Pub chain posts first profit since COVID-19

By Louis Goss

British pub chain J.D. Wetherspoon on Friday posted its first annual profits since the start of Covid-19 on the back of an 11% uptick in sales.

The Watford-headquartered company swung back into profit for the first time since 2020 after posting pretax profits of GBP42.6 million ($51.8 million) for the 12 months ending on July 31, compared to a GBP30.4 million loss over the same period in 2022.

Shares in the London listed company (UK:JDW), however, fell by 5% in Friday's morning trading session -- having risen by 51% over the past year -- as Wetherspoons failed to match analysts expectations in posting earnings per share (EPS) of 24.7p compared to the 27p forecasted.

The FTSE 250 UK:MCX firm, which currently owns 826 pubs across the UK and Ireland, made a total of GBP1.9 billion worth of sales, as it generated average sums of GBP53,000 a week from each of its pubs, up from GBP45,300 in 2022.

The return to profitability was largely driven by a 17.7% surge in food sales and a 9% rise in bar sales, as the low-price pub chain pushed forward with efforts to draw in cost-savvy customers.

Commenting on the company's return to profitability Wetherspoons CEO Tim Martin hit out at the U.K.'s response to Covid-19 as he reiterated his belief that "the biggest threat to the hospitality industry is the possibility of further lockdowns."

The company chief executive added that Wetherspoons was continuing to "perform well" as he said the "company currently anticipates a reasonable outcome for the financial year".

The outspoken CEO's comments come after the U.K.'s lockdown measures in 2020 saw Wetherspoons post its first annual loss since 1984, when it posted a loss of GBP7,000.

Martin first launched Wetherspoons in 1979 by opening his first pub in the north London suburb of Muswell Hill, before listing the company on the London Stock Exchange in 1993, and subsequently leading the firm's fast-paced expansion.

The financial year also saw Wetherspoons give up control of 31 of its pubs, including by closing four pubs, selling 13, and terminating the leases on 14 more, bringing its total number of venues to the lowest levels since 2011.

Wealth Club analyst Charlie Huggins described the results as a "solid performance" which signals the firm seems to be "moving in the right direction, following a very difficult few years."

He added that lower rates of inflation could now "bode well" for the company's profits in 2024, as he suggested Wetherspoons' commitment to "maintaining low prices" had kept its customers "loyal."

-Louis Goss

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10-06-23 0932ET

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