JD Wetherspoon PLC (LSE:JDW)’s upbeat third-quarter trading update reflects improving conditions across the UK’s pub sector, analysts say.
Citing strengthening demand for drinks from Guinness vodka and coffee, Spoons said on Wednesday that profit for the full year should be at the top end of expectations.
This would mark the pub chain’s second year in profit-making territory since the pandemic after lockdowns dealt a heavy blow to Wetherspoons and rivals.
Analysts noted the update echoed a wider narrative of improving trends across the industry, though.
“Encouragingly, trading conditions appear broadly stable,” Shore Capital analysts commented.
“Recent updates from both Carlsberg and Heineken [have pointed] to modest volume growth in the UK.”
Victoria Scholar, of interactive investor, also highlighted “resilient demand” across the sector, even though cost pressures from wages and energy remain.
Spoons, in particular, “has proven that customers still enjoy visiting its pubs and remain willing to spend despite cost-of-living pressures,” she said.
Indeed, the rate of pub closures has slowed over the start of this year against 2023, according to CGA’s May hospitality report.
An average of eight pubs closed a day last year, the group noted, but this had fallen to four a day during the first quarter of 2024.
“After a tough year, there are grounds for very cautious confidence about a better 2024,” CGA wrote.
That said, Wetherspoon’s generally lower pricing could still see the chain gain market share, Jefferies analysts said, as higher prices continue to prompt some to trade down.
Wetherspoon shares climbed 2.6% to 746.45p on Wednesday.