Wetherspoon warns of annual losses amid 'slow and laborious' pubs recovery: reaction
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The group - one of the UK’s biggest hospitality businesses with hundreds of pubs - said it is now expecting losses of around £30 million for the year to the end of July after investing to attract and retain workers and on the wider business.
It comes as the group said the recovery for many pub firms had been “slower and more laborious” than expected, while the sector is also grappling with soaring costs and a pull-back in consumer spending due to rising inflation.
The firm’s latest trading update showed that like-for-like sales in the first 11 weeks of its fourth quarter to July 31 were 0.4 per cent below the same pre-pandemic period in 2019 - an improvement on the previous quarter, when they fell 4 per cent.
Sales of draught ales, lagers and ciders - previously the biggest driver of pub trade - were 8 per cent below 2019 levels, it revealed.
Wetherspoon said staff costs were far higher than before the pandemic, with firms across the sector having to increase wages to overcome recruitment difficulties. It added that it is now “with minor exceptions, fully staffed”.
Repair costs have also soared, with the group saying it will have spent about £99m on this in the current year, compared with £76.9m in 2018-19, due to “catch-up” work since Covid restrictions were lifted.
Tim Martin, the group’s vocal founder and chairman, said: "Wetherspoon has tried to take a long-term approach to these issues, investing heavily in the workforce, in buildings, in marketing and in contracts with landlords and suppliers, which will hopefully create a solid base for future growth. The company remains cautiously optimistic about future prospects.”
AJ Bell financial analyst Danni Hewson noted: “It appears customers want the pie but not the pint. The biggest surprise was a big slump in sales of draught ales, lagers and ciders, which perhaps suggests that people are watching their wallets and making fewer visits to the pub for a casual drink with family and friends.
“So, what can Wetherspoon do to shift more pints? Beyond slashing prices to the bone and stomaching razor thin margins, it’s hard to see any radical options for the business which would be approved by Tim Martin.
“He’s always been a fan of sticking to the same model regardless of what’s happening in the world, and simply waiting for trading to pick up again.”
Alex Smith, global sector lead for retail and leisure companies research at Third Bridge, added: “JD Wetherspoon has outperformed other chains in past recessions due to its fairly unique value proposition and ability to attract consumers downtrading from ‘posher’ pubs. However, this recession may be more difficult given today’s strong customer preference for premiumisation.”