- Record Easter trading
- Full year profit to be at top end of market expectations
- Strong bank holiday trading
Pubs group JD Wetherspoon (JDW) gave an upbeat third quarter trading update after recording its best Easter week and ‘exceptionally’ strong May bank holiday sales.
Wednesday’s announcement continues the recent trend in strong like-for-like sales growth and the company now expects profit to be at the top end of market expectations.
The consensus profit for the year to 31 July is currently pitched at £47.4 million according to Refinitiv data. Expectations have fallen significantly over the last year by around two-thirds.
The share price jumped 5% to 781.5p on the latest update and has now almost doubled from the lows in October 2022.
WHAT DID MANAGEMENT SAY?
Chairman Tim Martin commented: ‘Lockdowns and associated restrictions have had more profound and longer-lasting consequences than most economists, politicians and commentators predicted.
‘Sales in the last quarter have continued their positive momentum, although inflation, especially in labour, energy and food costs, remains a more intractable issue.’
Like-for-like sales increased 12.2% in the 13 weeks to 30 April compared with 2022, taking nine-month sales growth up 12.7% and the company said it expects to notch-up record full-year sales.
Interestingly, the Coronation bank holiday weekend was slightly less strong than the May bank holiday which Martin pinned on supermarkets benefiting at the expense of pubs.
THE EXPERT VIEW
Investment director at AJ Bell Russ Mould commented: ‘If you were picking a survivor from the apocalyptic conditions faced by pubs during the pandemic then Wetherspoons might well be it. It has scale, some balance sheet heft and prominent sites as well as a cheap and cheerful offering with mass-market appeal.
‘However, the last few years really haven’t played out like that. Even as we emerged from Covid, its town and city centre locations have been a problem due to falling footfall as people work from home and a model focused on volume rather than profitability has left the company heavily exposed to rapidly rising costs.
‘As usual chair Tim Martin uses his soapbox to call out politicians and give his views on how they could tackle inflation. Pressures on household budgets could be a positive tailwind for Wetherspoons as its cheap and cheerful prices appeal to more people.’
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 (Daniel Coatsworth) own shares in AJ Bell.
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