The results statement from pubs group JD Wetherspoon PLC might contain some trading details, in between the ranting from chairman Tim Martin.
Martin’s gripes with ‘Remoaners’ and supermarkets are well-known, but whatever issues he has with politics, “Spoons” is expected to report a solid year when it publishes results on Friday.
In fact, the British pub chain lifted its full-year expectations not once but twice over summer, despite post-Brexit concerns that higher food and drink prices and stagnant wage growth could weigh on the pub industry.
Because of those updates we already know that like-for-like (LFL) sales will grow by around 3-4% year-on-year, while margins are expected to improve to between 7.6% and 7.8% compared with 6.9% in 2016.
Martin has often cautioned that like-for-likes will have to grow by another 3-4% in the current financial year for Wetherspooon to maintain its profit levels, so investors will be interested to see how the business has fared so far in the opening couple of months.
Numis Securities reckons every percentage point increase in LFLs increases earnings per share (EPS) by 10%.
“We expect an EBIT [earnings before interest and tax] margin at the top of the guided range (7.6 to 7.8%), which implies £128m of EBIT (+17%) and 63.6p of EPS (+45%),” Numis said.
“We note that consensus estimates imply an EBIT margin of 7.7%, although we perceive buy-side expectations are already at the top of the range. The step change EPS in FY17 reflects lfl sales growth well above industry average and a pick-up in margin from an historic low in FY16 as the company has raised prices to close the substantial gap vs competitors.”
It goes without saying that one eye should also be kept on Martin’s personal commentary which traditionally accompanies updates and results.
Traditionally this has chiefly consisted of a rant about the unfair tax treatment of pubs companies compared to supermarkets, but recently has extended to include Martin’s views on Britain’s detachment from Europe.
Significant announcements expected
Finals: JD Wetherspoon PLC (LON:JDW)
Trading update: Investec PLC (LON:INVP), SThree PLC (LON:STHR)
Economic data: US retail sales, US industrial production, US Empire State manufacturing survey