JD Wetherspoon PLC (LSE:JDW) is likely to report improved half-year results on Friday, March 24 as the damaged pub sector looks to recover.
A recent trading update indicated sales in the six months to 22 January had grown by 13% over 2021 but were still 0.7% lower than pre-pandemic levels.
December was particularly good for the chain, with sales increasing by 21% year-on-year – 6% ahead of trade body CGA’s average estimate for growth in the sector.
Investors appear confident about the Watford-based company, with its shares bubbling up 28% so far this year.
The company outperformed rivals such as Mitchells & Butlers, up 8% this year, and Marston’s which saw a drop of 3% sparking the proposed sale of 61 of its pubs.
Spoons indicated in its last trading update, in January, that costs in labour, food, energy, and maintenance were all up versus pre-pandemic levels and could pressure profits.
Tim Martin, chairman, argued that there was a significant tax disparity between supermarkets and pubs, so it will be interesting to see whether his views have changed after Jeremy Hunt in the Budget announced cuts to draught duty.
As well as Martin's latest take on the government and Brexit, shareholders may also look for any further updates on the 35 pubs the company has listed for sale.
At the end of January, the organisation confirmed that it had sold already sold ten pubs amounting to £2.9mln in cash inflows.
Analysts at Jefferies said last month that JDW was one of its preferred picks in the leisure sector.
With its low margin model, any material change in revenue performance can make a material difference to the bottom line profitability, with "any material changes in regulation or taxes would be a significant positive" - but we will have to wait and see what is said about the budget changes.