JD Wetherspoon PLC (LON:JDW) shares rose on Monday after the pub chain highlighted a “rapid acceleration” in its sales recently as its pubs reopened following a relaxation of lockdown restrictions.
In a trading update, the FTSE 250-listed firm said 844 of its 873 pubs have now reopened, although like-for-like bar and food sales were down 16.9% for the 44 days to August 16, 2020.
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Despite this, the company said sales have “gradually improved” with a “rapid acceleration recently” due to subsidised food, coffee and soft drinks in the early part of the week as a result of the government’s ‘Eat Out to Help Out’ scheme over August. Sales have also been lifted by extra outdoor seating.
However, the company said it still expects a period of “more subdued sales” once the Eat Out to Help Out scheme ends at the start of September.
Meanwhile, Wetherspoon's said the recent temporary reduction in VAT to 5% had helped to close the tax gap between ‘on trade’ pubs and ‘off-trade’ supermarkets, adding that if maintained this will “result in a significant increase in investment and employment in the on-trade”. The firm noted that it has proposed discussions with its lenders regarding waivers for the current financial year.
Looking ahead, Wetherspoon's chairman Tim Martin said despite the recent trading uplift the company “expects to make a loss” for the year ending July 26, 2020, after some exceptional items for the year related to the coronavirus pandemic.
Martin also questioned the viability of lockdowns in controlling the pandemic, saying there was “a debate in the scientific community, and among observers and commentators, as to whether lockdowns are beneficial in battling [coronavirus]”.
He added that he believes that “avoiding full lockdowns” was a better solution, saying Swedish government advisor Johan Giesecke had “correctly anticipated the problems of renewed outbreaks in countries placing excessive reliance on lockdowns”.
"Risk cannot be eliminated completely in pubs, but sensible social distancing and hygiene policies, combined with continued assistance and cooperation from the authorities, should minimise it", Martin concluded.
Shares in Wetherspoons were 1.3% higher at 986.8p in early deals.