Wetherspoon slumps to first annual loss as boss attacks UK Covid curbs
Pub chain JD Wetherspoon swung to its first an annual loss, blaming the UK government’s coronavirus lockdown measures, and said recent 10pm curfew had led to a 15% fall in like-for-like sales in the first 11 weeks of the current fiscal year.
The company on Friday reported a pre-tax loss of £34m compared with £102m profit a year ago. Revenue fell by a third to £1.26bn and the final dividend was scrapped. On a post-IFRS 16 basis, the loss after exceptional items blew out to £105.4m for the 52 weeks to July 26.
Wetherspoon added that it was cutting a further 108 head office jobs in addition to 130 already announced and was starting talks on cutting 450 of its 1,000 airport staff.
The news came after pub and brewing chain Marston’s said it was axing 2,150 jobs, the biggest cuts in the sector since the pandemic began. Rival Greene King last ween said it was cutting 800 jobs and closing 79 pubs and restaurants.
“The recent curfew and introduction of table service only have been particularly damaging for trade, depressing sales for customers who find it too much 'faff', at the same time as substantially increasing costs,” the company said.
Covid-19 related costs exceeded £29m, including perished stocks during the full lockdown, additional staff costs and an investment in protective equipment and hygiene measures across the chain's estate.
Tim Martin, founder of the chain famous for its cut-price alcohol and food and a financial donor to the ruling Conservative Party, accused the government of implementing “an ever-changing raft of ill-thought-out regulations”.
“These are extraordinarily difficult for the public and publicans to understand and to implement,” he said. “None of the new regulations appears to have any obvious basis in science."
“The company and the entire hospitality industry need a more sensible and consistent regulatory framework in which to operate - the current environment of lockdowns, curfews and constantly changing regulations and announcements threatens not only pub companies, but the entire economy.”
Hargreaves Lansdown analyst Susannah Streeter said Wetherspoon needed to maintain high customer numbers in order to offload large booze volumes given that many of the chains venues were large in size.
"Wetherspoon launched its own incentive scheme, 'Stay out to Help Out' to try and lure in customers and it has put in covered outdoor seating areas to try and attract trade. But these innovations are a sticking plaster for the group, which is calling for a consistent framework in which to operate, warning constantly changing announcements will threaten not only pub companies but the entire economy.’’
Interactive Investor head of markets Richard Hunter said despite the tough outlook, market consensus on Wetherspoon shares remained positive.
"Perhaps allied to the company’s ability to contain costs and benefit from any eventual recovery in the economic fortunes of UK plc, the general view of the shares is a buy, notwithstanding that the shares may only be suitable for investors of a steely nature at present," he said.