JD Wetherspoons: Sales overtake pre-pandemic levels
Sales at JD Wetherspoon have overtaken pre-pandemic levels for the first time after a sluggish five years for the hospitality industry.
Revenues at its 794 pubs have grown 5.1 per cent in the year to date, the company told markets this morning, putting growth at the chain above the industry average.
“Sales volumes, which were very slow post-pandemic, have recently overtaken pre-pandemic levels,” Chair Tim Martin said.
“Wine, for example, has shown strong growth… Spirits have improved in recent months and whisky volumes are significantly above pre-pandemic levels,” Martin added.
Martin said that draught sales have been led by “standout performer” Guinness, while breakfast sales are “well ahead” of pre-pandemic levels.
Wetherspoons expects profit to be in line with market expectations, “notwithstanding the high tax and labour increases for the hospitality industry”.
Martin has since been vocal about the damage of recent tax rises on the industry, arguing that prices will have to go up and small operators will “suffer”.
He has said the combination of increased staffing costs and higher VAT rates for pubs compared to supermarkets “will weigh heavily on the pub industry.”
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An ‘important milestone’ for Wetherspoons
Analysts have predicted profit of around £84m for the financial year, which would represent growth of 14 per cent.
The company reported a loss in 2020, 2021 and 2022 as the hospitality industry was battered by the pandemic.
“Lifting Wetherspoons volumes above pre-pandemic levels is an important milestone and it’s encouraging to see food items follow the trend too,” Robinhood UK lead analyst Dan Lane said.
“UK consumer confidence is on the up and just hit its highest point since December. If inflation resumes its downward journey after the summer and takes interest rates with it, [JD] could get a further demand boost heading into the final stretch of the year.
“The only glaring concern is the debt pile but, for now, the market clearly thinks it’s manageable enough to look past,” Land added.
JD Wetherspoons expects year-end net debt to be £720m, with headroom of £220m.