JDW reports 10.1% growth

By Amelie Maurice-Jones

- Last updated on GMT

Tim Martin: JDW has seen 'consistent but slow' recovery from pandemic
Tim Martin: JDW has seen 'consistent but slow' recovery from pandemic

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JD Wetherspoon (JDW) has announced financial growth in its trading update for the six months ending 28 January 2024.

In the 25 weeks to 21 January, like-for-like (LFL) sales were 10.1% higher than the same period a year ago.

Bar sales increased by 11.8%, food by 7.9% and slot/fruit machines by 10.4%.

Hotel room sales rose by 3.1%.

LFL sales in the last 12 weeks were 11.1% higher than the same period a year ago, and total sales have grown by 8.4% in the year to date.

JDW chairman Tim Martin​ said: “JDW, like the hospitality industry, has seen a consistent but slow recovery, following the pandemic.

“Although inflation is, in general, reducing, labour and energy costs are far higher than pre-pandemic.

“A main issue for the pub trade is that labour costs are around 30% of sales, compared to around 10% for supermarkets."

Price disparity

He continued: “The price of a pint​ in a supermarket is about £1, so a 10% increase in labour costs (which are around 10 pence per pint) necessitates a one pence increase in the selling price to cover costs.

“However, for pubs, the average selling price of a pint is around £4.50. The labour per pint is therefore around £1.35 (30% of £4.50), necessitating a 13.5 pence increase in the selling price to cover extra costs."

Martin said the consequence of this was that increased labour costs raise the differential in prices between the hospitality industry and supermarkets.

At the same time, he added, pubs pay far higher VAT and business rates than supermarkets, further drawing attention to the price disparity.

He added: “In particular, pubs and restaurants pay 20% VAT in respect of food sales, whereas supermarkets pay almost nothing, a tax differential which is surely unfair.

“Notwithstanding these issues, JDW currently expects an outcome for the financial year in line with market expectations, and will provide further updates as the year progresses.”

In the December edition of ‘Coffer CGA Business Tracker’, which reports monthly LFL sales for pub companies, industry LFL sales were reported to be 8.8% versus 15.2% for JDW.

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LFL sales in the last three weeks of the period were up 5.8%.

Interest costs for FY24, excluding IFRS 16 notional interest, are expected to be around the same as they were in FY23 (£51m).

Debt levels at the end of FY24 are currently expected to be broadly in line with the level reported at the end of FY23 (£642m).

The company has opened two pubs in the year to date, at London’s Heathrow airport and at London Euston railway station.

Five pubs have been sold and eight leasehold pubs have either been surrendered to the landlord or sublet.

The disposals and surrenders resulted in a cash inflow of £3.8m.

The company currently has a trading estate of 814 pubs.

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