Results pump JD Wetherspoon shares to highest since early 2022

Reaction to these half-year numbers and outlook takes share price gains since March to 65%. ii's head of markets explains how the struggling Spoons is fighting back.

2nd October 2026 08:32

by Richard Hunter from interactive investor

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Wetherspoon (J D) (LSE:JDW) had previously warned that higher costs would place a large stain on annual profits, and the prediction has unfortunately played out, although the group remains resolute in its ambitions.

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Pre-tax profit of £58.6 million in the 52 weeks ended 26 July is 28% lower than the previous year and, at the operating level, profit of £120.2 million was 17.9% light. Higher costs were indeed the main culprit, with the group pointing to increases of £46 million to wages, £31 million to repairs and £9 million to business rates. These inevitably impacted the already wafer-thin operating margin, which declined to 5.37% from a previous 6.88%, underlining the pressure on the group’s model.

The results also provide the opportunity for the usual mantra from a chairman who has never been backwards in coming forwards. Tim Martin reiterated previous comments which have included the issues which the group feel are both crimping growth while also giving others an unfair advantage. The different tax treatment of alcohol sales in supermarkets is a case in point, alongside wrongly applied business rates and even the question of whether the lockdown was necessary in the UK at all, compared to the experience of other countries.

Indeed, even now the previous lockdown continues to leave a stain, and the share price remains 51% below pre-pandemic levels. At this latest count, revenues stand 23% higher than that period, but the group has 87 fewer pubs. This results in sales per pub that have increased by 36.6%, but in terms of profit that progress has been largely obliterated by growth of 77.4% in energy, 84.5% in repair and 64.4% in wage costs.

All is far from lost, however, even within these constraints. Revenue for the year rose by 5.2% to £2.24 billion and like-for-like (LFL) sales grew by 4.2% where the group was above the industry average for the 48th consecutive month in August. Net debt was reduced further to £715.8 million from £724.3 million, with access to liquidity and a largely freehold estate valued at £1.4 billion lessening any immediate financial concerns.

The new trading year has started well, with LFL sales having risen by 8.6% over the last nine weeks, attributed largely to the spate of good weather, where Spoons benefits from a large number of beer gardens and outside areas. The group also intends to add to its estate of 792 pubs by 15 this year en route to its medium term target of 1,000 and is maintaining its pre-tax profit guidance for this year of £74 million, in line with current market expectations. Additional opportunities may continue to arise from the failure of some of the smaller pubs immediately following the pandemic and indeed since.

Spoons has been dealt some difficult hands over the years which, for the most part, it has been resolute in turning into profit. The group’s value model leaves it continually bumping up against a wall of higher costs, which puts perennial pressure on margins and profits.

Even so, the dogged determination to fight its corner has won the brand many friends, although from an investment perspective the jury remains out on prospects. All things considered, the shares have performed extremely well under the circumstances, with a boost of 35% over the last six months in anticipation of a World Cup bonanza, which did not fully materialise.

The share price has nonetheless added 23% over the last year, as compared to a gain of 9.5% for the wider FTSE250. With much of the disappointing news already priced in, the shares have fought back again at the open, with the worst of expectations not having come to pass. Even so, until such time as a sustained recovery can be shown, the market consensus of the shares as a hold will most likely remain in place.

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