Tim Martin, the multi-millionaire boss of JD Wetherspoon PLC (LON:JDW), has told so-called ‘Brexit gloomsters’ to “put a sock in it”.
The six foot six inch ‘giant of the pub industry’ has long been known for his Eurosceptical views and was a vocal supporter of Britain’s decision to leave the European Union last year.
‘No need for Brexit clarity just yet’
He has recently criticised the government and various media outlets for showing their hands too early, which he thinks reduces the chances of getting the best possible deal from the Brexit negotiations.
“As any buyer of a house or car knows, if you want something too badly, you will pay a very high price - especially if your desire is obvious to the counterparty,” said Martin in the pub chain’s pre-close trading statement.
“The basic principle of obtaining a good deal is that you need an alternative plan…so a viable alternative has [to] be the cornerstone of the government's position.”
‘Don’t believe the media furore’
Martin has often accused economists, journalists and politicians of engaging in “project fear”, with the head of the Confederation of British Industry, Carolyn Fairbairn, getting some more stick today.
“The public's message to Carolyn "We're all doomed" Fairbairn…and other gloomsters is: put a sock in it. We'll do well with or without a free trade deal, so stop tying the hands of our negotiators, who are doing their best to achieve a respectable outcome.”
Back to business: sales, margins increase
While Martin may have some issues with politics, his business is ticking over quite nicely.
Despite post-Brexit concerns that higher food and drink prices and stagnant wage growth could weigh on the pub industry, ‘Spoons has managed to grow sales this year.
The value pub and hotel operator’s financial year runs until the end of this month, but for the 50 weeks to 9 July like-for-like sales increased by 3.9% and total sales inched up by 1.9%.
Analysts’ fears that the margins may come under some pressure in the second half didn’t quite materialise, with Wetherspoon expecting to record a full-year operating margin of between 7.6% and 7.8% (versus 6.9% in 2016 and 8.1% in the first half of 2017).
The group has opened nine pubs – likely ten come the end of July – since the start of the current financial year and has sold or closed 38. Those closures and disposals will likely result in a one-off, non-cash loss of £24mln.
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“Sound” financial position
Wetherspoon told investors that it remains in a “sound financial position”, with net debt at the end of the current year forecast to be around £715mln.
The company has bought back 3.4mln shares since the start of the year, at a total cost of £31mln.
Speaking of purchases, ‘Spoons also snapped up the freeholds of 44 properties which it previously rented. It has spent £89.5mln on these freeholds since last August.
Similar like-for-like growth required next year
Given the well-documented rising costs Spoons has faced of late (business rates, utility taxes, excise duty and labour costs), Martin reckons it needs similar like-for-like growth next year to maintain profits.
“Sales have been good in the last 11 weeks (LFLs up 5.3%), probably helped by unusually good weather.
“As previously stated, the company anticipates that like-for-like sales of about 3 to 4% will be required to maintain profits at this year's levels in our next financial year.”
Full-year results for the 12 months to 30 July will be published on 15 September.