JD Wetherspoon PLC (LSE:JDW) said the ending of COVID restrictions has brought a return to more normal trading patterns in recent weeks.
The pubs group revealed in its half-year results to 23 January 2022 that like-for-like (LFL) sales were down 11.8% on the corresponding pre-COVID period two years earlier. Like-for-like bar sales decreased by 12.7%, food sales by 11.1% and slot/fruit machine sales by 9.8%. Hotel room sales increased by 6.6%.
In the first four weeks of the second half of the current financial year, LFL sales were down 12.4% on two years earlier; however, in the most recent three-week period, to 13 March 2022, sales improved and were just 2.6% lower than the equivalent period in 2019 [sic], the company said.
Cash sales per week during this three-week period have been around 10% above the depressed levels of December 2021, indicating an improving trend.
Total sales in the half-year period fell 13.5% compared to two years earlier to £807.4mln.
The unaudited pre-IFRS16 loss before tax and exceptional items was £21.3mln (2020: £57.9mln profit); this included property losses of £1.8mln (2020: £0.2mln).
As at 23 January 2022, the company's total net debt, excluding derivatives, was £920.4mln (2020: £804.5m), an increase of £115.9mln. The half year-end net-debt-to-EBITDA (underlying earnings) ratio was 25.63 times (2020: 3.54 times).
"Inflationary pressures in the economy have been widely publicised. Nearly 70% of the company's properties are freehold, with interest rates fixed for the next decade. Most of the company's leasehold pubs have rent reviews which are fixed at levels below the current level of inflation. There is pressure on input costs from food, drink and energy suppliers, mitigated to an extent, by a number of long-term contracts. Overall, the company expects the increase in input prices to be slightly less than the level of inflation,” said Tim Martin, the chair of JD Wetherspoon.
"Draconian restrictions, which amount to a lockdown-by-stealth, are, of course, kryptonite for hospitality, travel, leisure and many other businesses. The company is confident of a strong future if restrictions are avoided. The readiness of the leaders of all the UK's main political parties to resort to lockdowns, and extreme restrictions, which were not contemplated in the UK's 2019 plans for pandemics, is the main threat to the future of the hospitality industry, but also to the economy," Martin opined.