Tim Martin toasts return to profit at Wetherspoons but blasts lockdowns
Tim Martin, who founded the business in the late 1970s with a single pub in Muswell Hill, London, building it up into an 800-plus chain, said the biggest threat to the hospitality industry remained the possibility of further lockdowns and restrictions. Citing research on how various countries had responded to the pandemic, Martin told investors: “As some commentators have noted, lockdowns were not contemplated in the UK's laboriously compiled pre-pandemic plans. It appears that these plans were jettisoned, early on in the pandemic, in favour of copying China’s lockdown approach - an example, perhaps, of Warren Buffett’s so-called ‘institutional imperative’ - ‘everyone else has locked down, so we will, too’.”
Annual results for the 52 weeks to July 30 revealed a profit before tax of £42.6 million, marking a big swing from a loss of £30.4m a year earlier. The company, which runs 826 pubs across the UK, including the likes of the Caley Picture House in Edinburgh and Dunfermline’s Guildhall & Linen Exchange, saw total sales rise by 10.6% to just over £1.92 billion.
Analysts said the chain will “benefit from trading down” by customers squeezed by the rising cost of living. Wetherspoons said like-for-like sales grew by 12.7 per cent year-on-year, as it benefited from a significant rise in food sales, which increased by 17.7 per cent. Meanwhile, bar sales rose 9 per cent, its hotel business witnessed an 11.8 per cent rise and there was a 26.4 per cent increase in sales through slot and fruit machines. The group said sales growth had continued in recent weeks, with like-for-like sales increasing by 9.9 per cent over the nine weeks to October 1.
Martin added: "Wetherspoon continues to perform well. The company currently anticipates a reasonable outcome for the financial year, subject to our future sales performance.”
During the year, the group trimmed its pub estate, as it sold, closed or terminated the leases of 31 pubs. It said there was a £7m cash boost after fees as a result. Wetherspoons also opened three pubs. The firm is not paying shareholders a full-year dividend.
Charlie Huggins, manager of the Quality Shares Portfolio at Wealth Club, said: “Wetherspoons seems to be moving in the right direction, following a very difficult few years. Like-for-like sales are growing, profits are recovering and debt is coming down. All-in-all, a solid performance.
“The rise in energy and food costs over the last 18 months has posed major headaches for Wetherspoons and put pressure on margins. However, inflation now appears to be moderating which should bode well for profits in 2024.”
Mark Crouch, an analyst at trading and investment platform eToro, noted: “Like one of its bottles of reasonably-priced fizz, Wetherspoons is bubbling away nicely. Across the board, the firm is experiencing strong growth - a far cry from the position it was in a year or two back, when it was still recovering from the pandemic.”
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