Wetherspoons swings to heavy loss as Covid curbs bite

Pub chain JD Wetherspoon swung to a heavy half-year loss as it felt the impact of Covid restrictions.

The company reported a loss before tax and exceptionals of £46.2m compared with a profit of £57.9m. Revenue slumped 53.8% to £431m as Wetherspoons was forced to close its pubs in the latest lockdowns.

Its outspoken chairman Tim Martin once again took aim at the government’s pandemic measures, warning that the future of the industry “depends on a consistent set of sensible policies and the ending of lockdowns and tier systems, which have created economic and social mayhem and colossal debts, with no apparent health benefits”.

In the 26 weeks to January 24 like-for-like sales decreased by 53.9%, the company said on Friday. Like-for-like bar sales decreased by 57.3%, food by 48.4% and fruit/slot machines by 53.7%. Like-for-like hotel room sales fell 51.8%.

“The pandemic has taken a sledgehammer to Wetherspoon’s business model, which is focused on pulling in high volumes of punters while keeping prices low. The stop start nature of the business during the crisis has seen a yo-yo effect to some extent, but overall the picture was of a sharp decline," said Hargreaves Lansdown analyst Susannah Streeter.

"Indoor drinking and eating won’t be able to resume until May 17th at the earliest, and the company is even questioning the certainty of that timeline. It is speculating that despite the successful roll out of vaccines, there could be more knee jerk reactions in government policy to the latest news updates."

Streeter noted Wetherspoons did not mention any use of the £93.7m raised in a January rights issue to buy prime locations vacated by struggling rivals during the pandemic, saying the firm "appears focused on simply weathering the ongoing storm.’’

Richard Hunter at interactive investor said: "Despite the travails, the shares have added 136% over the last year, although remain down by 22% since the relatively recent high reached in December 2019. Indeed, the market consensus of the shares as a strong hold may reflect gradually improving prospects.”