Greggs, Cineworld Reopening Plans Give Some Relief to Shares
(Bloomberg) -- Britons will soon be able to purchase hot Greggs Plc sausage rolls and go to movie theaters again, boosting shares of the bakery chain and cinema operator Cineworld Group Plc.
Greggs will reopen around 800 shops to takeaway customers on Thursday, while Cineworld plans to lift the shutters on cinemas across some territories during the last week of June, with all theaters set to be open over the course of July. Both companies are implementing social distancing and other measures to counter the spread of coronavirus as part of their plans.
Greggs shares rose as much as 5.5% on Tuesday, the biggest advancer in the FTSE 350 Food & Drug Retailers Index, while Cineworld climbed as much as 11%, outpacing Europe’s Stoxx 600 Travel & Leisure Index. Even after Tuesday’s gains, the stocks are still down 25% and 62%, respectively, in the year to date.
The bakery chain said it isn’t able to predict the impact of social distancing on its ability to trade or on customer demand, and that capacity to operate will be restricted by shop size. The company warned of the need to expect that sales may be lower than normal for some time.
“Social distancing will clearly impact trading,” Jefferies analyst Andrew Wade wrote in a note, while keeping his buy recommendation on the stock. “Despite the challenges facing the food-to-go sector in the near term, Greggs is better positioned than much of its competition.”
Meanwhile, Cineworld’s reopening announcement comes after it scrapped plans to acquire Canada’s Cineplex Inc., which would have created the biggest operator of movie theaters in North America. The company said it has updated its booking system to ensure social distancing within and throughout auditoriums, adapted daily movie schedules to manage queues and avoid a build-up of crowds in lobbies, and enhanced cleanliness and sanitation procedures across all sites.
While the reopening plan isn’t “new news” in the sense that Hollywood had re-scheduled key releases for mid-July onwards, “it’s reassuring to see Cineworld still thinks that will prove the case as we get closer to that time,” Berenberg analyst Owen Shirley wrote in an email. “Obviously it’s all completely contingent on government guidance changing at the right time too,” he said.
The reopenings are part of a broader trend as governments ease restrictions put in place to slow the spread of the virus. Shoppers in England returned to stores on Monday for the first time since March, with many customers lining up outside popular retailers in and around London.
“People are definitely ready to shop again,” Bernstein analyst Aneesha Sherman wrote in a note. “Even if you assume a dampening of the initial pent-up demand effect, this is very good news for store-based retail.”
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