In its results for the year ended July 26, 2020, the FTSE 250 pubs group reported a pre-tax loss of £34.1mln compared to a profit of £102.5mln in the previous year, while revenues by tumbled 30.6% to £1.26bn and like-for-like (LFL) sales fell 29.5%.
The company’s dividend for the full year was also scrapped compared to a 12p payout last year, with the firm’s chairman Tim Martin saying the outlook for the year ahead is “even more unpredictable” than the prior 12 month period.
He noted that Wetherspoon's LFL sales in the first 11 weeks of the current year have been 15% below the same period a year ago as strong sales in the first few weeks were followed by a “marked slowdown” since the UK’s introduction of a 10pm curfew on pubs and other new restrictions.
"The recent curfew and introduction of table service only have been particularly damaging for trade, depressing sales for customers who find it too much 'faff', at the same time as substantially increasing costs”, Martin said in the results statement.
"As a result of recent changes in regulations, the outlook for pubs over the remainder of the current financial year is even more unpredictable than hitherto … the company and the entire hospitality industry need a more sensible and consistent regulatory framework in which to operate - the current environment of lockdowns, curfews and constantly changing regulations and announcements threatens not only pub companies, but the entire economy”, he added.
“Whether Wetherspoons is approaching its darkest hour – and indeed, the hospitality sector in general – remains to be seen, but the current situation is unquestionably parlous”, said Richard Hunter, head of markets at Interactive Investor. However, he added that despite the “cloudy outlook”, the market consensus on the shares has remained positive”.
“Perhaps allied to the company’s ability to contain costs and benefit from any eventual recovery in the economic fortunes of UK plc, the general view of the shares is a buy, notwithstanding that the shares may only be suitable for investors of a steely nature at present”, Hunter added.
Shares in Wetherspoon’s dropped 12.2% to 842.5p in mid-morning trading on Friday.
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