- Shares up 16% over the past year
- Year-to-date like-for-like sales increased by 7.7%
- Cost pressures remain for pub group
Shares in JD Wetherspoon (JDW) were little changed in morning trading at 766p as the pub group said like-for-like sales increased by 5.8% in the 10 weeks to 7 July compared to the same period last year.
Chairman Tim Martin said the gradual post-pandemic recovery was achieved with fewer pubs, however, costs for the pub group remain an issue.
‘For example, compared to the 2019 financial year, labour in this financial year has increased by approximately £164 million, energy by £28 million, repairs (also affected by labour costs) by £38 million and interest (excluding IFRS 16 interest) by £16 million,’ said Martin.
The pub group said it had opened two pubs year-to-date and several are to open in the next few months in Waterloo and Fulham Broadway stations in London and in Marlow, Buckinghamshire.
PUBS UP FOR SALE
It was not all good news for the pub group as it said it had sold or surrendered to the landlord 26 pubs.
‘Most of the disposals were smaller and older, or where the company has a second pub in reasonably proximity. There was a net cash inflow of £8.7 million from the disposals.’
Ten trading pubs remain on the market or are under offer. The company currently has a trading estate of 801 pubs.
EXPERT VIEW
Russ Mould, investment director at AJ Bell said: ‘Pubs chain Wetherspoons used to be all about volume of sales and not margins. That left the company exposed to increases in costs coming out of the pandemic.
‘It is now delivering record sales from a streamlined trading estate and with debt under control the company expects to deliver results in line with forecasts.
‘In a hospitality market which has seen a large number of venues disappear in recent years, Wetherspoons has an opportunity to further entrench its market position and it is investing in areas like beer gardens which could broaden the range of customers it might attract.’
The pub group’s preliminary results are due to be released on 4 October.
DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (Sabuhi Gard) and the editor (Martin Gamble) own shares in AJ Bell.
