Pub group JD Wetherspoon said on Friday sales in the first nine weeks of its financial year rose nearly 10 per cent on strong demand for its lower-than-average priced drinks and food amid a cost-of-living crisis.
Resilient customer spending has helped the hospitality industry in the UK manage pressures from high costs as they continue to recover from the pandemic lows. However, a cost-of-living crisis remains a threat as cash-strapped shoppers restrict discretionary spending.
JD Wetherspoon, which owns and operates 826 pubs across Britain and Ireland, said like-for-like sales increased by 9.9 per cent in the first nine weeks of the current financial year to October 1st.
Improving sales
The pub group said it returned to profit in the year ended on July 30th, with earnings before tax of £42.6 million pounds (€49.3 million), after three years of pandemic-related losses shy of £230 million. It reported a loss of £30.4 million in the year to July 2022.
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Wetherspoons said like-for-like sales grew by 12.7 per cent year-on-year, as it benefited from a significant rise in food sales, which increased by 17.7 per cent. Total sales jumped 10.6 per cent to £1.92 billion.
Analysts said on Friday that the chain will “benefit from trading down” by customers squeezed by the rising cost of living.
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Bar sales increased by 9 per cent, its hotel business had an 11.8 per cent rise and there was a 26.4 per cent increase in sales through slot and fruit machines.
Chairman Tim Martin said: “Wetherspoon continues to perform well. The company currently anticipates a reasonable outcome for the financial year, subject to our future sales performance.”
‘Price positioning’
During the year, Wetherspoon slightly trimmed its pub estate, as it sold, closed or terminated the leases of 31 pubs. It said there was a £7 million cash boost after fees as a result. Wetherspoons also opened three pubs.
James Wheatcroft, equity analyst at Jefferies, said: “Momentum continues into the current year. We argue that Wetherspoons’ low relative price positioning and well-located and well-invested premises will gain market share and benefit from trading down.”
Roberta Ciaccia at Investec added that the latest figures were “strong and broadly in line with market expectations”. — Reuters/PA
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