JD Wetherspoon set to reveal further sales growth and strong profits

Pub chain JD Wetherspoon is expected to reveal further sales growth and strong profits this week.

The company, which runs 809 pubs across the UK, will update investors in a trading update on Wednesday July 10, ahead of its annual results.

In its previous update in May, Wetherspoons reported that like-for-like sales increased by 5.2 per cent over the 13 weeks to April 28 compared with a year earlier, with total sales up 3.3 per cent.

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The group will be hoping it will receive a boost over the summer to put it on track for stronger growth in the final quarter of the year to July.

Pub chain JD Wetherspoon is expected to reveal further sales growth and strong profits this week, amid hopes punters shrugged off the wet weather to visit their venues.  (Photo by Victoria Jones/PA Wire)Pub chain JD Wetherspoon is expected to reveal further sales growth and strong profits this week, amid hopes punters shrugged off the wet weather to visit their venues.  (Photo by Victoria Jones/PA Wire)
Pub chain JD Wetherspoon is expected to reveal further sales growth and strong profits this week, amid hopes punters shrugged off the wet weather to visit their venues. (Photo by Victoria Jones/PA Wire)

Anna Barnfather, research analyst at Liberum, predicted it will report like-for-like growth of around 6 per cent for the current quarter.

Nevertheless, total sales will be impacted by the recent disposal of some pubs, with the company exiting 18 pubs in the year-to-date, while it opened two.

Wetherspoons is expected to conclude its disposal programme in the coming months, with 17 of its pubs still on the market for sale in May.

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In its previous update, the Tim Martin-founded pub firm also said it was on track to deliver annual profits at the top of expectations after strong growth and cost efficiencies.

As a result, it is expected to post pre-tax profits close to £75m for the year.

Derren Nathan, head of equity analysis at Hargreaves Lansdown, predicted it could see some benefit from its decision to show England’s Euro 2024 matches across its pubs, despite usually shying away from showing sport.

“The England men’s football team’s arguably fortunate progress in the Euros won’t be doing bar takings any harm, but that may be somewhat offset by the wettest spring since 1986.

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Investors will be looking out for any further changes to guidance.”

Shareholders will also be looking for an update on the group’s debts, which stood at £685m at the end of April.

Mr Nathan added: “So far, it’s not made too much progress this year in bringing down debt levels.

“Positive movement on that front and clarity over future expansion plans will be key to determining whether a return to the dividend list might be on the table.”

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Earlier this year, chairman Sir Tim Martin re-iterated his long-standing complaint that pubs have to pay higher value added tax (VAT) than supermarkets.

In a January trading update, he said: “Wetherspoon, like the hospitality industry, has seen a consistent but slow recovery, following the pandemic. Although inflation is, in general, reducing, labour and energy costs are far higher than pre-pandemic.”

He said that if the cost of staff rises, that is much more likely to impact the pub sector than the supermarkets.

“The price of a pint in a supermarket is about £1, so a 10 per cent increase in labour costs (which are around 10 pence per pint) necessitates a one pence increase in the selling price to cover costs. However, for pubs, the average selling price of a pint is around £4.50. The labour per pint is therefore around £1.35 (30% of £4.50), necessitating a 13.5 pence increase in the selling price to cover extra costs.”

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