JD Wetherspoon (LON: JDW) shares tumbled Wednesday on the back of a trading announcement for the 14 weeks to November 6.
The company told investors that during the period, like-for-like sales were 9.6% higher compared to last year and 0.4% higher than the 14 weeks ending November 3, 2019. However, costs, particularly in labour, food, and repairs, were “substantially higher.”
JD Wetherspoon shares are down over 9% at the time of writing.
Still, the company stated trading has been “broadly in line” with expectations, although the company acknowledged that October has been a slightly slower month. For example, for the first 9 weeks of its financial year, sales were 1.5% above the same period in 2019, but for the last 5 weeks, sales were 1.1% lower compared to 2019.
Its update also revealed it has terminated most of its interest rate swaps, receiving £169.4 million after costs.
The company has since fixed interest rates for £400 million of debt for three years to October 31, 2025, at 4.67%. As a result, interest costs for FY23 are expected to be approximately £10 million higher. As of November 6, the company's net debt was £745 million.
JD Wetherspoon also revealed that it has recently put 32 pubs on the market and intends to add a further 7 pubs to the list this week.
“Sales have improved since the ending of restrictions in the early part of this calendar year and are considerably above the same period in the last financial year,” said Wetherspoon chairman Tim Martin.
“The company reported a return to positive cash flow in FY22 and anticipates a positive cash flow in the current year.”
“In my comments on the full-year results released on 7 October 2022, I set out various threats to the hospitality industry and these continue to apply. Those caveats aside, in the absence of further lockdowns or restrictions, the company remains cautiously optimistic about future prospects.”