JD Wetherspoon set to announce sales plunge after lockdowns shut pubs
Investors in the pub group will be keen to see the full extent of the impact of November’s lockdown in England as well as tighter tiered restrictions in December when it posts its latest trading update on Wednesday January 20.
All of the budget pub group’s UK sites are currently shut as a result of the nationwide lockdown.
In November, the group said it would burn through £14 million for each month its pubs remain shut to customers across the country.
At the end of last year, chairman and founder Tim Martin lashed out at the Government for its “baffling and confusing” coronavirus restrictions as Wetherspoon reported a 27.6% plunge in first-quarter sales for the 15 weeks to November 8.
Sales are set to tumble further as a result of the November lockdown and tiered measures, with the company keeping 366 of its 872 pubs shut at the start of December after pubs were stopped from serving dine-in customers in Tier 3.
By the end of the month, all of the pub firm’s sites were within Tier 3 and Tier 4 areas and therefore forced to close.
Emma Lou Montgomery, associate director for personal investing at Fidelity International, said shareholders will have questions around when Wetherspoon can return to profit even after sites reopen.
“The hospitality sector, in general, works on such tiny margins that even being down 10% can be enough to force many publicans to call time on their pubs,” she said.
“For Wetherspoon pubs that all need to be packed out to thrive, following a variation of the pile ’em high, sell ’em cheap business model, how they can function profitably long-term with social distancing in place is the big question.”
However, Liberum’s analyst Anna Barnfather said pub groups should have reason for optimism after there was evidence of pent-up demand following previous lockdowns, alongside vaccine progress.
“We are cautiously optimistic of the easing of restrictions across England and the rest of the UK as of March/April 2021, in line with a successful roll-out of a vaccine to those most at risk,” she said.
“This provides some optimism for the sector after a difficult winter and almost non-existent festive period.
“Encouragingly, the sector saw high levels of pent-up demand for leisure activities and socialising following Lockdown 1.0, and we are optimistic that this will be the case when the sector reopens, with an even swifter recovery once health and safety concerns have minimised.”