24th Aug 2020 09:44
(Alliance News) - JD Wetherspoon PLC on Monday said it expects to make a loss in its most recent financial year, both before and after exceptional items relating to the Covid-19 pandemic and its associated lockdown.
The company also fought back against what it called "irresponsible and untrue" media reports and comments by UK members of Parliament about the pub chain's operations in the aftermath of the Covid-19 lockdown.
Wetherspoon hit out at a "large number of harmful media misrepresentations" in the national press and on social media. It said claims that it was "allowing overcrowding" at its pubs were "irresponsible and untrue".
The company took particular issue with an article in the Guardian newspaper that said "overcrowding in Wetherspoon pubs may lead to [a] Covid spike", which a local MP cited to claim that chain is "putting lives at risk".
"Wetherspoon has made strenuous efforts to adhere to government regulations and guidance," it asserted, noting visits by police and health officials to the pub in question in south London resulted in written confirmation that it had passed their risk assessment.
With the exception of a small number of development sites and pubs in airports and stations, Wetherspoon reopened all of its pubs in England, Scotland and Wales as soon as it had permission. Some of theses airport and station pubs have now reopened as well, although a few are still closed. Of its 873 total pubs, 844 are now open.
Like-for-like, bar and food sales were down 17% for the 44 days ended August 16. Sales have improved gradually but with a recent rapid acceleration thanks to subsidised food, coffee and soft drinks as well as more outside seating.
It was referring to the UK government's 'Eat Out to Help Out' scheme that give up to GBP10 off meals on Mondays, Tuesdays and Wednesdays during August.
However, Wetherspoon is expecting "a period of more subdued sales once the scheme for subsidised early-week meals and drinks ends."
Wetherspoon said it remains in a sound financial position. Net debt at the end of its financial year on July 26 is estimated to have been about GBP825 million. It also proposes to enter discussions with lenders regarding waivers for the current financial year.
Chair Tim Martin said that Wetherspoon predicts it will record a loss for its financial year ended July, before and after exceptional items, and that "some of these exceptional items will be related to the Covid pandemic".
Martin also questioned Covid-19 lockdown measures, and said that there was "debate in the scientific community" about whether lockdowns were truly beneficial in battling the pandemic.
"Many academics, including Nobel Prize winner Michael Levitt of Stanford University and Swedish government adviser Johan Giesecke, believe that they are not - and that social distancing, combined with rigorous handwashing are the practises for which there is genuine scientific evidence," he said.
Before lockdown, the pub chain had 5 positive tests among its 43,000 staff and has had 24 positive tests since reopening, with Martin noting that "the amount of testing has substantially increased".
Martin said: "Risk cannot be eliminated completely in pubs, but sensible social distancing and hygiene policies, combined with continued assistance and cooperation from the authorities, should minimise it."
In addition, Wetherspoon commended on the "much more onerous tax regime" imposed on 'on-trade', mostly pubs and restaurants, compared to 'off-trade', mostly in supermarkets. It noted that pubs and restaurants have had to pay 20% VAT on food sales while supermarkets have paid none.
Moreover, it noted that pubs have paid around 20 pence per pint of business rates compared to only 2p for supermarkets. This, it said, has led to "an increasing gap between on-trade and off-trade pricing".
Wetherspoon said: "It makes no sense for supermarkets, often operating outside town centres, to have a tax advantage. The chancellor, Rishi Sunak, has recently closed the VAT gap between the on and off-trade, by temporarily reducing VAT on food sales in the on-trade to 5%.
"If this major step towards tax equality is maintained in the long term, it will result in a significant increase in investment and employment in the on-trade," the company said.
Since the start of July, Wetherspoon has opened two new pubs, one in Leeds and another in the west Midlands.
Shares in Wetherspoon were up 1.8% at 991.50 pence in London on Monday morning.
By Anna Farley; [email protected]
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