Wetherspoon’s returns to profit for first time since Covid pandemic | JD Wetherspoon

JD Wetherspoon has bounced back to profit for the first time since the start of the coronavirus pandemic three years ago, as budget-conscious consumers flocked to the low-cost pub chain amid the cost of living crisis.

Wetherspoon’s, which runs about 830 pubs across the UK and Ireland, reported a pre-tax profit of almost £43m in the year to 30 July.

It is the first time the pub chain has reported an annual profit since 2019, when it made profits of £102m. It reported a £30m loss in its previous results.

The start of the pandemic in 2020 fuelled the first annual loss since the company was founded by Tim Martin in 1984.

The company made three consecutive annual losses – in 2020, 2021 and 2022 – totalling £230m.

“Wetherspoon’s continues to recover from the pandemic hangover which has left some stains on the business, but where progress is increasingly evident,” said Richard Hunter, the head of markets at Interactive Investor.

The company reported annual sales of £1.9bn, up 12.7% on a like-for-like basis, as cash-strapped consumers turned to its cheaper food and drink offerings.

Bar sales increased by 9% year on year, food sales soared by 16.7%, hotel room revenue increased by 11.8% and the pub chain’s slot and fruit machine operations rose by 26.4%.

Martin said trading in Wetherspoon’s new financial year has been strong, with sales up 9.9% year on year in the nine weeks to 1 October, but was more cautious about prospects for the full year.

“As we said last year, perhaps the biggest threat to the hospitality industry is the possibility of further lockdowns and restrictions,” he said. “The company currently anticipates a reasonable outcome for the financial year, subject to our future sales performance.”

The company kept a tight control of costs, which have been hit by food, energy and labour cost inflation, which rose by about £100m to £1.8bn.

The company’s operating margin was 5.6%, an improvement on the “wafer-thin” 1.5% the previous year.

“While sales may have returned to something resembling normality, the pressure on margin and profit remains evident,” Hunter said. “Wetherspoon’s has been able to pass on some of the inflationary costs without diminishing its appeal, but equally, it will be mindful that this particular strategy needs to be reined in where possible in order to maintain its no-nonsense and no-frills value offering.”