J D Wetherspoon posts £105 million loss as sales nosedive
The pub chain’s chairman Tim Martin has been vocal throughout the pandemic about how he finds the government’s approach ‘confusing’.
Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown, comments on the loss:
“After years of steady growth, the restrictions imposed by the government to limit the spread of infection have wreaked havoc on Wetherspoon’s business model. It posted a £105 million loss in the year to July as like-for-like sales fell 29.5%. Given its pubs were forced to shut for three months during lockdown, the huge slide in sales isn’t surprising, but recovery continues to elude the company due to new hospitality restrictions.
“Founder and chairman, Tim Martin, was scathing in his criticism of the fresh wave of rules that has continued to depress sales at the group. Describing them as, ‘an ever-changing raft of ill-thought-out regulations’, Mr Martin has detailed how the 10pm curfew and table service only requirement has damaged trade and increased costs. He claims customers see the new rules as a ‘faff’ and are spending less as a result.”
Susannah comments further: “The dealing with the impact of Covid,, including extra hygiene and social distancing measures cost the company £29.1 million. In the summer as pubs reopened there was a flurry of business but that evaporated after recent restrictions were imposed, and like for like sales in the first 11 weeks of the financial year were 15% below the same period in 2019.
“The collapse in international travel has hit its airport pubs business hard and it’s now begun a consultation process over job losses and will cut 108 positions at head office.
“The company says the coming months will be very unpredictable for the sector. Maintaining high numbers of customers is key for the company given that many of its venues are large and to keep costs low, it needs to sell high volumes.
“J D Wetherspoon launched its own incentive scheme, Stay out to Help Out to try and lure in customers and it has put in covered outdoor seating areas to try and attract trade. But these innovations are a sticking plaster for the group, which is calling for a consistent framework in which to operate, warning constantly changing announcements will threaten not only pub companies but the entire economy.”