Wetherspoons cheers jump in profit gains
Pub heavyweight JD Wetherspoon has cheered a jump in profits for the first half as it attracted more cash-strapped drinkers and diners and said it still had the “potential” to reach 1,000 sites.
Founder and chairman Sir Tim Martin said the business has seen sales “continue to improve” into its financial second half. Its latest results showed that pre-tax profits surged to £36 million for the 26 weeks ended January 28, compared with £4.6m a year earlier.
Wetherspoons, which runs more than 800 pubs in the UK and Ireland, including the likes of the Caley Picture House in Edinburgh and Dunfermline’s Guildhall & Linen Exchange, benefited from a continued improvement in demand and easing cost inflation. Like-for-like sales grew by 7.4 per cent for the period, with this now 15.3 per cent ahead of pre-pandemic levels from 2019. The group recorded revenues of £991m, up from £916m a year earlier. Martin said: “Sales continue to improve. In the last seven weeks, to March 17, 2024, likefor-like sales increased by 5.8 per cent. The company currently anticipates a reasonable outcome for the financial year, subject to our future sales performance.”
The interim results came as the pub giant also confirmed it had trimmed the size of its estate further. Wetherspoons said it now has 814 pubs after selling five, terminating the lease of another five and subletting three sites. It noted: “In the last decade, there has been a reduction in the number of trading Wetherspoon pubs, which peaked at 955 in December 2015. In spite of a reduction in the overall number of pubs, sales have continued to increase - total sales are now about one third higher than in 2015.”
The firm stressed that it still believes it has the “potential” to reach 1,000 sites across the UK.
Adam Vettese, an analyst at investment platform etoro, said: “Wetherspoons continues to prove that British pub culture is resilient in the face of a crisis with profits soaring a whopping eight times year on year as cost pressures ease. The firm is continuing to open pubs and also acquiring the freehold for those of which they are a tenant, securing their footing for the longer term. There is still no mention of a dividend returning, which has not been paid out since pre-pandemic times, but as performance continues to improve there’s no doubt shareholders will be eyeing a comeback to payouts.”
Derren Nathan, head of equity research at Hargreaves Lansdown, noted: “JD Wetherspoon’s half-year results tell a story of an impressive recovery. But the strong operating profit growth reflects the lowbase to which this set of numbers were compared to. At under 7 per cent, margins are still pretty thin and there was little in the statement to help see where an improvement might come from.”