- Like for like sales growth slows to 5.8%
- Big jump in operating profit
- Tough comps in second half
Slowing like for like sales growth at pubs group JD Wetherspoon (JDW) was enough to knock the shares 7% lower to 737.5p, bringing an end to a strong run which has seen them gain 25% over the last year, comfortably ahead of the FTSE 250.
Like-for-like sales growth slowed to 5.8% in the seven weeks to 17 March compared with 9.9% for the half year to 28 January.
Rather incongruously Chairman Tim Martin commented: ‘The company continues to be concerned about the possibility of further lockdowns and about the efficacy of the government enquiry into the pandemic, which will not be concluded for several years.
‘In contrast, the World Health Organisation (WHO) reported on its findings in 2022.’
CONTINUING RECOVERY
Continuing post-pandemic recovery saw sales increase 8.2% to £991 million and operating profit jump 81% to £67.7 million equating to an improved margin on sales of 6.8% compare with 4.1% a year ago.
Leisure analyst Greg Johnson at Shore Capital said this reflected the improved backdrop and the ability to pass on cost inflation.
Johnson described the general tone of the update as ‘more modest than previous. We would see the first half as consistent with, if not slightly ahead, of our full year assumptions for pre-tax profit of £67m, implying a softer Q4, with the Group anticipating a reasonable outcome for the full year,’ said Johnson.
Julie Palmer, partner at Begbies Traynor said: ‘Today's interim results underscore J D Wetherspoon's exceptional ability to outpace its rivals, with a remarkable eightfold increase in profits for the first half, underpinned by diminishing costs and a steady stream of patrons drinking at their establishments.
‘Despite all the positives, the pubs group is still yet to hit the lofty heights of its pre-pandemic performance, meaning the dividend is yet to be reinstated, but the ongoing refocusing of the portfolio and concerted efforts to reduce net debt have evidently made a positive impact, setting the company on a solid footing to navigate any potential economic turbulence ahead.’
