- Tim Martin points to older people staying away from pubs as driver of sales decrease
- Company still forecast to swing back to profit in 2022 financial year
As companies geared towards nights in and eating at home reported very strong momentum coming into winter, pub chain JD Wetherspoon (JDW) reported bar sales had dropped a tenth compared to 2019 in the 15 weeks to 7 November and overall sales were down 9 per cent.
Both ITV (ITV) and Marks and Spencer (MKS) reported better sales even after Britain reopened over summer and saw their share prices surge on Wednesday.
Wetherspoon reported people had not returned to all city centres, but more surprising was people still staying away from suburban pubs. “Contrary to some forecasts (including our own), trade has been positive in the centre of many, but not all, larger cities and towns - and negative in the suburbs,” the pub chain said. It reported sales were up in central Liverpool, Newcastle and Oxford and flat in Manchester, while the whole of Scotland was down on the same period in 2019. Trade in central London was down a hefty 17 per cent on two years ago.
Chairman Tim Martin said the declines had largely come from one demographic staying away. “With no music in Wetherspoon pubs (apart from 46 trading as Lloyds), a material proportion of our trade comes from older customers, some of whom have visited pubs less frequently in recent times,” he said. This was reflected in traditional ale sales tumbling by 30 per cent.
The company’s share price was down 4 per cent on the update, taking its six-month fall to just under 30 per cent.
Last month, Wetherspoon reported it had swung to a £105m pretax loss for the year to 25 July. Consensus estimates compiled by FactSet see Spoons making it back to profitability in this financial year, however, flipping back to a £101m pretax profit for the year to July 2022. The pandemic could add more difficulties in the winter months, however. Hold.
Last IC View: Hold, 1,042p, 01 October 2021
