JD Wetherspoon suspends dividend
JD Wetherspoon has suspended future dividend payments to shareholders and decided to "substantially" reduce its capital expenditure programme on new openings despite recording an uplift in sales over the festive season.
The managed operator said the move was designed to "ensure the repayment of the private placement from cash flow and existing facilities".
It said: "In normal conditions, a refinancing of the private placement on attractive terms could be relied upon, given our financial performance. However, in the present economic climate, a refinancing cannot be taken for granted and the Board therefore feels that the measures described above are prudent in the circumstances. We will continue to monitor the situation."
Wetherspoon saw like-for-like sales grow 3.7% on last year for the six week Christmas trading period (1 December 2008 to 11 January 2009), while like-for-likes in the last two weeks to 18 January have also increased 6.4%.
Like-for-likes were up 2.6% overall for the first 12 weeks of the second quarter, compared to 1.5% for the first quarter. Overall like-for-likes for the year have increased 2% and total sales 6.5% including recently opened pubs. It expects operating margin for the year to 25 January to be 1% lower on the same period last year but the same as the second half of last year.
"The Company remains in a sound financial position," it said. "The strength of our cashflow is demonstrated by a reduction in our borrowings of approximately £20m over the last twelve months, after accounting for the opening of 34 new pubs, paying dividends of £17m, and funding £6m of share buybacks. The Company's US$140m private placement is due for renewal in September 2009."
JDW has opened 21 new pubs so far this year and sold one, bringing the current number to 714. It expects to open a further 12 pubs by July 2009.
"Our sales performance and cash flow have proved to be extremely resilient in the current economic environment and a number of cost increases experienced during 2008 are starting to abate," said chief executive John Hutson.
"For example, the Company has recently agreed a new electricity supply contract from February to September 2009, which is approximately half the rate per megawatt of the previous contract from October 2008 to January 2009. As a result of these encouraging circumstances, we remain confident of the Company's prospects for the financial year ending July 2009."
