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Mon 28th Sep 2020 - Update: Two-week lockdown, Fulham Shore, Diageo
The Times – two-week lockdown under preparation: The Times has reported ministers are preparing to enforce a total social lockdown across much of northern Britain and potentially London to combat a spiralling second wave of coronavirus. The newspaper stated: “Under the new emergency plan, all pubs, restaurants and bars would be ordered to shut for two weeks initially. Households would also be banned indefinitely from meeting each other in any indoor location where they were not already under the order. Schools would stay open as well as shops, factories and offices at which staff could not work from home. The social lockdown was among options presented to the cabinet’s covid-19 strategy committee before last week’s new restrictions, which included a 10pm curfew on all hospitality venues. The Times has learnt that the group of six ministers, led by Boris Johnson, held them back, fearing a backlash from Tory MPs and sections of the public. A senior government source told the newspaper: ‘The nation and the party wasn’t ready for us to go any further last week. There wasn’t a wide enough understanding of how substantial the second wave could be. Unlike the first lockdown, nobody has seen pictures of body bags in Spain or France on the TV yet, which had a very powerful effect. You have to take people with you. Tougher measures on social interaction will have to come though. They’re inevitable in some parts if you look at the numbers’.” The Times added: “Downing Street still believes that a national social lockdown can be avoided because case numbers vary significantly across regions. They remain very low in the southwest as well as the southeast outside London. The effectiveness of the new 10pm curfew for pubs and restaurants is already in doubt after it led to packed city centre streets as soon as premises closed as well as widespread street drinking. Scientists on the government’s Sage committee also revealed that they had not modelled or recommended it.”

Fulham Shore delays results, does not think 10pm curfew will have “material impact”: Franco Manca operator Fulham Shore has announced its full year 2020 results will be published on or around 15 October. The company stated: “The company previously announced that it anticipated that the FY20 results would be published at the end of September 2020. However, as a result of the most recent measures put in place by the UK government in order to control the spread of covid-19 and additional work now required, it is now anticipated that the FY20 results will be published on or around 15 October 2020. Subject to the finalisation of the audit of the FY20 Results, the company expects to report revenue growth of 7.2% to £68.6 million (2019: £64.0 million). Following the completion of the placing and extension to its banking facilities in August 2020, the group remains well capitalised. The group’s net debt (before recognition of leases under IFRS 16) at the close of business on 25 September 2020 was £3.52 million, with £7.46 million undrawn of its £25.75 million of available banking facilities. Since the year end, the group opened a new Franco Manca on The Cut, near to the Old Vic theatre and Waterloo Station in London, in mid-September. As at the date of this announcement, Fulham Shore has 68 out of its 70 restaurants open and trading. Additional safety precautions and training were instigated throughout the group’s estate prior to re-opening for dine-in on 4 July 2020, with further improvements made following updated UK government guidelines last week. Thanks to the UK government’s ‘Eat Out to Help Out’ scheme, group revenues for the days when the scheme was operating increased markedly compared to those in the previous year. As of 24 September 2020, the UK and Scottish governments imposed further trading restrictions to combat the spread of covid-19. This included a 10pm curfew for all restaurants and bars. The board does not believe that this curfew will have a material effect on the group’s dine-in business, as the majority of its customers eat before then. The group will continue to react and adapt if and when new regulations come onto force in the areas where it has restaurants. If, as before, delivery and / or takeaway services are permitted and dine-in is curtailed, the company will pivot the business in this direction as it did earlier in the year.” David Page, chairman of the company, said: “ We are popular with the public, well capitalised and have headroom in our borrowing facilities. We believe that these positive attributes, combined with our cash balances, will see us emerge from this period as a successful survivor in an albeit reduced UK restaurant sector.”

Diageo reports on trading before AGM: Diageo has issued trading update before its AGM. Ivan Menezes, chief executive, said: “We have made a good start to fiscal (year) 2021, with sequential improvement in our performance across all regions, driven by strong execution, robust demand in the off-trade channel and the gradual re-opening of the on-trade channel in most markets. The pace of recovery from the covid-19 pandemic and easing of government restrictions varies by market. Our US business is performing strongly and ahead of our expectations, reflecting resilient consumer demand and the spirits category continuing to gain share within the total beverage alcohol market. Increased retailer confidence is resulting in some re-stocking in the off-trade channel. The on-trade channel is now open in all states, with some capacity restrictions. In Europe, off-trade demand remains robust and the on-trade channel has largely re-opened with the easing of lockdown measures in most countries, although the risk of additional restrictions remains where infection rates are worsening. In China, the on-trade channel continues to recover, although larger banqueting occasions are returning more slowly. While the on-trade has also begun to re-open in Africa, India and Latin America and the Caribbean, we expect the pace of recovery in those markets to be more gradual. Travel retail continues to be severely impacted. We are continuing to support our customers and we are seeing the positive impact of the actions we took to help the on-trade recover. As demand recovers, we are using our consumer insights and marketing effectiveness tools to accelerate smart investment behind innovation and marketing as well as behind new opportunities in the at-home occasion and in the e-commerce channel. Our outlook for the first half of fiscal 21 has improved since the year-end, reflecting the good start to the year, particularly for our US business. We continue to expect sequential improvement in organic net sales and operating profit compared to the second half of fiscal 20. Compared to the first half of fiscal 20, we still expect lower organic net sales and margin dilution. I am pleased with the resilient performance of our business in the current challenging operating environment and encouraged by our progress. While the pace of recovery is uncertain, I am confident in our strategy, the long-term fundamentals of our business and Diageo’s ability to emerge stronger.”

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