24th Mar 2023 08:53
(Alliance News) - JD Wetherspoon PLC on Friday said it swung to a half-year profit in line with improving revenue performance, while it expressed cautious optimism about further progress in the financial year and beyond.
Shares in JD Wetherspoon were up 6.9% to 621.13 pence each in London on Friday morning.
In the 26 weeks that ended January 29, the Watford, Hertfordshire-based pub and hotel chain said pretax profit, after separately disclosed items, was GBP57.0 million, swinging from a GBP13.0 million loss a year earlier. The separately disclosed items refer to additional finance income, costs and property losses.
This was because revenue was also up 13% to GBP916.0 million from GBP807.4 million.
JD Wetherspoon compared its results to the equivalent period in 2019 pre-pandemic. Pretax profit after separately disclosed items was up 17% from GBP48.6 million, while revenue was up 3.0% from GBP889.6 million and like-for-like sales was up 5.0%.
Basic earnings per share was in the first half of its financial 2023 was 29.4p, swinging from a loss per share of 9.0p, but down 20% from 36.8p in the equivalent period in 2019.
It opted not to declare an interim dividend, unchanged from a year earlier and having not done so since 2019, when it declared a return of 4.0p per share.
"Trade for the last seven weeks was 9.1% above the equivalent period in [financial] 2019 and 14.9% above the equivalent period in our last financial year. As reported last year, the company has a full complement of staff, although the labour market is competitive, with unemployment, in spite of economic problems, at approximately its lowest level in the last 50 or so years," said Chair Tim Martin.
"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."
Martin also lamented that "pubs pay far more [value-added tax] and business rates per pint than supermarkets", despite UK Chancellor Jeremy Hunt's recent pledge in the spring budget to reduce the duty on draught products in pubs by up to 11p lower than the duty in supermarkets. This will not come into effect until August 1, however.
Looking ahead, JD Wetherspoon said it is "cautiously optimistic" about further progress in the current financial year and beyond.
Martin cited a "substantial improvement" in sales and profit and a strengthened balance sheet, compared to both last year and the pre-pandemic period, as cause for the positive outlook.
Within the wider retail sector, food sales improved in February, with volumes increasing 0.9% from January, according to the latest figures from the Office for National Statistics on Friday.
But this affected the hospitality sector, according to Hargreaves Lansdown analyst Sophie Lund-Yates.
"It seems consumers were ringing more items through tills because of a pull-back in spending in pubs and restaurants because of cost-of-living pressures," she said.
Overall, UK retail sales continued to increase in February, pushing them back above pre-pandemic levels, increasing 1.2% in February from the previous month, following a rise of 0.9% in January.
By Greg Rosenvinge, Alliance News reporter
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