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Wetherspoons – Solid Results, but still Facing an Uphill Battle

J D Wetherspoon has today announced results for the six months ending 29 January 2023: 

  • Like-for-like sales were up 13% compared to the same period last year and up 5% versus pre-pandemic levels
  • The group made an operating profit of £37.4m versus a profit of £63.5m pre-pandemic
  • The outlook for the full year strikes a tone of cautious optimism

Charlie Huggins, manager of the ‘Quality Shares Portfolio’ at Wealth Club, commented:

“This is a solid performance from Wetherspoons set against an exceptionally challenging trading backdrop. Like-for-like sales have proved robust and have strengthened in the last 7 weeks, despite cost of living pressures on consumers.

Wetherspoon’s commitment to low prices is keeping customers loyal, as evidenced by the robust like-for-like sales growth. These value credentials are critical, and should mean the group is better placed than many of its peers to weather a downturn in consumer spending.   

Profitability, however, remains well below pre-pandemic levels. Wetherspoon’s business model is heavily exposed to the rise in labour, energy and food costs. Unfortunately, it doesn’t have the pricing power to fully offset these cost pressures. In the current inflationary environment that means one thing – pressure on margins.

Overall, while there are reasons for optimism, 2023 is shaping up to be yet another challenging year for Wetherspoons. Higher interest rates and inflation are strangling the economy, and leading to significantly higher costs for the group. Combine this with Wetherspoons low margins and low price strategy, it means the group faces an uphill battle in the current environment.”

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