Pub groups face high taxes and a growing legislative burden, largely aimed at combatting under-age and excessive drinking. JD Wetherspoon’s defence is to broaden and improve its product offering. Accordingly, the group has managed another robust performance in the year, although profits and earnings were both considerably boosted by lower exceptionals and a more normal tax charge.
That said, drink sales - with the exception of traditional ales - were sluggish. Indeed, Wetherspoon's big success story is its breakfast offering, now available in Wetherspoon pubs from 7am. The group sells over 400,0000 breakfasts and 600,0000 coffees a week - a rise of 40 per cent. Management continues to enlarge and improve the pub estate, too. A net 44 pubs were opened during the year and Wetherspoon plans to open at least the same number this year. What’s more, business has picked-up further since end-July, with like-for-like sales having risen 1.5 per cent in the six weeks since. Still higher wages, increasing food costs and VAT increases are issues to consider.
KBC Peel Hunt expects adjusted pre-tax profits for 2011 £72.2m, giving EPS of 34.9p (2009: £33m/32.6p).
JD WETHERSPOON (JDW) | ||||
|---|---|---|---|---|
| ORD PRICE: | 435p | MARKET VALUE: | £ 605m | |
| TOUCH: | 434-436p | 12-MONTH HIGH: | 556p | LOW: 379p |
| DIVIDEND YIELD: | 2.8% | PE RATIO: | 15 | |
| NET ASSET VALUE: | 117p | NET DEBT: | 277% | |
| Year to 25 July | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2006 | 848 | 58.4 | 24.1 | 4.70 |
| 2007 | 888 | 62.0 | 31.8 | 12.0 |
| 2008 | 908 | 54.2 | 25.2 | 12.0 |
| 2009 | 955 | 45.0 | 18.2 | nil |
| 2010 | 996 | 60.5 | 29.3 | 12.0* |
| % change | +4 | +34 | +61 | - |
*Excludes 7p special dividend - both were paid in April 2010 | ||||
