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Fri 18th Mar 2022 - Update: JD Wetherspoon H1 lfl sales down 11.8%, return to more normal trading patterns in recent weeks
JD Wetherspoon H1 lfl sales down 11.8%, return to more normal trading patterns in recent weeks: JD Wetherspoon has this morning reported that its like-for-like sales in the 26 weeks to 23 January declined 11.8% compared to the six-month period ended 26 January 2020, and were down 12.4% for the first four weeks of the second half of its financial year, ending 20 February 2022. The company said that in the most recent three-week period, to 13 March 2022, sales improved, being 2.6% lower than the equivalent period in 2019, as it saw a return to more normal trading patterns in recent weeks. It said that cash sales per week during this three-week period have been approximately 10% above the depressed levels of December 2021, its busiest month of the year, indicating an improving trend. Total sales in the six months to 23 January 2022 were £807.4m, a decrease of 13.5%, compared to the 26 weeks ended 26 January 2020. Like-for-like bar sales in H1 decreased by 12.7%, food sales by 11.1% and slot/fruit machine sales by 9.8%. Hotel room sales increased by 6.6%. The company’s loss before tax stood at £21.3m (2020: profit £57.9m), while operating profit was £500k (2020: profit £76.6m). The company opened four pubs during the first six months and sold or closed six, resulting in a trading estate of 859 pubs at the half year end. As at 23 January 2022, as a result of investment in freehold reversions (relating to pubs where the company was previously a tenant) and freehold pub openings, its freehold/leasehold split was 67.8%/32.2%. As at 23 January 2022, the net book value of the property, plant and equipment of the company was £1.4bn, including £1.1bn of freehold and long-leasehold property. Total capital investment was £64.7m (2020: £128.5m). £26.6m was invested in new pubs and pub extensions (2020: £23.7m), £18.9m in existing pubs and IT (2020: £34.1m) and £19.2m in freehold reversions of properties where Wetherspoon was the tenant (2020: £70.7m). The company said it increased investment levels, which are still substantially below the pre-pandemic period, on the basis that the adverse effects of covid-19 were likely to diminish in the near future. As at 23 January 2022, the company’s total net debt, excluding derivatives, was £920.4m (2020: £804.5m), an increase of £115.9m. The half year-end net-debt-to-Ebitda ratio was 25.63 times (2020: 3.54 times). Although debt has increased by £116m since H1 2020, trade creditors have reduced by £72m and £109m has been invested in new pubs and freehold reversions. The company has an agreement with its lenders, who have been extremely supportive throughout the pandemic, that waives its debt covenants until October 2022 and replaces them with a minimum liquidity requirement of £75m. At the half-year-end liquidity was £159.1m. Tim Martin, chairman of JD Wetherspoon, said: “Following a traumatic two years for many businesses and people, the ending of covid restrictions has brought a return to more normal trading patterns in recent weeks. As indicated above, trade for the last three weeks was 2.6% below the equivalent period in 2019, reflecting an improving trend. Contrary to some reports, the company has a full complement of staff and is fully stocked, with some minor exceptions. Inflationary pressures in the economy have been widely publicised. Nearly 70% of the company’s properties are freehold, with interest rates fixed for the next decade. Most of the company’s leasehold pubs have rent reviews which are fixed at levels below the current level of inflation. There is pressure on input costs from food, drink and energy suppliers, mitigated to an extent, by a number of long-term contracts. Overall, the company expects the increase in input prices to be slightly less than the level of inflation. The government is reported to have spent over £400bn on covid measures, around nine times the annual defence budget. The expenditure has been financed by the creation of ‘new money’ by the Bank of England, which has led to significant inflation and higher taxes. Draconian restrictions, which amount to a lockdown-by-stealth, are, of course, kryptonite for hospitality, travel, leisure and many other businesses. The company is confident of a strong future if restrictions are avoided. The readiness of the leaders of all the UK’s main political parties to resort to lockdowns, and extreme restrictions, which were not contemplated in the UK’s 2019 plans for pandemics, is the main threat to the future of the hospitality industry, but also to the economy.”

Latest edition of Propel Turnover & Profits Blue Book being sent to Premium subscribers today: The latest edition of the Propel Turnover & Profits Blue Book, which is produced in association with Mapal Group, will be sent to Premium subscribers today (Friday, 18 March) at midday. The latest Blue Book sees a further 12 companies added, taking the number of UK pub, restaurant, cafe and hotel operators featured to 546. The Blue Book, which is updated monthly, shows the full damage done to the sector by the pandemic, with 348 companies making a combined loss of £7.6bn compared with 198 companies in profit – making a combined £828.9m. Losses now outstrip profits in the sector almost ten times over. Total turnover of the companies stands at £25.9bn. The Blue Book, which is updated every month, provides an insight into UK operator turnover and profitability over five years, profit conversion and directors’ earnings. Premium subscribers also receive the New Openings Database, produced in association with StarStock, and the Multi-Site Operators Database, produced in association with Virgate, which are also updated each month. Premium subscribers are also to be given exclusive access to a new database early next month. The UK Food and Beverage Franchisor Database will be an exhaustive guide to the companies offering a food and beverage franchise in the UK and be updated every two months. The first edition will feature more than 100 companies, providing insight on the offer, locations, cost and other key details. The first edition provides almost 25,000 words of content. Companies can now have an unlimited number of people receive access to Propel Premium for a year for £895 plus VAT – whether they are an operator or a supplier. The single subscription rate is £445 plus VAT for operators and £545 plus VAT for suppliers. Email jo.charity@propelinfo.com to upgrade your subscription. Subscribers also receive access to Propel’s library of lockdown videos and Friday Wrap interviews and now also have access to a curated video library of the sector’s finest leaders and entrepreneurs, offering their insights on running outstanding businesses in the sector. Premium subscribers also receive their morning newsletter 11 hours early, at 7pm the evening before our 6am send-out; regular video content and regular exclusive columns from Propel group editor Mark Wingett. In this week’s Premium Opinion column, John Welsh, managing director of Hickory’s Smokehouse, writes about the work that has gone into the business securing the number one spot in the 'Best Large Companies To Work For 2022” list. Sector analyst Simon Stenning also explores the complicated ‘menage a trois’ of rising inflation, menu costing and consumer acceptance. At the same time, Propel group editor Mark Wingett looks at the succession plan at Young’s and reflects on the impact of the past two years on the sector. 

Burger King owner says Russia operator has ‘refused’ to shut shops: The owner of Burger King has said the operator of its 800 stores in Russia has ‘refused’ to close them. The president of Restaurant Brands International (RBI), which owns Burger King and has operated its restaurants in Russia for a decade in a joint venture which includes Alexander Kolobov, said the company was attempting to withdraw from the Russian market following the invasion of Ukraine. RBI president David Shear wrote in an open letter to employees: “We contacted the main operator of the business and demanded the suspension of Burger King restaurant operations in Russia. He has refused to do so. We suspended all corporate support for the Russian market, including operations, marketing, and supply chain support in addition to refusing approvals for new investment and expansion.” Shear said the company’s ‘complicated’ agreements with overseas partners meant it was unable to walk away from its Russia business, adding any changes “would ultimately require the support of Russian authorities on the ground and we know that practically will not happen any time soon”. The joint venture, which RBI owns 15% of, with Kobolov also includes a Ukrainian investment fund and VTB Capital, an affiliate of Russia’s second-largest financial institution VTB Bank. VTB Bank has been sanctioned by the UK, the US and numerous European countries over the invasion. Shear said: “We committed to redirecting any profits we receive from the business, including our ownership stake, to the United Nations’ refugee agency (UNHCR) and made an immediate donation of $1m (£760,000) toward that commitment. We’ve also worked with franchisees from more than 25 countries to distribute $2m of free meal coupons for Burger King restaurants to NGOs supporting Ukrainian refugees.”

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