“We’re not really focusing our major efforts on increasing profits in every year,” JD Wetherspoon (JDW) chairman Tim Martin says, before adding that this is a medium to long-term aspiration rather than a consistent short-term goal. The pub group’s like-for-like sales increased by nearly 7 per cent over its full year, but rising costs chipped away at the pub group’s adjusted profits. These included booming wage expenditure and a 25 per cent uptick in finance costs, much of which pertained to fixed-interest swaps taken out “a few years ago” when the chairman had predicted the lifting of interest rates. Statutory pre-tax profits were helped by the fact that the comparative period saw higher exceptional property losses.
Mr Martin said that there were numerous reasons for Wetherspoon’s sales growth, likening this matrix to “a thousand components of a BMW”. These range from the length of tenure of pub staff and bonus systems to the design edge that he believes his pubs possess. Wetherspoon seeks to respond to a perceived consumer preference for character and individuality across its venues, in favour of pursuing the promotion of an all-inclusive brand. Low prices and the introduction of more food, which has recently included pizzas, have helped. The chairman speculated that recent UK regulations on fixed-odds betting terminals might have contributed to his company’s gains in fruit machines, where sales growth was 10.3 per cent.
Mr Martin characteristically used the majority of his foreword to the company’s results to lambast detractors of Britain’s decision to leave the European Union. While Wetherspoon has experimented with substituting EU-produced drinks in favour of domestic products, including replacements for Jagermeister and brandy, Mr Martin said that these efforts are now on hold. “We don’t want to be horrid to European suppliers,” he adds. The decisions taken by Prime Minister Boris Johnson are likely to have a direct impact on the wallets of Wetherspoon regulars. If the UK leaves the EU without a deal and tariffs are reduced “in a meaningful way”, the group will seek to roll out price reductions.
Peel Hunt forecasts full-year 2020 pre-tax profits and earnings per share of £103.9m and 77.3p respectively, rising to £107.7m and 80.1p in 2021.
| JD WETHERSPOON (JDW) | ||||
| ORD PRICE: | 1,558p | MARKET VALUE: | £ 1.64bn | |
| TOUCH: | 1,558-1,560p | 12-MONTH HIGH: | 1,632p | LOW: 1,051p |
| DIVIDEND YIELD: | 0.8% | PE RATIO: | 22 | |
| NET ASSET VALUE: | 301p | NET DEBT: | 233% | |
| Year to 28 Jul | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2015 | 1.51 | 58.7 | 37.9 | 12.0 |
| 2016 | 1.60 | 66.0 | 44.5 | 12.0 |
| 2017 | 1.66 | 76.4 | 52.0 | 12.0 |
| 2018* | 1.69 | 89.0 | 64.6 | 12.0 |
| 2019 | 1.82 | 95.4 | 70.6 | 12.0 |
| % change | +8 | +7 | +9 | - |
| Ex-div: | 24 Oct | |||
| Payment: | 28 Nov | |||
| *Year to 29 July | ||||
