JD Wetherspoon: Pub chain reports ‘standout’ Guinness sales while breakfasts rebound
JD Wetherspoon has revealed its sales rose in recent months as it reported a rebound in demand for breakfasts.
The chain, which runs 794 pubs in the UK and Ireland, said sales increased by 5.1 per cent in the three months to July 20, compared like-for-like with the same period last year.
The volume of sales recently overtook pre-pandemic levels, the company revealed, having previously reported a slow recovery across its estate.
It highlighted strong draught sales, particularly Guinness, as well as growth for wine and an improvement in spirits.
Guinness maker Diageo has consistently said demand for the Irish stout has been growing rapidly.
Good weather over the period boosted visitor numbers, with a raft of Wetherspoon pubs receiving a boost from beer gardens.
Wetherspoon’s chairman Tim Martin said: “Draught volumes are performing strongly with Guinness being the standout performer.
“On the food front, breakfasts, terribly slow post-pandemic, have recovered their lustre and are now well ahead.
“Chicken, also, has put in a good performance and volumes in recent weeks are up by about 50 per cent compared to pre-pandemic levels.”
Wetherspoon is expecting to meet its profit forecasts for the year, despite warning over the impact of higher labour costs following increases to employers’ national insurance contributions and the minimum wage.
It has previously warned it is facing a £60m hit from the higher business costs.
Nonetheless, the group has said it plans to invest in its pubs over the year ahead, including staff rooms and gardens, and hopes to open another 30 sites.
Richard Hunter, Head of Markets at interactive investor, commented: “The briefest of trading statements revealed an upbeat tone, with Wetherspoons announcing that sales had at last overtaken pre-pandemic levels.
“Unfortunately the same cannot be said of the share price, which remains 54 per cent shy of the £16.94 achieved in December 2019.
"Even so, the shares are currently on something of a run, with a spike of 25 per cent over the last three months, although over the last year the gain is more pedestrian, with a 5 per cent rise comparing to a gain of 4 per cent for the wider FTSE250.
“Favourable weather of late has led to a strong quarter, with like-for-like sales up by 5.1 per cent, and by the same amount in the year to date.
Mr Hunter added: "Bar trade has been boosted by high levels of Prosecco and Guinness sales, while on the food front breakfasts are also staging a recovery.
"This was achieved despite the challenges arising from the Budget measures, where the group previously reported rather morosely that increases in labour rates and National Insurance would add some £60m per year to its costs, equivalent to £1,500 per pub, per week.
“Elsewhere, the group confirmed its year end net debt estimate of around £720m, at the bottom of the £720m to £740m range previously estimated. Wetherspoon also remains busy on its estate, with three pubs opened and nine sold so far this year, five franchised pubs added and eight freehold reversions purchased at a cost of £19m. Wetherspoon has fought its corner for many years and has overcome some serious hurdles, but the outlook for the wider domestic economy and the higher levels of staff costs continue to weigh heavily.”