Shares in JD Wetherspoon have taken a knock on news of the surprise departure of finance director Keith Down and chief operating officer Paul Harbottle.
The pub group has been fairly tight lipped about the reasons behind the departures, but many in the City are speculating that it comes down to a disagreement about strategy.
Mr Down is seen as a cost cutter who has been influential in Wetherspoon’s success at keeping margins up during the downturn. But the pub chain’s founder, chief executive and 24 per cent shareholder, Tim Martin, is seen as an entrepreneur with a track record of expanding the business during downturns.
So the surprise news is being interpreted as a sign that the group may be prepared to sacrifice margin for growth. If that is the case, it is not necessarily a bad thing, given Mr Martin’s record. But it is likely to cause anxiety and share price jitters, especially as Wetherspoon’s position at the value end of the market means margin control is key.
Broker Peel Hunt is forecasting underlying EPS for the current financial year of 35.5p and a dividend of 12.5p (2010: 34.9p/19p).
Price: 513p
When: 19 Mar 2010
Performance to date: -16%
