Interactive Investor

ii view: Wetherspoon prepares for full-year loss

9th July 2021 15:42

Keith Bowman from interactive investor

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The shares are up 5% year-to-date compared to nearly 12% for the FTSE 250 index. We assess prospects.

Trading update to 4 July

  • Expects to make a loss for the year ending 25 July 2021
  • Expects sales to the end July 2022 to be inline with that of the year ending July 2019
  • Liquidity was £224 million
  • Net debt of £865 million

ii round-up:

Founded in 1979 in North London, JD Wetherspoon (LSE:JDW) today employs over 37,000 people.

Headquartered in Watford, Hertfordshire, it operates 860 pubs and around 60 hotels connected to its pub outlets. 

For a round-up of these latest results, please click here

ii view:

A total of 850 of its pubs were open on 4 July out of a total of 860. Airport boozers accounted for most of those shut. The pre-tax loss for the first half to the 24 January, when its outlets were closed for much of the time, came in at £46 million. Outlet closures over the second half due to the virus have also been significant, with management unsurprisingly pointing towards a full-year loss for the year to 25 July 2021.  

For investors, Covid-19 uncertainty remains high. Virus cases in the UK are rising again and concerns regarding the Delta variant persist. The dividend remains suspended and net debt of just over £800 million compares to a stock market value of £1.5 billion.

On the upside, the vast majority of its outlets are now back trading, with Covid restrictions set to ease further in the near future. Wetherspoon raised £93.7 million in new equity in January, liquidity stands at £224 million and weekly cash burn earlier in the year, when its pubs were closed, was around £4.1 million, giving a sound financial position. An uncertainty economic outlook could also see its value offering further elevated by consumers going forward. In all, the risk-reward balance remains uncertain, and much will depend on business over the summer months and whether we see further Covid lockdowns come the autumn.

Positives: 

  • Liquidity of over £200 million
  • Value customer offering

Negatives:

  • Covid clouded outlook
  • Suspended dividend payment

The average rating of stock market analysts:

Buy

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

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