Budget pub chain JD Wetherspoon PLC (LSE:JDW) last month announced a return to profit for the first time since the onset of the pandemic, but can it stay that way?
That is the big question in the run-up to the first-quarter results due on Wednesday, 8 November.
While chief executive Tim Martin remains spooked by the spectre of government lockdowns, saying in October’s annual report that the possibility of further restrictions is “perhaps the biggest threat to the hospitality industry”, for the coming year the company anticipated “a reasonable outcome for the financial year, subject to our future sales performance”.
Though precise forecasts were not given, like-for-like sales in August and September were up 17.3% versus 2019 and 9.9% on a one-year basis.
Barring lockdowns, inflation and reduced customer spending are the primary sector-wide headwinds.
Shareholders will be eager to see how the group is managing to pass through costs while maintaining Wetherspoon’s famously low food and drink prices.
Dividends will also be in focus; the group opted out of reinstating shareholder returns following the recent return to profit.
Broker Peel Hunt said: "The company does not expect to resume paying dividends until profits approach pre-pandemic levels. We estimate this should be in 2026 or 2027."
On average, the City remains generally bullish on Wetherspoon’s share price, with average analysts targets pointing to a 26.5% upside.