JD Wetherspoon cuts losses but warns of 'momentous challenge' and rising costs
Pubs giant JD Wetherspoon is facing “a momentous challenge” to persuade people back into its bars after they got used to drinking at home during the pandemic, the company’s vocal founder and chairman has said.
Tim Martin revealed that while the business had cut losses significantly, it has still not managed to return to a profit since the pandemic, and sales remain lower than in 2019.
Total sales rose from £773 million to more than £1.7 billion in the year to the end of July. But sales were still behind the £1.8bn-plus the company made in 2019.
Wetherspoons - one of the UK’s biggest hospitality businesses with hundreds of pubs - revealed that pre-tax losses were cut from £167m before exceptional items last year to £30.4m this year. Before the pandemic the group generated a profit of £132m.
Martin said: “During lockdown, dyed-in-the-wool pub-goers, many for the first time, filled their fridges with supermarket beer - and it has proved to be a momentous challenge to persuade them to return to the more salubrious environment of the saloon bar.”
The group opened seven pubs during the year, and sold, closed or ended the leases on 15 others. In July the business ran 852 pubs across its estate.
Martin added: “The company has improved its prospects in a number of ways in recent financial years - we own an increasing percentage of freehold properties; the balance sheet has been strengthened; interest rates have been fixed at low levels until 2031; we have a large contingent of long-serving pub staff and underlying sales are improving.”
But he warned that the business is facing increasing costs.
Charlie Huggins, head of equities at Wealth Club, said: “2022 was another annus horribilis for Wetherspoons. The recovery from the pandemic has been slower than the group initially expected, meaning sales and profits are a long way short of where they would want them to be. And while the threat of Covid is now receding, another has reared its ugly head - inflation.
“Wetherspoons’ business model is heavily exposed to the rise in energy and food bills. While it can pass on some of these cost increases, it will be reluctant to push prices too far.”