TIDMJDW
RNS Number : 8622Y
Wetherspoon (JD) PLC
10 May 2023
10 May 2023
J D WETHERSPOON PLC
Q3 Trading Update
J D Wetherspoon plc ('J D Wetherspoon' or 'the Company'),
announces its Q3 trading update for the 13-week period up to 30
April 2023.
Current Trading
Like-for-like sales increased by 9.1% in the 13 weeks to 30
April 2023, compared to the same period in the last full financial
year before the pandemic, which ended on 28 July 2019 (FY19).
Year-to-date (YTD) sales increased by 6.4% compared to the same
year.
Sales in Easter week were the highest-ever for the company - and
sales in the current financial year are likely to be a record.
Compared to FY22, like-for-like sales increased by 12.2% in the
third quarter and by 12.7% YTD.
The last two weeks have included bank holiday weekends. The
first weekend, a May bank holiday, was exceptionally strong,
including our busiest-ever Saturday.
The second weekend, relating to the Coronation, was slightly
less strong, with a noticeably quiet Saturday, possibly benefitting
sales in the off-trade (mainly supermarkets) more than the on-trade
(mainly pubs, clubs and restaurants).
Employment and Taxes
The company employed 42,839 people as at the end of the third
quarter, an increase of 940 compared to the year-end FY19.
Wetherspoon, its customers and employees generated GBP764
million of taxes in FY19, approximately one pound in every thousand
collected by the government in that year. For details, please see
appendix 1 below.
Since sales in the current year are likely to be at record
levels, taxes are also likely to be at a record high.
The employment and tax contribution of the hospitality industry
to the UK economy is often underestimated, or ill-understood, by
the political powers-that-be. In fact, the industry contributes far
more in both areas than other, perhaps more glamorous,
businesses.
Staff Retention
In order to encourage staff retention, especially important in
the hospitality industry, the company has, for many years, offered
free shares, subject to a qualifying period, and monthly financial
bonuses, to all employees. Information in this area is provided in
an extract from our interim results, in appendix 2 below.
Food Hygiene Ratings
As we also reported in our interim results, we now have 769 pubs
rated on the Food Standards Agency's website. The average score is
4.98, with 98% of the pubs achieving a top rating of five stars. We
believe this to be the highest average rating for any substantial
pub company. In the separate Scottish scheme, which records either
a 'pass' or a 'fail', all of our 59 pubs have passed. Please see
appendix 3, below.
Free Enterprise
In the 1970s, usually regarded as a period of British economic
underperformance, the need to encourage free enterprise was
eventually acknowledged by all political parties and the
recognition continued, to one degree or another, for several
decades.
However, in recent years, the benefits of free enterprise have
often been taken for granted by politicians.
For example, in the 1970s, problems relating to "mobility of
labour", which disincentivized people from moving around the
country for employment, and difficulties in obtaining planning
permission for new businesses, were two of the main factors which
were identified by the London Business School, and others, as
impediments to UK economic growth.
The subsequent easing of planning restrictions enabled companies
like Wetherspoon to convert redundant buildings into pubs - and the
creation of a larger residential rental sector made it easier for
people to move towns, if needed.
Political parties, apparently unaware of the likely economic
consequences, are now considering a reversion towards 1970s-style
rental restrictions.
Property
In the last quarter, the company opened one pub (YTD 3 pubs) and
sold, closed or surrendered to the landlord 10 pubs (YTD 21 pubs).
Most of the pubs were smaller and older, or where the company has a
second pub in reasonably close proximity. There was a net cash
inflow of GBP4.7 million from the 21 disposals.
30 trading pubs remain on the market, or are under offer. The
company currently has a trading estate of 834 pubs.
Financial Position
As at 30 April 2023, net debt was GBP738 million, approximately
GBP67 million lower than we reported in our interim results for
FY20, immediately before the pandemic - since then, the company has
invested GBP185 million in new pubs and freehold reversions and has
raised equity of approximately GBP240 million.
The company had financial headroom of GBP241 million at the end
of the quarter.
Outlook
The chairman of JD Wetherspoon, Tim Martin, said:
"Lockdowns and associated restrictions have had more profound
and longer-lasting consequences than most economists, politicians
and commentators predicted.
"Sales in the last quarter have continued their positive
momentum, although inflation, especially in labour, energy and food
costs, remains a more intractable issue.
"In order to bear down on inflation, political parties should
encourage free enterprise, rather than a reliance on additional
regulations. A lack of understanding, among some senior
politicians, about the need to encourage a successful free market
economy, presents a real threat to the future prosperity of the
country.
"The company expects profits in the current financial year to be
towards the top of market expectations."
Appendix 1 - Extract from Wetherspoon's Interim Report, 24 March
2023
How pubs contribute to the economy
Wetherspoon and other pub and restaurant companies have always
generated far more in taxes than are earned in profits.
Wetherspoon, its customers and staff, generated total taxes in
FY19, before the pandemic, of GBP763.6 million. This equated to one
pound in every thousand of UK government revenue.
In the financial year ended 31 July 2022, the company generated
taxes of GBP662.7 million.
The table below shows the GBP5.6 billion of tax revenue
generated by the company, its staff and customers in the last 9.5
years. Each pub, on average, generated GBP6.3 million in tax during
that period. The tax generated by the company, during this 9.5-year
period, equates to approximately 27 times the company's profits
after tax.
2023
H1 2022 2021 2020 2019 2018 2017 2016 2015 2014 TOTAL
----------------
2014
to 2023
H1
----------------
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
---------------- ------- ------- ------- -------- ------- ------- ------- ------- ------- ------- ---------
VAT 177.1 287.7 93.8 244.3 357.9 332.8 323.4 311.7 294.4 275.1 2,698.2
------- ------- ------- -------- ------- ------- ------- ------- ------- ------- ---------
Alcohol
duty 81.3 156.6 70.6 124.2 174.4 175.9 167.2 164.4 161.4 157 1,433.0
------- ------- ------- -------- ------- ------- ------- ------- ------- ------- ---------
PAYE and
NIC 58.7 141.9 101.5 106.6 121.4 109.2 96.2 95.1 84.8 78.4 993.8
------- ------- ------- -------- ------- ------- ------- ------- ------- ------- ---------
Business
rates 26.4 50.3 1.5 39.5 57.3 55.6 53 50.2 48.7 44.9 427.4
------- ------- ------- -------- ------- ------- ------- ------- ------- ------- ---------
Corporation
tax 8.7 1.5 - 21.5 19.9 26.1 20.7 19.9 15.3 18.4 152.0
------- ------- ------- -------- ------- ------- ------- ------- ------- ------- ---------
Corporation
tax credit
(historic
capital
allowances) - - - - - - - - (2) - (2.0)
------- ------- ------- -------- ------- ------- ------- ------- ------- ------- ---------
Fruit/slot
Machine
duty 7.6 12.8 4.3 9 11.6 10.5 10.5 11 11.2 11.3 99.8
------- ------- ------- -------- ------- ------- ------- ------- ------- ------- ---------
Climate
change
levies 8.1 9.7 7.9 10 9.6 9.2 9.7 8.7 6.4 6.3 85.6
------- ------- ------- -------- ------- ------- ------- ------- ------- ------- ---------
Stamp duty 0.7 2.7 1.8 4.9 3.7 1.2 5.1 2.6 1.8 2.1 26.6
------- ------- ------- -------- ------- ------- ------- ------- ------- ------- ---------
Sugar tax 1.4 2.9 1.3 2 2.9 0.8 - - - - 11.3
------- ------- ------- -------- ------- ------- ------- ------- ------- ------- ---------
Fuel duty 0.9 1.9 1.1 1.7 2.2 2.1 2.1 2.1 2.9 2.1 19.1
------- ------- ------- -------- ------- ------- ------- ------- ------- ------- ---------
Carbon
tax - - - - 1.9 3 3.4 3.6 3.7 2.7 18.3
------- ------- ------- -------- ------- ------- ------- ------- ------- ------- ---------
Premise
licence
and TV
licences 0.3 0.5 0.5 1.1 0.8 0.7 0.8 0.8 1.6 0.7 7.8
------- ------- ------- -------- ------- ------- ------- ------- ------- ------- ---------
Landfill
tax - - - - - 1.7 2.5 2.2 2.2 1.5 10.1
------- ------- ------- -------- ------- ------- ------- ------- ------- ------- ---------
Employee
support
grants - (4.4) (213) (124.1) - - - - - - (341.5)
------- ------- ------- -------- ------- ------- ------- ------- ------- ------- ---------
Eat out
to help
out - - (23.2) - - - - - - - (23.2)
------- ------- ------- -------- ------- ------- ------- ------- ------- ------- ---------
Local
Government
Grants - (1.4) (11.1) - - - - - - - (12.5)
---------------- ------- ------- ------- -------- ------- ------- ------- ------- ------- ------- ---------
TOTAL
TAX 371.1 662.7 37 440.7 763.6 728.8 694.6 672.3 632.4 600.5 5,522.5
---------------- ------- ------- ------- -------- ------- ------- ------- ------- ------- ------- ---------
TAX PER
PUB 0.44 0.78 0.04 0.53 0.87 0.83 0.77 0.71 0.67 0.66 6.30
---------------- ------- ------- ------- -------- ------- ------- ------- ------- ------- ------- ---------
TAX AS
% OF NET
SALES 40.52% 38.10% 4.80% 34.90% 42.00% 43.00% 41.80% 42.10% 41.80% 42.60% 37.16%
---------------- ------- ------- ------- -------- ------- ------- ------- ------- ------- ------- ---------
PROFIT/(LOSS)
AFTER
TAX 1.3 -24.9 -146.5 -38.5 79.6 83.6 76.9 56.9 57.5 58.9 204.8
---------------- ------- ------- ------- -------- ------- ------- ------- ------- ------- ------- ---------
Note - this table is prepared on a cash basis
IFRS 16 was implemented in the year ending 26 July 2020 (FY20).
From this period all profit numbers in the above table are on a
Post-IFRS 16 basis. Prior to this date all profit numbers are on a
Pre-IFRS 16 basis
Appendix 2 - Extract from Wetherspoon's Interim Report, 24 March
2023
Bonuses and Free Shares
As indicated above, Wetherspoon has, for many years (see table
below), operated a bonus and share scheme for all employees.
Financial Bonus and free Profit after
year shares tax(1) Bonus and
free shares
as % of profits
GBPm GBPm
2007 19 47 41%
2008 16 36 45%
2009 21 45 45%
2010 23 51 44%
2011 23 52 43%
2012 24 57 42%
2013 29 65 44%
2014 29 59 50%
2015 31 57 53%
2016 33 57 58%
2017 44 77 57%
2018 43 84 51%
2019 46 80 58%
2020 33 -39 -
2021 23 -146 -
2022 27 -25 -
2023 H1 15 1 1500%
Total 479 558 51.6%(2)
--------------- -------------
(1) IFRS 16 was implemented in the year ended 26 July 2020
(FY20). From this period all profit numbers in the above table are
on a Post-IFRS 16 basis. Prior to this date all profit numbers are
on a Pre-IFRS 16 basis.
(2) Excludes 2020, 2021 and 2022.
Length of Service
The attraction and retention of talented pub and kitchen
managers is important for any hospitality business. As the table
below demonstrates, the retention of managers has improved, even
during the pandemic.
Average kitchen
Financial Average pub manager manager length of
year length of service service
(Years) (Years)
----------- -------------------- -------------------
2013 9.1 6.0
2014 10.0 6.1
2015 10.1 6.1
2016 11.0 7.1
2017 11.1 8.0
2018 12.0 8.1
2019 12.2 8.1
2020 12.9 9.1
2021 13.6 9.6
2022 13.9 10.4
2023 H1 14.1 10.6
Appendix 3 - Extract from Wetherspoon's Interim Report, 24 March
2023
Food Hygiene Ratings
Financial Total Pubs Average Pubs with highest
Year Scored Rating Rating %
----------- ----------- -------- ------------------
2013 771 4.85 87.0
2014 824 4.91 92.0
2015 858 4.93 94.1
2016 836 4.89 91.7
2017 818 4.89 91.8
2018 807 4.97 97.3
2019 799 4.97 97.4
2020 781 4.96 97.0
2021 787 4.97 98.4
2022 775 4.98 98.6
2023 H1 769 4.98 98.0
Enquiries:
John Hutson Chief Executive Officer 01923 477777
Ben Whitley Finance Director 01923 477777
Eddie Gershon Company spokesman 07956 392234
Notes to editors
1. J D Wetherspoon owns and operates pubs throughout the UK and
Ireland. The Company aims to provide customers with good-quality
food and drink, served by well-trained and friendly staff, at
reasonable prices. The pubs are individually designed, and the
Company aims to maintain them in excellent condition.
2. Visit our website: www.jdwetherspoon.com
3. This announcement has been prepared solely to provide
additional information to the shareholders of J D Wetherspoon, to
meet the requirements of the FCA's Disclosure and Transparency
Rules. It should not be relied on by any other party, for any other
purposes. Forward-looking statements have been made by the
directors in good faith, using information available up until the
date on which they approved this statement. Forward-looking
statements should be regarded with caution, because of the inherent
uncertainties in economic trends and business risks.
4. This announcement contains inside information. The person
responsible for arranging release of the announcement on behalf of
the Company is Ben Whitley, Finance Director.
5. The current financial year comprises 52 trading weeks to 30 July 2023.
6. The next trading update is expected to be the Company's statement on 12 July 2023.
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