7th Jul 2021 08:53
(Alliance News) - JD Wetherspoon PLC on Wednesday said a recent rebound in sales was stopped in its tracks due to the pub chain largely not televising the UEFA Euro football matches.
In addition, the FTSE 250 company warned that it may be forced to boost the prices of its meals, hitting out once again at the "unfairness" of UK government VAT rules.
Wetherspoon said that 850 of its 860 pubs have now reopened following the easing of lockdown restrictions, but it still expects a loss for its year ending July 25.
Between April 12 and May 16, when only outdoor dining was permitted, like-for-like sales were down 49% from two years earlier. During those weeks, 500 of its pubs were opened.
The like-for-like decline tempered to 15% between May 17 and July 4, when pubs were allowed to provide indoor dining. It improved further between May 17 and June 10, before the start of the delayed Euro 2020 football championships. Like-for-like sales during that three-week period were 8.1% lower on a two-year basis.
However, since then, like-for-like sales have tumbled 21%.
"Apart from a limited number of exceptions for individual matches, Wetherspoon pubs have not televised UEFA Euro 2020 football matches," the company explained.
"Trading has been helped by the addition of outside seating. Landlords, landowners, and local and licensing authorities have been extremely flexible in accommodating extra outside space - which has helped Wetherspoon and the licensed trade generally."
The ubiquitous pub chain opened two new sites over the past six months, one in Headingley, a suburb of Leeds, and another in Northallerton, North Yorkshire.
Its has a pipeline of 75 projects, including 18 new pubs and 57 extensions. Under plans flagged back in March, it expects to invest a further GBP750 million to open 15 new pubs and enlarge 50 existing ones each year for 10 years, creating 20,000 new jobs.
Wetherspoon said its financial position is "sound". It had net debt of GBP865 million as of Sunday, which is expected to be reduced to GBP833 million by the end of the company's financial year at the end of this month.
Chair Tim Martin added: "The company continues to expect to make a loss for the year ending 25 July 2021. In a trading update of 19 January 2021, the company's principal 'scenario' estimated sales in the financial year starting 26 July 2021 to be in line with financial year 2019, which remains our current best estimate, on the basis that restrictions are ended, as the government currently intends."
Wetherspoon warned it will have to increase food prices by around 40 pence per meal.
"One area of undoubted unfairness, which creates economic distortions, relates to VAT. Supermarkets pay zero VAT on food, but pubs and restaurants pay 20%, in normal circumstances," the company said.
UK Chancellor Rishi Sunak plans to raise VAT for the hospitality industry to 12.5%, with the reduced 5% rate, introduced due to Covid-19, ending in September. The rate will then be hiked to 20% in April of next year.
The company added: "The main impact of tax inequality is on high streets and town and city centres, which heavily depend on a diversity of prosperous hospitality businesses for economic, social and employment success.
"Some of the major licensed trade companies have not, in the past, campaigned for tax equality, possibly due to their historic association with brewers - supermarkets are most brewers' biggest customers."
Wetherspoon shares were 0.2% lower at 1,236.00p each in London on Wednesday morning.
By Eric Cunha; [email protected]
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