Pret A Manger announces plans to axe 400 jobs
Pret a Manger has revealed plans to axe 400 jobs and close 6 London stores after a slump in sales.
The sandwich chain has struggled since people have switched to homeworking and city centres have seen a reduction in footfall.
Sales at Pret A Manger have fallen to their lowest in a decade due to the pandemic. The group has not specified which London branches will close but they will add to the 30 shop closures announced in August.
Clare Clough, who is the UK managing director of the chain, said: “It’s absolutely right that we take steps to stop the spread of the virus and tackle the new wave of infections. Sadly, the result of the rise in infections and the necessary shift in public health guidance mean that our recovery has slowed.
“We’ve said all along that it’s up to Pret to decide our own future and that we must adapt to the new situation we find ourselves in. That’s why we have to make these further changes as we continue to transform our business model and prepare for the six months ahead.”
The 30 closures announced in August led to the loss of 2,900 jobs.
Pret A Manger has launched a new coffee subscription service offering up to five drinks a day for £20 a month.
Pano Christou, the chief executive at Pret, said: “There’s no doubt that workers will come into the office less often than beforehand. Pret needs to adapt itself to the changes of customer patterns and that’s where we’ve been very focused.”
Bank of England seeks to incorporate climate risk into bond purchases
On Friday, the Executive Director for Markets at the Bank of England, Andrew Hauser, announced the central bank’s intention to seek Treasury backing for incorporating climate risk into its asset purchasing methodology over the coming year.
In a speech to the Investment Association, Mr Hauser said:
“2% of the Bank’s Asset Purchase Facility consists of sterling corporate bonds, acquired as part of the MPC’s quantitative easing programme. As we stated in our TCFD disclosure, the framework for the MPC’s asset purchases is determined by the Committee’s remit given to it by the Chancellor. But, subject to the Government indicating a willingness to update this remit, we will over the coming year be considering how to incorporate climate factors into decisions on the mix of financial assets, whilst still achieving our policy aims.”
This move follows a similar approach taken by ECB President, Christine Lagarde, just two days earlier, and the Chancellor is now being urged by climate campaigners to align the bank’s Quantitative Easing programme with the government’s own climate commitments, alongside the next budget.
Having been slow off the mark, today’s move represents the first statement of intent since Andrew Bailey pledged to make the decarbonisation of corporate bond purchases ‘a priority’ back in March. Since then, in April, fossil fuel-producing companies featured in the updated list of eligible bonds for further rounds of corporate QE.
In June, the premier Bank of England climate-related financial disclosure showed that if the projected emissions performance of the Bank’s corporate bond portfolio was representative of the emissions performance of corporates globally, the world would experience 3.5 degrees celcius of heating by 2100.
The bad year suffered by fossil fuel giants looks set to get even tougher, between the BoE’s new strategy proposal, and pressure from campaigners for the bank to stop including BP and Shell in its bond-buying programme.
Speaking on the update, Executive Director of Positive Money, Fran Boait, said:
“It’s positive to hear the Bank of England is finally taking forward proposals to ensure its asset purchases aren’t fuelling the climate crisis, though progress seems worryingly slow. The Bank says it will consider incorporating climate over the coming year, more than six months since Andrew Bailey told MPs he would make it a priority in March.”
“Action needs to happen more urgently, especially with the prospect of more corporate quantitative easing as the Bank of England responds to the worsening economic outlook. The Bank’s own disclosure suggests its corporate bond purchases are currently fuelling 3.5C global heating, more than double the 1.5C limit the government is committed to pursuing through the Paris Agreement.”
“The Bank of England and the Treasury should work to ensure the central bank’s remit is updated to allow it to support the government’s net zero strategy by the next Budget.”
Lockdown will see more distressed M&A deals in hospitality sector
With the prime minister leaving most of the country in Tiers about the prospect of further lockdown restrictions, sectors of the economy, such as hospitality, will be asking what they can expect in the coming months, and whether the situation will be even worse than the first time around.
Speaking on the impact another lockdown would likely have on hospitality, Mark Lynch, Partner at consumer industries specialist, Oghma Partners, said: “The lockdown restrictions that are currently being imposed by the Government are likely to re-emphasise the earlier trends that we saw around Spring time which showed positive sales growth for direct to consumer and supermarket companies.”
“Indeed we have already seen a significant shift in consumer behaviour which has boosted growth for those companies in Q2 and to a lesser extent in Q3 but which now look to boost growth again in Q4. However on the other hand this does mean we are likely to see more long term problems for Food to Go and food service providers that are unable to service clients as per normal – the sad fact is that the longer the restrictions are imposed the more end user businesses will go bust.”
“This includes pubs, restaurants and the more food service manufacturing capacity and, to a lesser extent, Food to Go capacity we will see taken out of the market. These may be seminal changes that we are seeing.’’
It will be interesting to see to what extent these trends come to fruition, given that support for lockdown restrictions – while still favoured by most – is slowly waning, and whether more local representatives will outright refuse to impose the government’s new measures on their constituents.
For those who do abide by the government’s rules, and businesses in struggling sectors such as hospitality, the top Tier of restrictions may be even less hospitable than the first lockdown. Indeed, not only is government support for businesses far less generous than it was earlier in the year, but support for staff, and what might considered ‘viable jobs’, could leave many in difficult situations should stringent restrictions remain in place for more than a short time.
Another interesting trend to watch will be activity in Mergers and Acquisitions, with Lynch saying that: “Oghma Partners’ latest UK Food and Beverage Sector M&A report highlighted that in the months May – August of this year, there was a 59.5% decline in overall M&A deal volume but the number of distressed deals increased to 27% of the total within the sector.”
“Looking through to the rest of the year we expect this trend to continue. 2021 could see a mixed picture however, with distressed deals a continued feature of activity and in addition we may see businesses that have come to market in the final third of 2020 from owners hoping to avoid any increase in capital gains tax help improve activity levels and reverse the negative deal volume trends of the last three quarters of 2020. Overall our expectation remains that it won’t be until Q2 2021 that we will see year on year increases in M&A activity.’’
Serco Group upgrades profit guidance, shares rise
Serco Group shares (LON: SRP) soared by 18% after strong Q3 trading across all regions worldwide.
The international provider of services to governments provided an unscheduled trading update, which shared an upgrade of guidance for 2020.
The group is currently running much of the UK government’s coronavirus test-and-trace and virus testing services.
Serco Group expects full-year revenue of around £3.9bn and an underlying trading profit of £160m-£165m.
“All of our regions worldwide are performing better than we expected and have increased their forecasts for 2020. In both Group and in the divisions, effective cost control and the ability of our systems to respond efficiently to increased demand has helped increase margins,” said the FTSE 250-listed group in its update.
In the UK, Serco Group has been awarded extensions to contracts to provide test sites and call handlers for NHS Test & Trace, “which is an indication of our customer’s satisfaction with the quality of work we have delivered.”
In Australia, restrictions on movement as a result of the pandemic has meant additional work for both the immigration services and the Citizens Services businesses. In the Middle East, there has been an increase in project-related work on rail and facilities management contracts for the group.
On the company’s outlook for 2021, the group said: “as we noted in our half year results, and as this unscheduled trading update underlines, the current crisis makes forecasting extremely difficult. We expect the uncertainties of 2020 will persist into 2021 as the world grapples with recurring outbreaks of infection.”
Serco Group shares (LON: SRP) are currently trading 18.16% at 139,90 (1211GMT).
Loungers PLC shares rise thanks to “excellent trading”
Loungers PLC shares (LON: LGRS) rose almost 8% on Friday’s opening bell after the group reported significant outperformance of the market.
The owner of the Lounge and Cosy Club brands shared a trading update for the 24 weeks ending on 4 October 2020, revealing a 25% growth in like-for-like sales when cafes, bars, and restaurants reopened.
During the 24-week period, Loungers PLC has opened new sites in Hull, Sittingbourne, and Birmingham, taking the total to 167. The group said that it plans on opening a further three sites in the current financial year.
“I am delighted with our continued excellent trading which reflects the resilience of our brands and fantastic performance of our team working in very difficult circumstances,” said chief executive, Nick Collins.
“Loungers, and the sector more broadly, have gone to considerable efforts to ensure the safety of our teams and customers. We anticipate further interruptions to trade in the coming weeks and months, but take confidence from our continued market out-performance. We remain well-positioned to accelerate our growth and to continue to lead the market once Covid-19 is behind us,” Collins added.
The strong trading performance comes as many other groups in the hospitality sector are struggling. Wetherspoons shares fell today after the group swung to a £95m annual loss.
Tim Martin, the founder and chairman of JD Wetherspoon, blamed the government for not giving enough support to the hospitality sector and introducing curfews, which “has few supporters outside the narrow cloisters of Downing Street and Sage meetings”.
Loungers PLC shares (LON: LGRS) are trading +6.79% at 149,50 (1118GMT).
Wetherspoons: shares plunge but can it ride out the storm?
Wetherspoons shares (LON: JDW) took a plunge on Friday after the pub group revealed a £95m annual loss.
Revenues at the group fell by 30.6% to £1.26bn amid lockdown and forced closures as well as one-off costs of £29m on staff costs and equipment.
Tim Martin, the founder and chairman of JD Wetherspoon, blamed the government for not giving enough support to the hospitality sector and introducing curfews, which “has few supporters outside the narrow cloisters of Downing Street and Sage meetings”.
Since July, 429 employees have tested positive for coronavirus. The pub group said it was below levels at Amazon.
Martin said: “If pubs were, indeed, ‘centres of transmission’ it might be expected that infection rates would be higher among employees than those of either the general population or companies like Amazon.
“It appears the government and its advisers were clearly uncomfortable as the country emerged from lockdown. They have introduced, without consultation, under emergency powers, an ever-changing raft of ill-thought-out regulations. None of the new regulations appears to have any obvious basis in science,” he added.
Wetherspoons is in the process of cutting employees at airport sites by 450. The news comes as pub and brewer Marston’s announced it was axing 2,150 jobs.
Despite the new restrictions, analysts remain confident that the group will continue to perform.
Alastair Reid from Investec told the Guardian: “The path of recovery rarely runs in a perfectly straight line, and new government restrictions will continue to buffet JD Wetherspoon.”
“However, the company is well placed to ride out the storm and the results demonstrate it is well-positioned to capture a growing share of demand as and when it returns. We expect the company to emerge even more robustly from the crisis,” Reid added.
Wetherspoons shares (LON: JDW) are currently trading 14% lower at 825,50 (1006GMT).
SpaceandPeople shares down 25% after “very challenging year”
SpaceandPeople shares (LON: SAL) have fallen by almost 25% as the group revealed losses for the first half of the year.
The retail, promotional, and brand experience specialist shared interim results for the six months ended 30 June 2020 where net revenue plunged 72% to £1.1m.
SpaceandPeople felt “profound” effects from the lockdown and the continuing restrictions and economic climate. During the lockdown, the group said almost all activities stopped and as a result, all bookings for that period were canceled or postponed. For three months, SpaceandPeople recorded virtually no revenue.
Nancy Cullen, the group’s chief executive, said: “As you would expect, 2020 has been a very challenging year for the Group so far. The Covid-19 pandemic has impacted all areas of our business in every territory we operate.
“The challenge to our staff, clients, promoters and operators has been enormous and I am extremely grateful to them all for their help, resilience and understanding. I would have liked for my first report as CEO to have been during more normal times, however, I am proud of how the Group has coped with the challenges it has faced and I look forward to better times in the future.”
Since the lockdown enforced in March, the German arm of the business is now almost back to normal levels of trading. However in the UK, restrictions on media budgets and nervousness about running activations whilst social distancing needs to be maintained have led to activity cancellation and have had “a strong depressive effect on the brand business.”
Cullen added on the outlook of the business: “As I write this, Covid-19 cases in the UK are on the rise again and local restrictions are being put in place in many areas of the country. Our industry is slowly recovering, but is by no means back to normal.
“When we forecast the outlook for our business earlier this year, we assumed scenarios where there were further lockdowns. Although this would be extremely unwelcome news for us, we are confident that we will be able to trade through such events and emerge in a position to take advantage of the recovery. We have good cash headroom, are streamlined and very focused on achieving results and seeing the grass roots of recovery in bookings from 2021 onwards.”
SpaceandPeople shares (LON: SAL) are currently trading -13.98% at 4,00 (0913GMT).
Mind Gym shares plummet amid Corona disruption
Mind Gym shares (LON: MIND) plummeted 17% on Friday’s opening as the group was hit by Covid disruption.
In the six months to 30 September 2020, the gym group a 40% fall in revenue compared to a year earlier.
Mind Gym said in a trading update released today that it anticipates making an adjusted loss before tax in the six months to 30 September 2020 of between £1m-£1.5m.
“As our clients focused on dealing with their own operational changes, including moving to remote working, they were forced to cancel face-to-face leadership events and training programmes and most of the new work usually commissioned with us between February and July was suspended,” said the group.
Whilst overall revenue fell, Mind Gym saw 78% in revenue from virtual live deliveries – compared to the 32% for the same period a year earlier.
Octavius Black, Chief Executive Officer of Mind Gym, commented: “The first six months of the current financial year was a period of great uncertainty as companies focused their attention on the operational challenges of adapting to COVID-19. We were successful in pivoting clients to virtual delivery, feedback for which is very strong, and in leading the market again in product development.
“The Group has taken the opportunity to increase its focus on the medium to long term digital strategy and investment which will ensure Mind Gym grows its share of the corporate development and behaviourial change market. Growth is returning, showing up in both booked revenues and the opportunity pipeline and we are confident that revenue performance and profitability in H2 FY21 will be significantly better than H1.
“We continue to have a strong cash balance that protects the business and provides the resources for investing in growth.
“Despite the challenges brought by COVID, our strong proposition, team and financial position combined with an improving performance leaves us confident about the future,” he added.
Mind Gym shares (LON: MIND) have recovered slightly since opening and are currently trading -4.28% at 89,50 (0840GMT).
Boots sales fall as people avoid high streets
Sales at Boots fell 30% in this year’s fourth quarter as shoppers stayed away from high streets.
In the three months till the end of August, the pharmacy chain saw a drop in sales across all markets except beauty due to people buying their pharmacy products from supermarkets.
As people are working from home, sales at stores dropped, however, online sales in the period were seen to surge by 150%.
Walgreens Boots Alliance, the owner of Boots, said the stores that had been most affected were those in the city centres and at travel sites due to the drop in tourism.
We think the UK is the country where there might be [further] lockdowns. It is quite unpredictable. We don’t see major risk in the US, but the UK presents risks to the [sales] projections,” said James Skinner, the group’s chairman.
In June, the group said it would cut 4,000 jobs and last year it said it planned to cut 200 stores in an effort to save $2bn in costs by 2022.
Sebastian James, the managing director of Boots UK, said about the job cuts: “The proposals announced today are decisive actions to accelerate our transformation plan, allow Boots to continue its vital role as part of the UK health system, and ensure profitable long-term growth. In doing this, we are building a stronger and more modern Boots for our customers, patients and colleagues.
“We recognise that today’s proposals will be very difficult for the remarkable people who make up the heart of our business, and we will do everything in our power to provide the fullest support during this time,” he added.
Walgreens Boots Alliance expects a profit growth over 2021. Shares in the group rose in pre-market trading.
Apple’s iPhone 12 – formidable or forgettable?
The eve of Apple‘s (NYSE:AAPL) long-awaited next instalment is upon us, and in just a matter of minutes, excited applets will be able to pre-order the latest, aluminium-coated slice of Californian tech – the iPhone 12.
And that pretty much sums it up for me. Being a past Apple patron myself, these infuriating details seem to mount up to a high-style, low-substance final product; where the suave-woke zeitgeist of the brand doesn’t quite wash against what is quite clearly the company’s priority: it’s balance sheet.
With that being said, I hope the new phone meets everybody’s expectations – it may well end up being a roaring success.
But do we think the iPhone 12 is worth the hype?
Well, in terms of features, there are a few new things to talk about. For instance, the confirmed iPhone Mini at 5.4 inches and iPhone 12 at 6.1 inches. Unusually, though, there could be up to four sizes launched on within a short range of release dates, with a 6.1 inch iPhone Pro and a sizeable 6.7 inch iPhone Pro Max also being announced.What has really been grabbing headlines, though, are the iPhone’s new tech features and appearance. Boasting 5G capabilities and a 3D depth-sensing camera, Apple have made an some effort to move with the times – and will also be keeping their popular 14 interface for the launch of their new models. In terms of the look of the thing, the iPhone 12 seems to hark back to the reliable and popular iPhone 5, taking a leaf out of the old-school book with sharp, rather than rounded edges. The phone is also being showcased in dark blue, a new colour scheme for Apple’s staple product. The main selling point for many though, will be the price, $699 in the US and £699 in the UK for the Mini, which is far short of the iPhone X’s £999 price tag, and may appear slightly more affordable than the £729 asked for the basic iPhone 11 model.iPhone 12 Size Comparison: All iPhone Models Side by Sidehttps://t.co/pZ2YatGkMx pic.twitter.com/xnXfG8JIff
— MacRumors.com (@MacRumors) October 15, 2020
Or is the iPhone 12 more predictability from Apple?
Having completely blown mobile phone technology into a new paradigm with the iPhone 3G and 3GS, it is little secret that ever since, Apple has been trying to find ways to replicate that success. Indeed, as stated by Daniel Morgan, senior portfolio manager Synovus Trust Co.:“Since 2014, the newest iPhone launches have felt more like ripples opposed to a wave,”And, to be honest, it doesn’t look like this model will be the one to do it, at least not on merit. Apple’s last big boom in devices followed the launch of the iPhone 6 and 6 Plus, and while the iPhone X’s top range models saw the company boast record-breaking revenues, its new features seem more in the range of like novelty, than revolutionary. But perhaps that’ll be enough to get fans onboard. Indeed, Apple is seen as the cutting edge of tech fashion, its devices are battery-powered status symbols, and the addition of a swanky display was enough to get some people to pay around £1,400 for the top spec iPhone 11. Also, some analysts (granted, ones who work for companies with large Apple holdings) believe that the iPhone 12 will spur sales that exceed beat 231 million devices sold during the 2015 fiscal year. Dan Ives, analyst for Wedbush Securities, comments: “I believe it translates into a once-in-a-decade-type upgrade opportunity for Apple,” One factor that might drive sales will be the pandemic, with Apple shares rallying more than 50% and its market value climbing above $2 trillion. Similarly, with consumers being more reliant on tech than ever, and looking to enjoy the endorphin hit provided by a sleek new device, the next dose of Apple might prove to be just what the doctor ordered. Equally, though, the pandemic might discourage consumers from lavish new expenditure, or more importantly, home-working might reduce the demand for high-speed, wireless connections, as people rely more heavily on home Wi-Fi. The other factor which could – and should – turn off some potential customers, is the fact that the iPhone 12 doesn’t actually cost £700. If you include essentials, or the items that are normally included when you buy a new handheld device – earphones, the obligatory earphone adaptor, and charger – this will set you back an additional £78. As put by Have I Got News for You:
And that pretty much sums it up for me. Being a past Apple patron myself, these infuriating details seem to mount up to a high-style, low-substance final product; where the suave-woke zeitgeist of the brand doesn’t quite wash against what is quite clearly the company’s priority: it’s balance sheet.
With that being said, I hope the new phone meets everybody’s expectations – it may well end up being a roaring success.