ii view: Wetherspoon confident enough to order a dividend

Full-year 2024 results to 28 July

• Revenues up 5.7% to £2.03 billion
• Adjusted pre-tax profit up 74% to £73.9 million
• Net debt of £660 million, down from £694 million in late January
• Share buybacks totalling £40 million
• Final and total dividend for the year of 12p per share (no payment in 2023) 

Chairman Tim Martin said:

"The company continues to be concerned about the possibility of further lockdowns and about the efficacy of the government enquiry into the pandemic, which will not be concluded for several years.

"The company currently anticipates a reasonable outcome for the current financial year, subject to our future sales performance."

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ii round-up:

Wetherspoon (J D) (LSE:JDW) currently operates 800 pubs across the UK and Ireland with some also offering hotel accommodation.

Headquartered in Watford, Hertfordshire, it employs 42,300 people.

For a round-up of these latest results announced on 4 October, please click here. 

ii view:

Started in 1979, Wetherspoon is known for converting unconventional premises such as former cinemas and banks into pubs. The FTSE 250 company today competes against rivals such as All Bar One owner Mitchells & Butlers (LSE:MAB), Fuller Smith & Turner Class A (LSE:FSTA) and Marston's (LSE:MARS). 

Still headed by founder Tim Martin, the group’s estate peaked at 955 in December 2015, with management again hinting at a possible return to 1,000 pubs. Bar sales over this latest financial year accounted for its biggest slug of revenues at 57%, followed by food at 38%, slot and fruit machines 3% and hotel accommodation most of the 2% balance.

For investors, likely higher alcohol tax duties at the new government’s first Budget warrant consideration. Elevated borrowing costs continue to pressure consumer spending. The weather regularly impacts customer demand and sales, while business costs including wages, energy and property repairs have all risen since the pandemic. 

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More favourably, City analysts predict like-for-like sales for 2025 will grow by around 4.4%. Investment in areas such as beer gardens and improved beer dispense systems is being made. A previously revamped food menu should now be assisting sales, while competition has eased since the pandemic given the failure of many smaller players.

The group’s value offering and return to modest dividend payments are indeed positives, but exposure to hard-up consumers, thin profit margins and potential tax rises do offer grounds for caution. The share price trend this year has also been downward. A recovery at Wetherspoon depends on getting more punters through the door, so watch for events that make the UK consumer feel financially better off. Lower interest rates should help. 

Positives: 

• Value customer offering
• Majority freehold properties

Negatives:

• Tough economic backdrop
• Elevated costs

The average rating of stock market analysts:

Strong hold