Pub group Wetherspoons’ share price has risen in midweek trade as it tipped record-breaking sales for the full year.
At 780p per share the FTSE 250 company was last dealing 4.8% higher in Wednesday’s session.
Record trade during Easter week pushed like-for-like sales 12.2% higher during the 13 weeks to April 30, Wetherspoons said. Year-to-date comparable sales are up 12.7% meanwhile.
Like-for-like sales in the third quarter were also 9.1% higher than in the corresponding quarter prior to the pandemic, the leisure giant said.
Recent strong trading means that full-year profits are expected to hit all-time highs, Wetherspoons advised.
Mixed Bank Holiday Trade
Wetherspoons noted that business during the May Day bank holiday was “exceptionally strong” and included its busiest-ever Saturday.
However, it said that trading during the more recent Coronation bank holiday “was slightly less strong” and included a “noticeably quiet” Saturday.
The company opened one new pub during quarter three, taking the total in the current financial year to 3.
But it closed 10 sites in the 13-week period, meaning that closures in the year to date now total 21. Wetherspoons said that “most of the pubs were smaller and older” or within close proximity to another pub.
The firm has announced swathes of pub closures in recent months in response to cost pressures. It currently has 834 sites in its portfolio.
“Positive momentum”
Wetherspoons chairman Tim Martin commented that “sales in the last quarter have continued their positive momentum, although inflation, especially in labour, energy and food costs, remains a more intractable issue.”
However, Martin said that “the company expects profits in the current financial year to be towards the top of market expectations.”
“Toast of the Industry”
Mark Crouch, analyst at social investing firm eToro, said that “after a challenging three years during the pandemic, Wetherspoons is proving to be the toast of the industry again, with a strong Easter performance leaving it on course for record full-year sales.”
He added that “Wetherspoons’ focus on value for money is helping it to thrive at a time when firms are having to fight hard for every pound in people’s pockets. And for that reason, we expect its financials to strengthen further once the economy is in on a more solid footing.”
Derren Nathan, head of equity research at Hargreaves Lansdown, said that the pub chain’s focus on value “is holding it in good stead as the cost-of-living crisis continues and the action to bring debt down and optimise its portfolio of pubs is the right move.”
However, he added that “top line growth won’t necessarily drive a similar uplift in profits, with Tim Martin noting that inflationary pressures had become ‘intractable’, which is likely to weigh on investors’ minds.”
Nathan said that the company’s valuation (of around 30 times forward earnings) leaves it “a little vulnerable [and] particularly if the green shoots seen in consumer sentiment don’t continue to germinate.”
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