of further measures implemented by the Irish and UK Governments.’ No surprises here. • C&C says it has drawn down its full revolving credit facility, reduced capex, reduced marketing spending and is looking at working capital. It concludes ‘that it is well-positioned to withstand a material decrease in business activity during 2020. • Hotel Chocolat updated on trading on Friday saying that ‘trading both in the UK and in the Company’s international markets of the USA and Japan had been encouraging up to the end of February with Group revenue having increased by 6% year-on-year in February.’ This has changed, of course. HOTC says this resulted in ‘Group retail revenue having decreased by 5% year-on-year in March-to-date.’ • HOTC reported before the closure mandate for cafes and restaurants and stronger advice that customers should only venture out if they have to and that they should not gather together over Mothers’ Day (or Easter). This will hit sales. • HOTC also announced that it was to place shares in order to raise £20m in funds via an accelerated bookbuild. It says ‘this fundraise of £20 million should not only provide the growth capital required but also provide additional flexibility if it so becomes needed.’ The company later announced that it had raised £22m at 225p per share. • Admiral Taverns has said that it is cancelling rental charges to its tenants from 21 March to 30 April. Admiral adds ‘we will keep this end date under review’. It advises its publicans that ‘the cash grants (£10,000-£25,000) promised by the government will be paid by your Local Authority’. Admiral reminds its tenants that both Sky and BT have suspended sports TV charges and VAT payments have been deferred to end-June. • There are few winners. The supermarkets are effectively bringing forward sales. Same too some of the food manufacturing companies. • Some sharp share price movements on Friday, mostly on the upside. Carnival +20%, Comptoir +27%, DART +75%, Escape Hunt +14%, Fulham Shore +22%, Gym Group +20%, Hollywood Bowl +17%, Hostelworld +26%, Intercontinental Hotels +15%, Mitchells & Butlers +20%, Rank Group +32%, SSP +15%, JD Wetherspoon +25%, Whitbread +11%. Just one double digit faller, City Pub Group down 13%. Coming through the other side: • Cask Marque recognises that pubs, clubs and restaurants will have to both run down and, hopefully, reopen their cellars as a result of the temporary shutdown mandated by government. The body has advice on how best to do this here. • The Commercial Kitchen exhibition has announced that it is to move to 14-15 July. This may prove to be optimistic. Leisure sector profit warnings: • We’ve left them in the Forthcoming Results section as the volume of them is noteworthy but perhaps not surprising. • Only Restaurant Group to date has attempted to put flesh on the bones as regards the cost of the virus outbreak. It is working on the basis of a 12wk shutdown. See last week’s emails for specific details. Human nature in a crisis. • Fertility rates drop almost as soon as infant mortality rates drop. Apart from rationing, the most effective way to prevent panic buying (aka pantry preparation) is to make sure that the supermarkets’ shelves are full. The evidence of shoppers’ own eyes will work wonders. • See A Day in the Life. A sample of just one but there was stuff on the supermarkets’ shelves yesterday. Hopefully that might do the trick. • Environment secretary George Eustice has suggested that British shoppers have bought £1bn worth of extra food in the last three weeks. • No discounts out there from the restaurants, for obvious reasons, but general retailers are offering 20% to 30% with Footlocker & outliers at minus 50%. Probably only a matter of time before someone says that trying to attract crowds is a bit counter-productive in the current environment. • And the shaming industry is stepping up a gear. Admittedly with some justification, the shaming industry has intensified efforts to make people feel guilty for walking the dog, cycling or getting some exercise (all Prime Ministerial recommendations). Whilst everyone should pull together, the tutters & head-shakers are, of course, out of doors themselves. But only in order to police the situation. • The tendency to pile-on (aka to hunt witches) is an unpleasant but endemic human condition. It enhances social cohesion. Journalists were visiting ski slopes over the weekend to vilify people who were also visiting ski slopes. BBC1 visited an empty York on Saturday to report that it was in York and that the town was empty. Langton, thankfully, was not in the back-shot. • Around a third of meals are eaten out of the home (many admittedly from sandwich shops). A large amount of this food will now be purchased via supermarkets (so of course they are busy). Taking delivery drivers, trucks etc. temporarily from the on-trade makes perfect sense. Other Covid-19 news: • Mandated closed. Bars, pubs, clubs, restaurants, casinos, bingo halls and many other units have been obliged to shut. Some jumped before they were pushed. Bill’s, Loungers, Hall & Woodhouse managed, McDonald’s, Dishoom, Yo! Sushi, Prezzo, ASK, TGI Friday and others. • Voluntarily shut. Some operators are closing by choice. Primark closed yesterday, Arcadia is shut, Cathay Pacific is down 96%, EasyJet could cease flying tomorrow. The Farnborough Airshow is toast, ditto the Euro football, The London Wine Festival, John Lewis shops, New Look, Timpsons etc, etc. Pret and Starbucks have closed all of their units having originally kept either some or all of them open for takeaway only. • Open but deathly quiet. Heathrow, Manchester Airport, most other airports, UK trains etc. • Major question marks. Tokyo Olympics. • Taking pay cuts. JD Wetherspoon Chairman & CEO down 50%, Marston’s Chairman and CEO down 50%. O’Leary and his staff at Ryanair, BA pilots down 50%. • Hiring. Tesco 20,000, Amazon, Morrison’s 3,500, Co-op 5,000, Aldi 9,000, ASDA 5,000. • Move to takeaway only. Gail’s, Gregg’s. Leon is moving to a ‘shop’ format. McDonald’s removed the eat-in option and has now closed altogether. • Free food for NHS & blue light services. Franco Manca. • Scrapping / postponing dividends. Marks & Spencer, JD Wetherspoon. Most companies, probably. There may be some very proud, 50yr records falling by the wayside. EasyJet is coming under pressure. There will be a reluctance to extend government money if companies are seen to be paying cash out to shareholders. • Profit warnings. See Forthcoming Results. • Cancelling existing orders. Primark is reported by The Sunday Times to be cancelling orders already in the pipeline quoting force majeure. OTHER PUB & RESTAURANT NEWS: • Busiest reporting day in memory. There are trading statements out today from Fuller’s, Fulham Shore, Britvic, Ten Entertainment, Gym Group, AG Barr, Time Out, New River, Tasty and others. There other updates from Easy Hotel and Gfinity. Many of the statements simply update the market to the fact that the operator’s sites are closed. They will take a bit of sorting out so here we will cover just a selection of statements. • Fuller’s reports that it has closed its entire estate and adds ‘given the uncertainty as to when our estate will re-open, we are not in a position to give guidance on the financial impact of COVID-19 on our business at this juncture, except to say that we anticipate a material reduction in our trading performance.’ • Fuller’s adds ‘the quantum of this will depend upon the duration of the temporary closure of the Group’s pubs and hotels and any subsequent measures imposed by the Government.’ It adds ‘Fuller’s is in a strong financial position. We have an excellent relationship and open dialogue with our lending banks, and the Company is well financed with a healthy balance sheet and significant liquidity headroom. Furthermore, the Group has a high quality asset base of premium pubs and hotels, which is 89% freehold by book value.’ • Fuller’s CEO Simon Emeny comments ‘these are unprecedented times. The impact of COVID-19 on the hospitality sector, and indeed the nation, cannot be underestimated. However, Fuller’s is a long-term business, established on extremely sound foundations, which equips it well to navigate testing times such as these. This will end and, when it does, we will be ready to welcome our customers into our wonderful pubs and hotels and provide the fantastic food, drink and exceptional service that we have been delivering for nearly two centuries.’ • Fulham Shore (Franco Manca & The Real Greek) reports that ‘until recently we were on target to meet or slightly exceed market expectations for the current financial year. Due to decelerating trading in February and March from the impact of Covid-19, we now anticipate that we will marginally undershoot those expectations.’ • FUL says ‘the majority of our Franco Manca and The Real Greek restaurants were closed temporarily as of Friday 20 March 2020’ but adds ‘some of our sites remain open, continuing to serve our customers through our delivery, take away and click and collect services.’ • FUL says ‘we are…in the unhappy position of having to reduce all of our costs to a minimum. These include, amongst others, property and staffing costs. We are likely, however, to benefit from the business rates holiday and the assistance to be provided by the Coronavirus Job Retention Scheme for the employees of our closed restaurants. We have also taken the decision to halt all but our basic capital expenditure in order to better manage our cash flow.’ • FUL concludes ‘the situation is evolving rapidly with new guidelines being introduced by the UK Government every day. There is currently little certainty around the duration of the impact on the Group.’ It says, however, ‘our two popular restaurant businesses offer delicious food at great prices. Despite the impact of the current situation, we remain confident that the two businesses will thrive once the market returns to normal.’ • Britvic updates saying ‘prior to the recent developments, trading in the quarter was broadly in line with our expectations. The recently announced closure of on trade outlets and restrictions in people movement in each of our markets will however significantly affect consumption both in outlet and on the go. We therefore anticipate a material impact to the company’s revenue and earnings in 2020.’ • A chunk of Britvic’s sales should move from the on-trade to the off-trade but the disruption will be considerable. It says ‘all elements in our supply chain are currently working and while our modelling anticipates some minor potential disruption, it does not include a significant supply chain discontinuity, such as the enforced closure of all or a substantial part of any of our major production or distribution sites. Nor does it include significantly elevated levels of bad debt.’ • Britvic says ‘our interim dividend is due to be proposed in our interim results on May 20. While all the above gives us confidence in our funding arrangements, the uncertainty that surrounds us and pace of change means that we will reflect, at the appropriate time, with the best available up to date information, whether it is in our shareholders’ best interests for us to recommend or postpone the interim dividend.’ CEO Simon Litherland comments ‘soft drinks has historically been a resilient category in any downturn. Britvic starts from a strong financial position and we are taking further action to protect our cashflow and profitability. Our brands’ consumer appeal is enduring in good times and bad, and we are confident in our ability to bounce back strongly as normality returns. The long-term investment case for Britvic remains intact.’ • AG Barr says it will delay its results. Re trading, it says ‘we ended the financial year with encouraging trading performance, which continued into the new year, however the circumstances resulting from COVID-19 are now creating an unprecedented level of uncertainty for the UK and beyond.’ • AG Barr is concentrating on its supply chain and has not yet experienced any difficulties. It says ‘from a demand perspective, while consumers are currently prioritising take-home purchases, and in some cases shopping more locally as a result of the Government’s containment measures, there are significant challenges for the hospitality sector which in total accounts for c.10% of our business.’ The company adds ‘we have multiple routes to market serviced by a combination of distribution partners and a company owned fleet of around 80 vehicles, all of which currently provide us with flexibility and continuity of service.’ • Time Out has said it will delay its numbers. It says that its year to end-December delivered ‘significant year-on-year growth’ but adds that ‘the COVID-19 pandemic has had a significant effect on trading with the temporary closure of all six Time Out Markets and a slowing of advertising revenues. Given the material uncertainty of the situation it is not currently possible to quantify the full trading impact of the outbreak. In the meantime, the Group has cash reserves of £11.4m, as at 29 February 2020 and an undrawn debt facility of £18m, alongside various cost mitigations and other available options.’ • Time Out CEO Julio Bruno says ‘we are responding quickly to these unprecedented times with a temporary “Time In” rebrand, a launch of an e-version of the magazine, complementing our online digital content, a review of the operating structure and preserving our cash position. We are in the process of assessing the potential financial impact, which will be highly dependent on the duration of the outbreak, coupled with the response from governments and consumers alike.’ • Writing in the Sunday Times, Luke Johnson suggests that a third of the c3.2m people who work in hospitality may already have lost their jobs. He says operators will be trying to defer bills and he says that the reaction from landlords is mixed. The insurance industry is ‘deserting the battlefield’ and the government must do more. • Johnson says ‘this month has been a dramatic and terrible reckoning’. He says the weak will go to the wall and a lot of units may not reopen. He says ‘the industry overall might well shrink by a third or more unless it is able to revive in May or, at the very latest, June.’ • Leon has said that it will turn its 65 UK restaurants into shops selling meals. Founder John Vincent told the BBC that he hoped the move would save the company and help customers and food producers. • JD Wetherspoon announced on Friday that CEO John Hutson bought 12,000 shares in the company at 757p. The group’s shares rose by 25% in a rising market to 700p on Friday. • Wireless Social reports that footfall at the 800 venues that it services nationally dropped on Thursday, Friday and Saturday this week (compared with the same days a year ago) by 74%, 80% and 94% respectively. Presumably dine-in volume fell by 100% on the Saturday, but there was some takeaway action. • Friday & weekend tweets: Things are moving very rapidly as these tweets illustrate. Since they were sent (less than one working day ago) all pubs & restaurants have been ordered closed, Chancellor Rishi Sunak has made the biggest peacetime intervention into the market and innumerable promises have been made.
• Tweets as follows: 1) Loungers says it will temporarily close all its sites from 3pm. Adds ‘we remain confident in our ability to emerge from this period strongly.’ 2) All those new words / phrases we Five Minute Experts have picked up. Herd immunity, self-isolation, mass-gatherings, social distancing, super-spreaders etc. 3) Wireless Social says pub footfall down 74% yesterday compared with a year ago. Was down 30% earlier this week and 20% a week ago. Full shutdown likely? 4) Industry looking forward to a Rishi Rescue. It needs to be real money, real quick. Billions. BILLIONS. To worry about tomorrow’s taxes we first have to make sure there is a tomorrow. 5) And if there is money made available, it needs to be very, very fast. No point saying ring the switchboard. That could take months. Gov needs to push the money to struggling firms now. 6) Word from an economist, money is a • BBPA has responded to the Government’s call to shut down all pubs, stating: ‘The Government has been clear that pubs must now shut down. The safety and wellbeing of people is our priority. We stand ready to play our part in the fight against COVID-19 and in the process protecting our communities and employees.’. • Chief Executive of UKHospitality Kate Nicholls has commented on the shut down of UK pubs by the Government: ‘This generous package will support our fantastic staff, is very welcome and additionally gives hope to those who have been laid off. This may have saved up to 1 million jobs, but we need it as soon as possible to ensure we can continue to trade’. • Vapiano, the Italian-themed restaurant chain has called on Governments to bail it out after the group entered insolvency due to the coronavirus pandemic. • Vehicles from the catering industry have been offered to aid in the supply of supermarket chains, due to the need to restock shelves emptied by stockpiling customers. • Fox news has reported that the Governor of the state Gavin Newsom has called on restaurants to ‘focus on takeout for those isolating’ but fell short of closing all restaurants. HOLIDAYS & LEISURE TRAVEL: • TUI has said that its travel agencies are operating a ‘closed-door policy’. Presumably that means that they are shut. • UK holidaymakers and owners of second homes have been warned to stay away from rural and seaside areas as they cannot cope with the volume if travellers become ill. • The Sunday Times suggests that a major government investment in the travel industry could shortly be forthcoming. • The UNWTO says it will hold ‘regular virtual meetings, reflecting the need for coordinated and efficient action by the private and public sectors, governments, international financing institutions, and the United Nations.’ • Heathrow has said it will shrink its operation but remain open. • Global travel data company ADARA has said that there is some evidence that travel in China is picking up. • Sir Richard Branson is to inject $250 million into companies across Virgin Group. EasyJet is under some pressure to cancel its dividend. • easyJet has stated that it will ground the majority of its aircraft from tomorrow due to travel restrictions designed to prevent the spread of coronavirus. • Abta have written a letter to Prime Minister Boris Johnson, in which it makes seven demands in order to save jobs in the travel industry. • The government is contemplating buying an equity stake in airlines to keep them afloat through the coronavirus crisis, according to the Financial Times. • Manchester airport has announced it will close two of its three terminals from Wednesday. • Bourne Leisure, parent to Butlin’s has warned that it may have to layoff 10,000 seasonal workers if it does not receive financial help from the government. • The World Travel & tourism Council has estimated that as many as 1m people are losing their jobs worldwide in the industry, due to the outbreak of the coronavirus. • Marriott International has stated that there have been small signs of recovery in the Chinese hospitality market as chief executive Arne Sorenson offered a business update. He commented that the number of closed Marriott hotels in Greater China has declined from over 90 a month ago to under 30 today. • Large-scale closures of hotels in the UK are feared due to the coronavirus pandemic, according to Deloitte. • The Governor of California Gavin Newsom has ordered 40m Californians to stay at home in order to reduce the spread of coronavirus in the state. • Uber has announced that it has seen ride volumes decrease by as 60-70% in the recent days. CEO of the group Dara Khosrowshahi has commented that the group was ‘well-positioned’ to see out the crisis even if rides were to fall by 80% for the year. OTHER LEISURE: • Ten Entertainment has updated on the Covid-19 virus saying that all of its sites are now closed. It says ‘we currently have cash balance of £20.5m, a further overdraft facility of £2m and undrawn RCF funds of an additional £2.8m. This totals a liquidity headroom of over £25m.’
• TEN says ‘we are already in close discussions with our bank, landlords and key business partners, with whom we have worked for many years, and who are already demonstrating keen support.’ It adds ‘the Board has already ceased all future capital investment on projects that are not already under construction and has put its property acquisition strategy on hold’ and says ‘the vast majority of the company’s employees will be furloughed. Other cash conservation measures are being developed and these will be deployed as soon as possible.’ Chairman Nick Basing says ‘it is hugely disappointing to be instructed to suspend operations forthwith, in our role to keep the nation’s families entertained. But we live in extraordinary times where the health of the nation always comes first. We entirely support the Government action and are also supremely grateful for their generous fiscal support in • TEN chairman Duncan Garrood adds ‘I am grateful to all our employees for their professionalism and hard work in the difficult circumstances of closing down our centres on Friday. We are committed to securing their jobs and income for the future and have strong plans in place which, together with the unprecedented levels of Government support will provide us a great platform for growth once we are able to re-open.’ FINANCE & ECONOMICS: • The OECD says that the world economy will take years to recover from its current partial shutdown. It says that earlier estimates that the outbreak could halve global growth to 1.5% now looked too optimistic. • A MORI poll shows that the British population is at its most pessimistic about the outlook for the economy since 2008. Some 69% of respondents believe that the economy will get worse over the next year. MORI said ‘around half the public felt the government was handling the crisis well, although half were wanting more to be done.’ • The Bank of England has reduced interest rates to an all-time low rate of 0.1%. This is the second cut in ten days. • Global stock markets have resumed their downward move. On Friday, the UK and Europe was higher but the US fell. The Far East is mixed but largely down today. • Sterling $1.1686 and €1.0867. Oil $26.37. UK 10yr gilt yield 0.54%. World markets headed down again, UK set to open down by around 270pts. START THE DAY WITH A SONG: Last Friday’s song was You Do Something by Paul Weller. Today who sang: Whatever happened, To Tuesday and so slow? Going down the old mine With a transistor radio RETAIL WITH NICK BUBB: • Saturday’s Press and News (1): The front page headlines in the Saturday papers were divided between the unprecedented Government income support package announced by the Chancellor on Friday evening (eg the FT ran with “Sunak turns financial firepower on effort to ward off jobs crisis”) and the Prime Minister’s decision to enforce social distancing by closing down all the pubs, cafes, restaurants, gyms etc (eg the Guardian went with “Britain shuts down”). The Editorial in the FT was headlined “Johnson is coming to grips with the crisis”, noting that although “the Prime Minister’s instincts are towards sunny rhetoric…but the public may respond better to a serious recognition of problems and clear plans”, whilst the Economics Editor of the Times penned a column headlined “There are economic consequences in trying to save lives on a mass scale”.
• Saturday’s Press and News (2): So much happened on Friday that the papers had plenty to try and cover and most focus was on the crisis in the Leisure and Hospitality industries. In terms of Retail news, the main coverage was on the gloomy news from Marks & Spencer about possible store closures and the axing of its dividend, as highlighted by the Times, the Daily Mail and the FT. The Guardian focused, however, on the news that the embattled Arcadia fashion chain is closing all its stores temporarily and that Primark is cancelling all forward orders. The Times also went big on the empty shelves in supermarkets (noting that the problem is caused by a shortage of drivers and lorries and workers in the distribution chain rather than by bulk buying) and flagged the big job hiring news by the big supermarkets, eg 20,000 new jobs at Tesco. The Times also highlighted the news that the • Saturday’s Press and News (3): The Daily Mail featured Kingfisher in its “Popular Shares” column ahead of next week’s results. The Daily Mail also flagged the news that the embattled Ted Baker announced late on Friday that it had managed to sell its HQ freehold for £79m and that Hotel Chocolat had raised £22m in a share placing to prop up its balance sheet. As well as highlighting the store closures at Arcadia, the FT also had a feature on the way in which the lockdowns are boosting Online grocery ordering in France (as well as Italy and Spain). Interestingly, however, the FT also had a column by its stockmarket correspondent Bryce Elder querying Ocado’s status as the best performing FTSE 100 stock, noting that “Food security fears will put Ocado’s gains to the test” and that it is a brave call to bet on the shares continuing to do well.
• Sunday’s Press and News (1): The Sunday papers were, inevitably, full of gloom and doom about the crisis and the Sunday Telegraph front page headline, for example, was “NHS facing Italian-style crisis if we don’t stay at home, says PM”. In terms of all the Editorial and other comment, we would highlight that Sunday Times Economics correspondent David Smith had some interesting charts in his column about the likely path of GDP during the upcoming deep recession, compared to what happened after 2008, noting that “the deeper the dive, the longer the way back” and that “we have to hope that, while the economy should recover more quickly than after the financial crisis, the lasting effects will not be as damaging”. We would also highlight the view of the veteran City commentator Jeremy Warner in the Sunday Telegraph that the British response to the crisis is falling between two stools and
• Sunday’s Press and News (2): In terms of Retail news, the main Business story in the Mail on Sunday was that panic buying had sent supermarket sales up by over 50% last week, to Christmas-type levels, with the view of BRC boss Helen Dickinson that the nation has stored up £1bn of food over recent weeks. The Sunday Times also had a big feature on the way in which “Virus brings doom and boom to High Streets”, including a look at Newport, “a city in distress”. The Sunday Telegraph had an interesting article about the problems that lie ahead for Online grocers like Ocado (“Can the Online grocers deliver?”) and it also flagged the barrage of retailers calling on landlords to suspend the quarterly rents due next week. The Mail on Sunday also highlighted the pressures on shopping centre landlords and it also noted that the fashion/homewares chain Cath Kidston is struggling badly and is • Sunday’s Press and News (3): The Sunday Times flagged that the embattled Ted Baker is close to agreeing the appointment of the former Next Chairman John Barton as its new Chairman. The Sunday Times also noted that Primark has sent shock waves through the fashion industry by cancelling all forward orders and it had a column by James Timpson, the boss of the Timpson’s shoe repair chain, about “A week I will never forget”, noting that “In these dark days we try to be positive, but it’s difficult when your sales are down by 40% on last year”. • Today’s Market: The FTSE 100 index is expected to slump again this morning (according to the Proactive private investor website), after Wall Street ended the day 4.7% down on Friday and Asian markets fell further overnight. The spread-betting firms expect the FTSE 100 to open c240 points down at around the 4950 mark, with more gloomy corporate news out this morning, despite the big Government income support package announcement announced on Friday evening… • Today’s Retail News: As well as the confirmation of the sale of the London HQ by Ted Baker announced to the press on Friday night, Ted Baker has also flagged that most of its stores have been closed because of the impact of COVID-19 (aka the coronavirus) and there are similar announcements from Primark and Watches of Switzerland. Card Factory has said that its stores remain open for the time being, but has warned of a big hit coming and has suspended its dividend, whilst the home shopping business N Brown has warned that trading has collapsed (like its share price) and that its balance sheet is stretched and Kingfisher has said that it is delaying its final results from tomorrow (in line with new FCA guidance) and suspending its dividend. • Store Closure Watch: As well as the Retail Week and Drapers websites, you can also get up to date news on all the stores that are closing on the BRC website: https://brc.org.uk/news/corporate-affairs/coronavirus-latest-retailer-activity • News Flow This Week: The Kingfisher finals tomorrow and the Moss Bros finals expected on Wednesday have been delayed. Investors in JD Sports will be interested in the Nike Q3 results (in the US) tomorrow. Thursday brings the ONS Retail Sales for February, plus the Signet Q4 (in the US), whilst the Irish-based motorway service station operator Applegreen has its finals on Friday. And we are sure that there will be plenty of “unscheduled” news from companies as well this week… TRADING STATEMENTS & EVENTS: Upcoming results are set out below: • 17 Mar 20 Numbers and / or Covid-19 trading update. Tasty, Brighton Pier, Rank Group • 18 Mar 20 Numbers and / or Covid-19 trading update. Morrison’s FY numbers, DART Group, Gear 4 Music, Loungers, Marston’s, M&B, Restaurant Group, Revolution Bar Group. • 19 Mar 20 Numbers and / or Covid-19 trading update. Everyman, Gym Group, Shepherd Neame, Sportech, Escape Hunt, Playtech, PPHE Hotels, New River, Comptoir. • 20 Mar 20 Numbers and / or Covid-19 trading update. JD Wetherspoon, Hotel Chocolat, C&C, Carnival Corporation, Intercontinental Hotels. • 23 Mar 20 Covid-19 updates, Fuller’s, Fulham Shore, Time Out, Tasty, Britvic, AG Barr, Ten Entertainment, Gym Group, New River, EasyHotel. • 23 Mar 20 Gfinity H1 numbers • 24 Mar 20 888 Holdings FY numbers • 25 Mar 20 DP Eurasia FY numbers • 25 Mar 20 Ten Entertainment FY numbers • 26 Mar 20 Time Out FY numbers • 26 Mar 20 Bank of England MPC meeting • 2 Apr 20 Saga FY numbers • 3 Apr 20 Constellation Brands numbers • 9 Apr 20 Hollywood Bowl H1 trading update • 23 Apr 20 Gear 4 Music FY numbers • 28 Apr 20 Pepsi Co Q1 numbers • 29 Apr 20 YUM Brands Q1 numbers • 7 May 20 Intercontinental Hotels Q1 numbers • 12 May 20 On the Beach H1 • 13 May 20 Marston’s H1 numbers • 13 May 20 Stock Spirits H1 • 13 May 20 Compass Group H1 • 13 May 20 C&C full year numbers • 11 Jun 20 Fuller’s FY numbers LANGTON CAPITAL: Made in Hull. Like all the best things. Langton Capital is a financial advisory company providing insightful views on the UK and global leisure industry and the wider consumer sector in general. Subscription to the daily email is free. Unsubscribing is painless. We provide daily off the shelf and bespoke research. We have helped with transactions, fund-raisings, disposals and other corporate issues. We have a good ear, we are impartial, independent and not half bad at what we do. If you think that we could help you or your business, drop us a line. |
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