J D Wetherspoon – Recovery Slower Than Anticipated, Losses Expected
J D Wetherspoon plc (LON:JDW)’s fourth quarter like-for-like sales were 0.4% lower than 2019 levels. That comes as the recovery for draught ales, lagers and ciders was slower than anticipated, where sales were 8% lower than 2019. Spirits, cocktails, food and hotel rooms were higher than 2019 levels, as sites in city centres performed better than suburban locations.
The group spent £128m buying out 48 pubs that it previously leased, bringing the proportion of freehold pubs to 68.3% of the estate.
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Losses for the full year are expected in the region of £30m, higher than previously thought. That comes as staff costs are ‘far higher’ and the group invested more in repairs and marketing. In the next financial year, costs are expected to increase less than the current rate of inflation.
The shares 6. 3% following the announcement.
J D Wetherspoon's Sales
Matt Britzman, Equity Analyst at Hargreaves Lansdown
“The booming rebound in pub sales J D Wetherspoon’s was hoping for hasn’t quite panned out, with sales just about in touching distance of pre-pandemic levels. It looks like the older demographic’s still cautious to get out and about and that comes through in the numbers. Lagers and ales were replaced by spirits and cocktails as sales in lively city locations, with music on the weekends, performed much better than quieter, suburban, pubs.
Hefty investment in labour, repairs, and marketing to try and reinvigorate the customer base mean costs are racing higher. That’s expected to push the bottom line into negative territory at the full year mark, which is disappointing - but ultimately those costs are a necessary evil. The difficulty now, for the entire pub sector, is that drinking and eating at home looks to be sticking around longer first thought. That trend's likely to continue, as the cost-of-living crisis looks poised to accelerate the tightening of purse strings.”
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