JD Wetherspoon warns of full-year losses amid ‘laborious’ recovery
After investing heavily in labour, repairs and marketing, the group expects FY22 losses to be higher than expected at a loss of £30m
JD Wetherspoon has warned it is expecting an annual loss of £30m in its upcoming full-year results, as recovery for many businesses has been “slower and more laborious” than first anticipated.
After investing heavily in labour, repairs and marketing, the group expects FY22 losses to be higher than expected, as despite the fact sales are now roughly in line with 2019, labour costs were “far higher” over the period.
It comes as like-for-like sales in the first 11 weeks of its fourth quarter were -0.4% compared to the same pre-pandemic period in 2019. This still marked an improvement compared to the previous quarter, when sales were minus -4%.
Sales of spirits (4.4%), cocktails (18.6%), food (2.1%), hotel rooms (8.4%) and fruit/slot machines (16.6%) were positive in the quarter, but sales of draught ales, lagers and ciders, historically the largest contributors to pub sales, were 8.0% below 2019.
Contrary to expectations, sales in major city centres, apart from London, have been stronger than suburban locations or smaller towns. For example, sales in the latest quarter in central Cardiff were up 14.9%, up 13.8% in Newcastle, up 9.5% in Nottingham, up 8.6% in Glasgow, up 8.5% in Bristol, up 8.3% in Coventry, and up 7.0% in Manchester.
Wetherspoon chairman, Tim Martin, said: “When Covid-19 struck in early 2020, most governments, with the exception of Sweden, abandoned their WHO-approved pandemic plans and copied China’s approach by ‘locking down’. There have been many unintended consequences.
“Large numbers of people, as has been widely reported, have left the workforce, mainly through early retirement. Many people now work from home, rather than from offices, which has had a significant impact on transport and hospitality businesses, among other examples.”
He added: “The ‘fear factor’, used by governments to encourage compliance with lockdowns and restrictions, has also had lingering after-effects, with many people remaining cautious about leaving their homes. Inflation, mainly a result of the ‘money printing’ which was activated by governments and central banks to finance lockdowns, has proved to be far higher and more intractable than anyone anticipated.
“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.”
