- Strong full-year growth and profit recovery
- Robust trading in recent weeks
- Shares fall on profit-taking and lack of upgrade
Pubs group JD Wetherspoon (JDW) continued its post-pandemic recovery with full-year sales up 10.6% to £1.9 billion driven by strong like-for-like sales growth of 12.7%.
Momentum has continued into the new financial year with like-for-like sales up 9.9% in the first nine weeks to 2 October, but it was not enough to placate investors and the shares sank 4.5% to 665p.
Given the stock price has gained 60% in the last year, a degree of profit-taking is understandable.
HOW DID THE COMPANY PERFORM?
Sales increased by 10.6% to £1.9 billion for the 53 weeks to 31 July, with food sales showing the biggest like-for-like growth up 17.7% while bar sales increased by 9%.
Like-for-like sales were 7.4% above pre-pandemic levels, also driven by strong food sales growth of 13.7%, while bar sales lagged, increasing by just 2.1%.
Operating profit before separately-disclosed items increased from £25.7 million in 2022 to £107.1 million. Pre-tax profit came in at £42.6 million compared with a loss of £30 million last year, but still trails the £97 million generated in 2019.
Net debt excluding leases and hedging shrank by £249.8 million in the year to end the period at £641.9 million, while the book value of the company’s assets was £1.38 billion.
EXPERT VIEWS
Leisure analyst Gregg Johnson at Shore Capital said current strong trading showed the resilience of the company’s model and the broader hospitality sector over the summer.
Johnson added: ‘Ahead of the update, our FY24F estimates were based broadly on a doubling of H2 FY23 operating profit (reflecting an underlying LFL of c5%).
‘Current trading is tracking above our full-year assumptions, and although comparatives do toughen as the year progresses we anticipate upside risk to forecasts.’
AJ Bell investment director Russ Mould commented: ‘There may not have been the requisite upgrades to stoke a great deal of excitement among investors but pubs group Wetherspoons still served up a solid set of results.
‘Despite the pressure on household budgets there is still a residual clamour to go out and enjoy everything which was denied to people during Covid and Wetherspoons, with its keenly-priced food and drinks, is well placed to cater for that.’
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