JD Wetherspoon sees FY profits at top of market forecast

8th May 2024 07:48

(Sharecast News) - Pub group JD Wetherspoon said on Wednesday that full-year profits were set to be towards the top of market expectations as it reported a jump in third-quarter sales, boosted by sales of traditional ales and Guinness.

In the 13 weeks to 28 April, like-for-like sales rose 5.2% on the same period a year earlier, with year-to-date LFL sales up 8.3%.

Total sales were 3.3% higher in the quarter and 6.5% firmer year-to-date.

Wetherspoons pointed out that the last week of the period last year included a bank holiday weekend, whereas this year the bank holiday fell a week later. Excluding that week, LFL sales for the first 12 weeks of the period rose 6%.

Chairman Tim Martin said sales in the period continued the steady recovery from the pandemic.

"Traditional ales, which were very slow in the aftermath of the lockdowns, are increasing momentum, with Abbot Ale, Ruddles Bitter and Doom Bar showing good growth, as indeed are ales from the many small and micro brewers with which we trade," he said.

"The gods of fashion have smiled upon Guinness, previously consumed by blokes my age, but now widely adopted by younger generations.

"Also selling well among younger generations are Au Vodka from Swansea and XIX flavoured vodkas, the latter promoted by the hugely popular Sidemen."

Martin said sales of Lavazza coffee were also increasing. "Free refills are thought to be responsible for spontaneous exhibitions of breakdancing among retired customers," he said.

In the year to date, the pub chain has opened two pubs and sold or surrendered 18 to the landlord. Most of the pubs were smaller and older, or where the company has a second pub in reasonably close proximity, it said.

At 1010 BST, the shares were up 2.6% at 746.50p.

Russ Mould, investment director at AJ Bell, said: "The thought of pensioners, fuelled by caffeine, breakdancing in the aisles of Wetherspoon pubs might seem like you've woken up from a surreal dream, yet Tim Martin's tongue in cheek comments suggest it's happening across the country.

"Free refills of coffee, younger people discovering the joys of Guinness and a resurgence in real ale are among the reasons why Wetherspoon says profits could come in towards the top end of market expectations.

"The pub industry has experienced more than its fair share of ups and downs over the years, and the number of pubs has been decreasing steadily for decades. But one name has managed to keep its head above water and show the kind of resilience and stamina that a marathon runner aspires to, and that's Wetherspoon.

"Its focus on value for the customer has paid off in spades and that's a key reason why it remains one of the last men standing in the sector.

"While it cannot take full credit for the latest drinking trends, it can capture a lot of business by making sure it offers popular products at competitive prices and ensuring its pubs remain a pleasant place to visit."