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(Alliance News) -Â JD Wetherspoon PLC is facing a number of challenges, but Wednesday's announcement that Covid restrictions will be eased in England from next week could brighten its outlook for the second half.
Meanwhile, a spiralling cost-of-living crisis in the UK also plays to the strength of a pub chain known for its cheap drinks.
The pub operator Watford, England-based pub operator said like-for-like sales decreased by 12% and total sales dropped by 13% in the 25 weeks leading up to January 16, compared to the same period in financial 2020.
Wetherspoon said its second-quarter ending January 16 was damaged by the 'Plan B' restrictions brought in by the UK government in December. Like-for-like sales in this 12-week period decreased by 16% and total sales by 17%.
The Plan B rules will be dropped from Thursday next week, UK Prime Minister Boris Johnson told Parliament.
Wetherspoon's share price were up 2.9% to 930.00 pence each in London on Wednesday afternoon, though they remain down 21% over the past 12 months.
Chair Tim Martin said: "The uncertainty created by the introduction of Plan B Covid-19 measures makes predictions for sales and profits hazardous. The company will be loss-making in the first half of the financial year, but hopes that, with the ending of restrictions, improved customer confidence and better weather, it will have a much stronger performance in the second half."
On Wednesday, PM Johnson confirmed the Plan B measures aimed at tackling the spread of Covid-19 are to be dropped across England.
People will no longer be told to work from home and, from Thursday next week when Plan B measures lapse, mandatory Covid passes will end, Johnson said.
Wetherspoon is likely to welcome these relaxed restrictions "with open arms", said Hargreaves Lansdown equity analyst Matt Britzman.
He also highlighted Wednesday's news that UK inflation soared to a 30-year high in December, coming in at an annual rate of 5.4%.
"As wallets feel the ever tighter pinch of inflation, but many customers want to socialise again, the group's 'pile it high sell it cheap' approach should help it be more resilient. Punters may be more likely to favour its offerings over some of its more premium peers," said Britzman.
By Lucy Heming;Â lucyheming@alliancenews.com
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