Pub operator JD Wetherspoon reported its full-year results today, and it’s clearly doing a lot better than the industry as a whole. Although it took a hit to its bottom line from a write-down in the value of its pubs, it still managed to post sales of £955m – the highest total since the company’s inception – and like-for-like sales growth of 1.2%. During a recession which is claiming 50 pubs a week, that’s a pretty strong showing – and it proves how well its offering is tailored to the current climate. Although its £1 pints and cut-price food are probably part of the reason why so many smaller operators are going out of business…
Wetherspoon hasn’t escaped the ordure entirely. As a big landlord, it suffered like everyone else from the collapse in property prices, forcing it to write off £20m from the value of its pub portfolio. But it’s been trying to weather the storm by finding efficiencies across all areas of its business, including staff costs (which might include employing fewer bar staff, judging by MT’s last visit) and energy bills. It’s also now selling over 700,000 breakfasts a week, which means its pubs are raking in cash all day every day. So although it’s been slashing drink prices to get the punters through the doors – including a £1 pint, which caused much consternation – it actually managed to boost pre-tax profits by 13% to £66m (falling to £45m after the write-down).
All of these numbers were better than expected, which is why Wetherspoon’s share price inched up again today – despite confirming that it wouldn’t be paying a dividend, in an effort to preserve cash. The stock is currently up over 80% for the year, which shows how much investors like its value (i.e. cheap-and-cheerful) model. In fact, the company might even look to cash in on that soon: it said today that it was considering a range of financing options to wipe out its £400m debt pile.
So all in all, Wetherspoon boss Tim Martin has plenty to be cheerful about. His company now has over 700 pubs in the UK – it opened 39 last year, and is planning for a similar number this time round – and is on course for revenues to break through the £1bn barrier before long. Although we suspect that struggling smaller pub operators, who can’t compete with it on price, will be feeling less positive about that...
In today's bulletin:
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Wetherspoon still merry after record sales
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