Pub profits surge during April's sunny spell as capital increases
JD Wetherspoon expects a good year after favorable weather boosted sales and helped offset rising expenses. The pub giant reported a 5.6% increase in like-for-like sales for the 13 weeks ending April 27, with total sales up by 5%.
Despite selling seven pubs since the start of the year, the chain opened two new venues, leaving them with 795 locations in total. They aim to open four to five new pubs this financial year and around ten next year.
However, the company also spent £17 million on seven freehold reversions, where they purchase properties they were previously tenants of. Additionally, seven pubs now operate under a franchise agreement, four of which opened in the last quarter, all managed by Haven Holiday Parks.
CEO Tim Martin noted that sales had been helped by good weather. Despite a predicted outcome of approximately £1.2 million weekly in wage and tax increases, the company remains optimistic. Martin stated, "Bearing in mind that recent trading has been helped by favorable weather, the company anticipates a reasonable outcome for the financial year, notwithstanding these wage and tax increases."
Recent investments include staff facilities across 520 pubs, with 49 already completed this year. The company plans to invest in staff facilities for approximately 270 more pubs in the future, costing around £100,000 per venue. New additions to the bar, like Jaipur traditional ale, Kronenbourg 1664 Biere, and Poretti, have proved popular additions.
The firm anticipates ending the financial year with a net debt of £720 million to £740 million, with around £200 million headroom under existing credit facilities. Despite inflationary pressures and US tariff concerns, the market has largely shrugged off Wetherspoon's debt pile.
- JD Wetherspoon, despite selling seven pubs and investing £17 million on seven freehold reversions, aims to reinvest in its business by opening four to five new pubs this financial year and around ten next year.
- The company, in its recent investments, has spent resources on improving staff facilities across 520 pubs, with 49 already completed this year and plans to invest in approximately 270 more pubs in the future, costing around £100,000 per venue.
- Wetherspoon's mortgages on property purchases partly contribute to their net debt, which they anticipate ending the financial year with a net debt of £720 million to £740 million, with around £200 million headroom under existing credit facilities.
- Alongside improved staff facilities, the business has also introduced popular new additions to the bar, such as Jaipur traditional ale, Kronenbourg 1664 Biere, and Poretti.
- The positive sales growth, largely due to favorable weather, has given Wetherspoon immunity from the immediate effects of wage and tax increases, allowing them to remain optimistic about their financial year's outcome.
