ii view: Wetherspoon prepares for full-year loss
The shares are up 5% year-to-date compared to nearly 12% for the FTSE 250 index. We assess prospects.
9th July 2021 15:42
by 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
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