- Like-for-like sales slip back below pre-pandemic levels
- Company expects to report full-year loss of £23 million
- Traditional clientele slow to return
Pubs group JD Wetherspoon (JDW) said like-for-like sales for the first 11 weeks of the final quarter were 0.4% lower than pre-pandemic levels, reversing a positive trend seen in the third quarter.
The flat sales performance and higher spending on repairs and maintenance compared with 2019 means the company now expects to make full year losses of around £23 million.
This is significantly below the breakeven expected at the end of the third quarter. Investors were clearly disappointed, marking the shares down 7% to 584.5p.
The shares are down 34% over the last six months and around two-thirds below pre-pandemic levels.
DRAFT ALES DRAG
Sales of draft ales, lagers, and ciders, historically the largest contributors to pub sales continued to underperform with like-for-like sales 8% below 2019 levels.
Mitigating the poor ales performance, cocktails registered 18.6% growth and spirit sales were 4.4% ahead while slot/fruit machines sales were 16.6% higher.
City centres excluding London performed better than suburban and small towns, contrary to expectations while the 48 Lloyds pubs which attract a younger clientele generated 6% growth in the period.
It would be brave to suggest Wetherspoon has permanently lost its mojo, but compared with other pubs groups, the format appears to be struggling.
Investment director at AJ Bell Russ Mould commented: ‘One might expect Wetherspoon to benefit from customers trading down from posher pubs and looking for somewhere with cheaper bar prices.
‘In times of economic hardship, one would have also thought pubs would still pick up custom from individuals finding solace in a pint to drown their sorrows.
‘Beyond slashing prices to the bone and stomaching razor thin margins, it’s hard to see any radical options for the business which would be approved by Tim Martin. He’s always been a fan of sticking to the same model regardless of what’s happening in the world, and simply waiting for trading to pick up again.’
Travel and leisure analyst at Shore Capital, Greg Johnson said, ‘we continue to believe JDW will outlast the competition with a highly competitive and well invested proposition, although it is likely to be a long road.’
Discalimer: AJ Bell referenced in this article owns Shares Magazine. The editor of the article (James Crux) owns shares in AJ Bell.
