JD Wetherspoon warns of ‘considerable’ cost pressures in Q3
Sales for the group have slightly rebounded despite being down by 4% against 2019
JD Wetherspoon has seen its like-for-like sales slip by 4% in its third quarter of trading against the same period in 2019, with the group warning of “considerable” cost pressures for the industry.
Sales for the group have slightly rebounded however. In its last interim statement, the pub chain indicated that like-for-like sales in the three weeks to 13 March 2022 had improved to -2.6%. In the following six weeks, to the end of the quarter, there was a further modest improvement to -1.6%. In the last two weeks of the period, like-for-like sales were slightly positive.
Like-for-like sales for Lloyd’s pubs were up 3.4%, while like-for-like room sales for its hotels during the quarter were +5.0%.
In the financial year to date, the company has disposed of six pubs while a further five pubs have been surrendered to landlords following lease expiries. In addition, three leasehold pubs have been closed, in anticipation of lease expiries. The disposals and surrenders gave rise to a cash inflow of £6.3m.
Chairman of JD Wetherspoon, Tim Martin, said: “Since Covid restrictions ended, sales have improved, as previously reported. As many hospitality companies have indicated, there is considerable pressure on costs, especially in respect of labour, food and energy. Repairs are also running at a higher rate than before the pandemic.
“The company anticipates a continuing slow improvement in sales, in the absence of further restrictions, and anticipates a “break-even” outcome for profits in the current financial year. Since 13 March, the company has returned to profitability and to a positive cash flow, and is cautiously optimistic about the prospect of a return to relative normality in FY23.”
He added: “The biggest threat to companies in the hospitality, tourism and related sectors is the possibility of future lockdowns and restrictions. These sorts of actions were never previously contemplated in the nation’s history – or, indeed, in the government’s own pre-pandemic plans. Many people, including those in the government and the medical establishment, believe that the UK response to Covid, which included a number of prolonged national lockdowns, was a success.
“This view is called into question by the outcome in Sweden, a more urbanised country than the UK, which did not lock down – and which appears to have had better health results. “The collateral damage from lockdowns has yet to be quantified, but the economic cost, approximately half a trillion pounds, financed largely by “money printing” by the Bank of England, is a direct cause of the current inflationary crisis.”
