Wetherspoons cuts losses as punters return to pubs but prices set to rise
The group said sales over the past three weeks have been marginally below pre-pandemic levels as it more than halved its losses amid the continued recovery in trade.
Bosses stressed that the company, which is one of the UK’s biggest hospitality businesses with hundreds of pubs, was in a strong position, with “a full complement of staff” and is “fully stocked” despite reports regarding supply pressures.
Tim Martin, the group’s vocal founder and chairman, said the group had witnessed cost increases in its supply chain.
“There is pressure on input costs from food, drink and energy suppliers, mitigated to an extent by a number of long-term contracts,” he said. “Overall, the company expects the increase in input prices to be slightly less than the level of inflation.”
Martin said the company has benefited from the end to “draconian measures” brought in due to the pandemic.
He said: “Following a traumatic two years for many businesses and people, the ending of Covid restrictions has brought a return to more normal trading patterns in recent weeks.
“As indicated above, trade for the last three weeks was 2.6 per cent below the equivalent period in 2019, reflecting an improving trend.”
He added: “The company is confident of a strong future if restrictions are avoided. The readiness of the leaders of all the UK’s main political parties to resort to lockdowns, and extreme restrictions, which were not contemplated in the UK’s 2019 plans for pandemics, is the main threat to the future of the hospitality industry, but also to the economy.”
His comments came as the chain reported a pre-tax loss of £21.3 million for the 26 weeks to January 23, compared with a £46.2m loss over the same period the previous year.
That compares with a £51.6m profit for the same period until January 2020, before the pandemic struck.
Revenues dropped by 13.5 per cent to £807.4m compared with pre-pandemic levels, but were almost double revenues from the same period last year.
Greg Johnson, an analyst at brokerage Shore Capital, said: “We continue to be cautious over the positioning of the Wetherspoon’s estate (significant metropolitan exposure), its value-led (more price elastic customer base) and low-margin (most sensitive to cost pressures) model, suggesting recovery may take longer.”
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, noted: “JD Wetherspoon is among the companies facing an uphill battle with an onslaught of higher costs. It’s now facing price pressures from food drink and energy suppliers, as the long struggle continues to regain its pre-pandemic form, forcing it to hike the price of pints at its pubs,” she added.
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