After initially struggling to get customers back through its doors after the reopening pub group J D Wetherspoon (JDW) seems to have rediscovered its mojo with like for like sales accelerating in the final quarter to 11% compared with pre-pandemic trading.

Compared to 2022 like for like sales increased by 11.5% pushing year to date growth to 12.9%. The company expects profit for the year to 31 July 2023 to be inline with market expectations, while free cash flow is expected to be ‘substantially’ in excess if pre-tax profit.

WHAT DID TIM MARTIN SAY?

Chairman Tim Martin commented: ‘As a result of a continued improvement in sales and a slightly reduced expectation for cost increases, for example energy costs, the company anticipates an improved outcome for the next financial year and anticipates an outcome for the first half of full year 2024 approximately in line with the second half of 2023.’

Leisure analyst Gregg Johnson at Shore Capital reckons this implies an annualised 2024 pre-tax profit slightly ahead of his £68 million estimate.

Johnson said: ‘JDW has navigated the current inflationary environment better than we had anticipated, supported by a pub sector which is proving resilient, although on an full year 2024 price to earnings ratio of 17 and an EV/EBITDA of circa 8-tmes, we continue to see better value elsewhere across the sector.’

EV/EBITDA represents the multiple of enterprise value to earnings before interest, tax, depreciation and amortisation. 

Investors raised a glass to the continued recovery in trading and pushed the shares 8% higher to 715.5p. But they remain around 57% below pre-pandemic levels.

Head of investment analysis at AJ Bell Danni Hewson commented: ‘A key takeaway from Wetherspoons’ otherwise steady as she goes trading update was the news it is no longer going to be reliant on the slack offered by lenders during Covid as it brings its borrowings under control.

‘The move away from covenant waivers is a sign Wetherspoons has finally been able to put the pandemic behind it, allowing the pubs group to capitalise on an opportunity to draw in more cost-conscious punters and gain market share as a survivor in a sector which has endured an apocalyptic few years.

LOUNGERS PREDICTS RECORD COASTAL TOURISM 

All day dining venue operator Loungers (LGRS:AIM) is predicting a record year for coastal tourism as British tourists ‘fall back in love’ with traditional coastal towns.

The company says its coastal restaurants (25 sites out of 222) are performing 25 per cent better than average and that business is booming even in the winter.

The company forecasts coastal tourism will surpass £250 billion for the first time in 2023 with over 250 million trips planned.

Loungers revealed like for like sales growth of 7.4% for the year to 16 April as revenues increased 19% to £283.5 million. The group has delivered industry leading 17.6% like for like sales growth over the last three years.

Strong trading has encouraged the group to increase the pace of new openings with 34 expected to open in 2024 compared with 29 in 2023. The company believes there is scope for ‘at least’ 600 loungers across the UK, a whopping 50% upgrade on prior expectations.

Investors welcomed the positive update with the shares gaining 3.5% to 191p.

Disclaimer: Financial services company AJ Bell referenced in the article owns Shares magazine. The author of the article (Martin Gamble) and the editor of the article (Steven Frazer) own shares in AJ Bell.

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