- Like-for-like sales up 5.1%
- Full-year seen in line
- Return to estate growth
Shares in pub group JD Wetherspoon (JDW) gained 23p or 3% to 803p, a new 12-month high, after the company reported a 5.1% increase in like-for-like sales for the 12 weeks to 20 July boosted by favourable weather.
In line with other hospitality firms, Wetherspoon shares have enjoyed a good run, gaining around 30% year-to-date, outperforming the 7% advance for the mid-cap FTSE 250 index.
STRONG VOLUME GROWTH
Chairman Tim Martin commented: ‘The company has benefited from favourable weather in the fourth quarter, so profits are anticipated to be in line with market expectations, notwithstanding the high tax and labour increases for the hospitality industry, which have been widely reported.’
Martin said sales volumes had recently overtaken pre-pandemic levels driven by strong growth in Villa Maria wine from New Zealand and prosecco from Italy, while whisky volumes were ‘significantly’ above 2019 levels.
Other highlights included strong sales of Guinness and chicken, which saw ‘clucking good’ demand according to Martin with volumes in recent weeks up 50% on pre-pandemic levels.
Looking ahead, Wetherspoons said it was planning to open 15 new managed pubs and the same number of franchised pubs, taking the total number of franchised outlets to 23, up from three in 2024.
BACK TO THE FUTURE
Analyst Greg Johnson at Shore Capital noted the planned new opening programme would be the highest since 2015, arresting a decade-long slide in the size of the overall estate.
‘Given the macro backdrop, this would suggest confidence in the both the model and the market. Is Spoons to become a roll out story again? asks Johnson.’
‘The Group remains a high-quality operator, with a unique consumer offering, as witnessed by its consistent robust like-for-like delivery,’ noted Johnson, who has a hold rating on the stock.
Analysts at Jefferies commented: ‘With a low-price position relative to other operators, and increased wages affecting the whole industry, we argue Wetherspoon's is relatively better placed to absorb the wage inflation and gain market share.’
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