JD Wetherspoon stock fell in early trade on Friday as the chief executive Tim Martin warned of higher taxes.
The pub chain said that like-for-like sales increased by 51% and revenues rose 4.5% to £2.12 billion and profit before tax was up by 10.1% to £81 million.
As the markets opened the share price fell 3.9%.
“While revenues have finally recovered to stand 17% higher than that period, the group has 85 fewer pubs,” said Richard Hunter, head of markets at Interactive Investor.
“This results in sales per pub which have increased by 29%, but in terms of profit that progress has been largely obliterated by growth of 57.8% and 34.5% in energy and wage costs respectively.
“More broadly, the continuing closure of many pubs across the country opens opportunities for Wetherspoon, although the group is understandably cautious of opening any new pubs which may not meet its financial hurdles.”
Robyn Duffy, Consumer Markets Senior Analyst at RSM UK, comments on today’s full-year results from JD Wetherspoon, “JD Wetherspoon continues to outperform the wider UK pubs market, with revenues and profits rising year-on-year. At the heart of this success is the business’s unique value proposition, which is resonating strongly with cost-conscious consumers. The group has also benefitted from the wider contraction in the pub sector, with the number of licensed premises down around 14% since the start of the pandemic.
“A diverse mix of revenue streams is serving the business well. Drinks sales remain robust, while the food division continues to broaden its appeal across the day, with all-day breakfasts and other affordable staples proving especially popular. Hotel stays dipped this year, but that hasn’t dented overall performance. Crucially, Wetherspoons’ highly competitive pricing continues to underpin its ability to attract cost-conscious consumers.
“Capital investment has remained a priority this year, with a focus on maintaining the comfort and appeal of its estate. At the same time, the group is exploring new growth avenues through franchising, with early partnerships at Haven Holiday Parks and university student unions highlighting the potential of this low-capital, captive-audience model. Expansion into the Isle of Man further signals its intent to reach underserved markets.
“While value-driven consumers continue to favour the business, challenges remain. Rising employment costs and inflationary pressures will put margins under strain, and potential tax rises in the upcoming budget add a further layer of uncertainty. With its clear positioning as the best-value operator, consistent outperformance of the CGA RSM Hospitality Business Tracker, and plans to double its franchise estate over the next year, Wetherspoons looks well placed to extend its lead in the year ahead.”
