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Wetherspoon Shares Rise After Cutting Losses Despite Increased Costs

Sam Boughedda trader
Updated 7 Oct 2022

Trade J D Wetherspoon Shares Your Capital Is At Risk

Key points:

  • JD Wetherspoon reported preliminary results
  • The firms losses narrowed
  • Wetherspoon shares jumped 10%

JD Wetherspoon (LON: JDW) reported its preliminary results on Friday, which saw the company reduce its losses considerably from the prior year, sending its shares over 10% higher.

The pub chain posted a loss of £30.4 million for the 12 months to July 31, compared to a £154.7 million loss in the prior year. In addition, revenue rose to £1.7 billion in the year, just slightly behind the £1.81 billion reported in 2019.

The board did not recommend a final dividend payment.

JD Wetherspoon shares hit a high of around 494p on Friday, adding to the previous session's over 2% gain. However, its share price has fallen considerably in 2022.

JDW share price chart
JD Wetherspoon Daily Chart – Source: IG

Also Read: How To Rejuvenate Your Investment Portfolio

“The company has improved its prospects in a number of ways in recent financial years – we own an increasing percentage of freehold properties; the balance sheet has been strengthened; interest rates have been fixed at low levels until 2031,” commented Tim Martin, Chairman of J D Wetherspoon.

However, the company has seen increases in labour, repair and energy costs, with Martin stating that “perhaps the biggest threat to the hospitality industry is the possibility of further lockdowns and restrictions.”

As a result, Wetherspoons did not provide guidance, as “firm predictions are hard to make.” Regardless, Wetherspoon did state that in the first 9 weeks of the current financial year, to October 2, like-for-like sales increased by 10.1% compared to the same period last year.

Meanwhile, in response to the concerns over costs, Wetherspoons recently put 32 of its pubs up for sale.

Instead of being a short-term solution to the trading difficulties of the Covid era, the company said the policy of opening larger pubs at a considerable distance from each other represents its long-term strategy.

Sam is a trader and lead stock market writer at AskTraders. After starting his career in the forex market, Sam now focuses on stocks, specifically consumer staples.