Pub chain JD Wetherspoon's sales jump ahead of pre-pandemic levels

The business, which has been heavily exposed to rising costs for energy, food and labour, said its pre-tax profit shrank by more than 90 per cent to £4.6m in the first half, from £50m in 2019.

Nevertheless, it means it returned to profit after suffering a loss during the pandemic.

Tim Martin, Wetherspoon’s chairman, said: “Supply or delivery issues have largely disappeared, for now, and were probably a phenomenon of the stresses induced by the worldwide reopening after the pandemic, rather than a consequence of Brexit, as many commentators have argued.

“Inflationary pressures in the pub industry, as many companies have said, have been ferocious, particularly in respect of energy, food and labour.

“The Bank of England, and other authorities, believe that inflation is on the wane, which will certainly be of great benefit, if correct.

“Having experienced a substantial improvement in sales and profits, compared to our most recent financial year, and with a strengthened balance sheet, compared both to last year and to the pre-pandemic period, the company is cautiously optimistic about further progress in the current financial year and in the years ahead.”

Commenting on the results, Charlie Huggins, manager of the ‘Quality Shares Portfolio’ at Wealth Club, said: “This is a solid performance from Wetherspoons set against an exceptionally challenging trading backdrop. Like-for-like sales have proved robust and have strengthened in the last seven weeks, despite cost of living pressures on consumers.

"Wetherspoon's commitment to low prices is keeping customers loyal, as evidenced 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 a downturn in consumer spending.

“Profitability, however, remains well below pre-pandemic levels. Wetherspoon’s business model is heavily exposed to the rise in labour, energy and food costs.

"Unfortunately, it doesn’t have the pricing power to fully offset these cost pressures. In the current inflationary environment that means one thing – pressure on margins.

Mr Huggins added: “Overall, while there are reasons for optimism, 2023 is shaping up to be yet another challenging year for Wetherspoons. Higher interest rates and inflation are strangling the economy, and leading to significantly higher costs for the group.

"Combine this with Wetherspoons low margins and low price strategy, it means the group faces an uphill battle in the current environment."

The hospitality sector was badly affected by the pandemic, when Government-imposed lockdowns forced many pubs and restaurants to close for months. ​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​