Pub chain owner JD Wetherspoon saw sales outperform pre-pandemic levels in its first half, but the company still faces several headwinds as it looks to return to pre-Covid profit levels.
Revenue grew by 5% to £916mln compared to 2019’s £890mln, largely driven by a return of its older demographic who may have been initially hesitant to return after the pandemic.
Despite the company increasing prices by around 7.5% in February demand continues to bolster sales as the pub chain stated that 2023 trading has been improving.
The Watford-based company added it was back in the black, but underlying profits are still less than 10% of the £50.3mln the group took home in the first half of its 2019 financial year.
The FTSE 250 constituent reported operating margins at 4.1% compared to 7.1% in 2019, as inflationary costs continue to squeeze the business.
Wetherspoon remains 1%-2% behind the national inflation rate due to a long-term drink supplier agreement that is believed to be capped.
Looking past the 2023 financial year the company faces extended pressure when its energy cost hedging ends in September.
The hospitality company is expecting to see an increase of £40mln in expenditure when it switches to paying market prices.
The business is at full employment right now, but when the national living wage increases on 1 April it can expect increased pressure on its labour costs.
It added that a dividend is unlikely to be reinstated for a couple of years until profitability reaches pre-pandemic levels.
Wetherspoon shares are currently up close to 10% on Friday after they opened at 602p.