The Diamond Jubilee, Euro 2012, and the Olympics supported robust sales growth at pub group JD Wetherspoon. Like-for-like sales rose 3.2 per cent in the 12-month period while, in the six weeks since the July year-end, they've soared 8.4 per cent. But with profit margins under pressure, the shares look up with events.
Underlying bar sales rose 2.8 per cent, while underlying food sale grew 4.8 per cent. But rising costs are hurting - maintenance costs alone jumped 20 per cent to £44.6m - and the underlying operating margin fell from 9.5 per cent to 9 per cent. There was also a raft of one-off hits which held back reported profit by £13.5m, including a £7.8m impairment of pub assets and a £2.2m provision against onerous pub leases.
Wetherspoon's management says the price advantage enjoyed by supermarkets is another worry - especially the food-related 20 per cent VAT charge that pubs pay. And while 40 pubs were opened in the financial year, bringing the estate to 860, just 25 new openings are expected by July.
Broker Numis Securities has upped its forecast by 4 per cent and now expects current year pre-tax profit of £73.2m and EPS of 41.7p (2012: £72.4m and 41.3p).
JD WETHERSPOON (JDW) | ||||
|---|---|---|---|---|
| ORD PRICE: | 482p | MARKET VALUE: | £607m | |
| TOUCH: | 481-482p | 12-MONTH HIGH: | 490p | LOW: 367p |
| DIVIDEND YIELD: | 2.5% | PE RATIO: | 14 | |
| NET ASSET VALUE: | 135p | NET DEBT: | 312% | |
| Year to 29 Jul | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 0.91 | 54.3 | 25.2 | 12.0 |
| 2009 | 0.96 | 45.0 | 18.2 | nil |
| 2010 | 1.00 | 60.0 | 30.2 | 12.0 |
| 2011 | 1.07 | 61.4 | 35.4 | 12.0 |
| 2012 | 1.20 | 58.9 | 35.6 | 12.0 |
| % change | +12 | -4 | +1 | - |
Ex-div: 24 Oct Payment: 29 Nov | ||||
