Tim Martin blasts
Like many in the hospitality industry Wetherspoon has been aiming to recover lost ground after two years of restrictions played havoc with sales. Its latest trading update shows sales are now slowly beginning to recover but still remain down on pre-Covid levels. For the 13 weeks to 24 April 2022 sales were down by four percent compared with the same period in 2019, the last normal year of trading. Mr Martin warned future lockdowns or restrictions were “the biggest threat” faced by companies in the hospitality sector.
While acknowledging that many in government and medicine supported the policies, including national lockdowns, Mr Martin said this view was “called into question by the outcome in Sweden, a more urbanised country than the UK, which did not lock down- and which appears to have had better health results.”
He added: “The collateral damage from lockdowns has yet to be quantified, but the economic cost, approximately half a trillion pounds, financed largely by “money printing” by the Bank of England, is a direct cause of the current inflationary crisis.”
While Wetherspoon’s sales remain down for the period of its trading update, a more zoomed in picture reveals a push towards recovery.
For the three weeks to 13 March sales improved to -2.6 percent with a further improvement to -1.6 percent in the following six weeks.
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In the last two weeks of the period the firm says like-for-like sales were slightly positive.
Other sections of the chain have seen clearer improvements with sales in its Lloyds pubs, which play music, up 3.4 percent while room sales in its hotels were up five percent.
Looking forward Mr Martin expressed concern over rising operating costs but remained optimistic about an improvement in profits.
He explained: “Since Covid restrictions ended, sales have improved, as previously reported.
“As many hospitality companies have indicated, there is considerable pressure on costs, especially in respect of labour, food and energy.
“Repairs are also running at a higher rate than before the pandemic.
“The company anticipates a continuing slow improvement in sales, in the absence of further restrictions, and anticipates a “break-even” outcome for profits in the current financial year.”
As well as the impact of inflation on the firm’s own costs, the rising cost of living also potentially threatens to eat into recovering sales as households reign back on spending.
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Sophie Lund-Yates, Equity Analyst at Hargreaves Lansdown warned: “Exactly how trading is going to shape up from here depends on the extent of the damage to people’s discretionary spending.
“On one hand, Spoons’ reasonable price point could entice those slipping down the value chain.
“On the other, the cost-of-living crisis may well serve as a real blow to the group’s core demographic and ultimately drive them away.”
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