JD Wetherspoon has reported a pre-tax profit of £42.6m having seen like-for-like sales rise 12.7% in the 12 months to July 2023.
During the period the pub group opened three pubs and sold, closed or terminated the leases of 31, reducing its estate to 826 sites.
Wetherspoon also confirmed it was in a contractual dispute with an unnamed large supplier, widely reported as AB InBev, which it said would be resolved by a legal process.
Total sales for the year to July 2023 were up 11% at £1.9b. Like-for-like sales were up 12.7% compared to 2022 with food sales growing by 17.7% and hotel rooms by 11.8%.
Wetherspoon reported that underlying profit was up from £25.7m to £107.1m, profit before tax hitting £42m compared to a loss of £30m in 2022.
Commenting on the results, Tim Martin, the Chairman of J D Wetherspoon plc, said:
“Wetherspoon continues to perform well. In the first nine weeks of the current financial year, to 1 October 2023, like-for-like sales increased by 9.9%, compared with the nine weeks to 2 October 2022.
“As we said last year, perhaps the biggest threat to the hospitality industry is the possibility of further lockdowns and restrictions.
“Those interested in the UK Government’s response to the pandemic may like to read the reports by Professor Francois Balloux, director of the UCL Genetics Institute, in The Guardian, and by Professor Robert Dingwall, of Trent University, in the Telegraph (See pages 54-56 of Wetherspoon News)
“The conclusion of Professor Balloux, broadly echoed by Professor Dingwall, based on an analysis by the World Health Organisation of the pandemic, is that Sweden (which did not lock down), had a Covid-19 fatality rate “of about half the UK’s” and that “the worst performer, by some margin, is Peru, despite enforcing the harshest, longest lockdown.”
“Professor Balloux concludes that “the strength of mitigation measures does not seem to be a particularly strong indicator of excess deaths.”
“Indeed, as some commentators have noted, lockdowns were not contemplated in the UK’s laboriously compiled prepandemic 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”.
“The company currently anticipates a reasonable outcome for the financial year, subject to our future sales performance.”
Charlie Huggins, manager of the ‘Quality Shares Portfolio’ at Wealth Club, commented:
“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.
“Despite these rising costs, Wetherspoon’s has been committed to maintaining low prices. This is helping to keep customers loyal, as shown by the robust like-for-like sales growth. These value credentials are critical, and should mean the group is better placed than many of its peers to weather any downturn in consumer spending.
“2023 was supposed to be an annuss horribilis for the UK consumer but spending has held up much better than expected. Whether this can continue into 2024, as the impact of interest rate hikes really starts to bite, remains to be seen. But all-in-all, given easing cost pressures and Wetherspoon’s value credentials, it looks well set for the year ahead.”