‘Year of progress’ for JD Wetherspoon as pre-tax profits hit record levels

For the 52 weeks to 28 July, revenues grew by 7 per cent to £1.28bn and operating profit was up by 3.7 per cent to £111.3m. JD Wetherspoon’s chairman Tim Martin was happy with the results, but was keen to note the barriers to growth that remain for the pub industry.

“It is unsustainable to have far higher taxes for the pub industry than those for supermarkets,” said Martin. “Already, 10,000 pubs have closed and many others are suffering, through insufficient investment. In particular, there should be VAT equality for pubs, restaurants and supermarkets.”

Wetherspoon, along with many other pub and restaurant groups, is supporting Jacques Borel’s VAT Club on Tax Parity Day​​- Wednesday 25 September – by offering a one-day 7.5 per cent reduction in its prices to publicise this inequality.

The Hertfordshire-based firm opened 29 pubs during the 12-month period, with three sold, resulting in a total estate of 886 pubs at the financial year end. It is planned to open c30 pubs in the current financial year.

Foolish ideas​

As an indicator for future sales growth, Wetherspoon’s like-for-like sales have increased by 3.6 per cent in the six weeks to 8 September. “Overall, the company is aiming for a reasonable outcome in the current financial year,” added Martin.

He went on to claim that it is a ‘strange paradox’ that companies in the pub business which have complied least with governance guidelines seem to have fared the best.

“Family brewers like Fuller’s, Young’s and Shepherd Neame, which have often had a chairman who had previously been chief executive, a majority of executives on the board and non-executive directors who are either not ‘independent’ or have been on the board for more than the recommended time, have tended to do well, whereas the compliant boards of the large pub companies have struggled greatly, in many cases, in the last decade.

“One reason may be that the non-compliant boards have been more resistant to the sometimes foolish ideas which take hold of financial markets. The main misconceived fashion of the last decade and a half has been in relation to so-called ‘efficient balance sheets’. This fashion encouraged excessively high levels of debt and arrangements such as ‘opco/propco’, which also increased financial gearing.”

JD Wetherspoon’s earnings per share (including shares held in trust) grew by 12.6 per cent to 44.8p while the full-year dividend of 12p was maintained.