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Shops and restaurants brace for Christmas season as Pizza Express cuts 1,300 jobs

Consumer confidence is expected to fluctuate based on what restrictions the government will impose

Revolution Bars - Shops and restaurants brace for Christmas season as Pizza Express cuts 1,300 jobs

Consumer-facing industries such as retail and hospitality are bracing for a tough Christmas season, with Pizza Express already cutting 1,300 jobs to cope with dire trading.

Although the UK is divided into regional lockdowns, meaning several businesses are still allowed to trade respecting local restrictions, consumer confidence has been battered by the economic crisis and fears of infections rising.

According to the latest Business Impact of Coronavirus Survey, published on Thursday by the Office for National Statistics, 47% of currently trading UK businesses reported a lower turnover compared to that normally expected for this time of year.

As October 31 passes, the finances of Britons may further be battered by the end of the original furlough scheme, alongside mortgage, loan holidays and interest free overdrafts.

“Christmas is the peak season for many businesses. If the restrictions can be eased and confidence recovers in December, a better Christmas season could partly offset a bad November,” analysts at Berenberg said in a note.

“However, a pronounced negative confidence effect could exacerbate the damage.”

While shops and restaurants may be equally suffering if forced to close, retailer could “probably” make up for some of the November losses in December depending on how restrictions are lifted, the German bank noted.

For restaurants, hotels and the entertainment sector, lost output cannot be recovered that easily.

In fact, Revolution Bars Group plc (LON:RBG) said this week the festive period “will be severely compromised” and any return to near normal levels is not expected before next spring at least.

Other London-listed restaurant or pub operators have not dared commenting on Christmas trading yet, though Mitchells & Butlers (LON:MAB) and Marston's (LON:MARS) announced some of the latest rounds of job cuts in the industry earlier this month.

Conversely, retailers may have a better time depending on how much Christmas shopping will be allowed.

NEXT PLC (LON:NXT) modelled three fourth-quarter sales scenarios, where they remain flat on 2019 in the best case, dip 8% if people avoid shops when they get busy and there are capacity constraints for online sales, or drop 20% if there is a significant reduction in footfall and self-isolation at the warehouses.

“Given its experience earlier in the year, Next like other retailers can now put a price on the cost of lockdowns, and if drastic restrictions are imposed during the Christmas shopping period, which is so crucial, sales will flounder,” analysts at Hargreaves Lansdown commented.

“Already with the party season cancelled and working from home the norm, sales of occasionwear and formal wear are particularly weak… With the Christmas party season cancelled and little need to refresh wardrobes there seems to be a reduced appetite to invest in new seasonal styles.”

Just like in the hospitality sphere, NEXT has been the only listed retailer so far to forecast what December may look like, as companies grapple with the uncertainty of the winter ahead coupled with the usual Brexit woes.

Quick facts: Revolution Bars

Price: 23.5 GBX

LSE:RBG
Market: LSE
Market Cap: £29.39 m
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