Sales rise at Wetherspoons but October sees slowdown

(Sharecast News) - Pub chain JD Wetherspoon posted a rise in sales on Wednesday as it continues to recover from pandemic restrictions, but said it had seen a slight slowdown in October.

In an update for the 14 weeks to 6 November, the company said like-for-like sales were 9.6% higher than the same period last year and 0.4% higher than the 14 weeks ending 3 November 2019.

However, it also noted that costs, especially in respect of labour, food and repairs, were substantially higher.

"Trading has been broadly in line with expectations, although October has been a slightly slower month," it said.

For the first nine weeks of the financial year, sales were up 1.5% versus the same period in calendar-year 2019. For the last five weeks, meanwhile, sales were 1.1% lower than the same period two years ago. Compared with 2021, sales were 10.1% higher for the first nine weeks and 8.9% higher for the last five weeks.

Chairman Tim Martin said: "Sales have improved since the ending of restrictions in the early part of this calendar year and are considerably above the same period in the last financial year.

"The company reported a return to positive cash flow in FY22 and anticipates a positive cash flow in the current year.

"In my comments on the full year results released on 7 October 2022, I set out various threats to the hospitality industry and these continue to apply. Those caveats aside, in the absence of further lockdowns or restrictions, the company remains cautiously optimistic about future prospects."

At 1200 GMT, the shares were down 6.2% at 458p.

Derren Nathan, head of equity research at Hargreaves Lansdown, said: "Generally sales are holding up at JD Wetherspoon, but we will need to hold our breath to find out if the more recent slowdown is a blip or a trend, as customers feel their wallets ever more squeezed. The World Cup may provide some relief, but JD Wetherspoon is not a sports led outlet.

"With an acceleration in pub disposals and efforts to make a dent its debt levels, it feels like the pub chain is battening down the hatches, and that may well be a sensible move as we enter a period of increasing economic uncertainty."

The pub chain said in its update that it had opened one pub during the period and sold five pubs, giving rise to a cash inflow of £1.9m.