Pub chain JD Wetherspoon warns of annual loss as WFH takes loss on sales | Business news

JD Wetherspoon has warned it will post a third straight year of annual losses as wages and other costs hit profits and sales lag behind pre-pandemic levels.

The pub chain, which has more than 800 sites in its stable across the UK and Ireland, said like-for-like sales in the first 11 weeks of the fourth quarter were down 0.4% on the same period in 2019.

Sales of draft and light ale – the main drivers of revenue – fell 8%, reportedly reflecting drinkers’ shrinking budgets rising inflation in the period – mainly due to energy costs.

But campaign chairman Tim Martin also blamed the sequel work at home trend despite the end of the COVID restrictions.

Wetherspoon’s said the sales, combined with investment in staff and other rising costs, including fuel, now expected to report a £30m loss for the year to the end of July.

In May, Wetherspoon expected to break even after two consecutive years of losses due to the pandemic.

Since then, pubs and restaurants have struggled to recruit and retain staff amid widespread labor shortages.

Weatherspoon said it was spending on payroll to “strengthen our position” for the next fiscal year.

Mr Martin told investors there were many “unintended consequences” of the decision to keep people at home during the pandemic.

“Large numbers of people have left the workforce, as has been widely reported, mainly through early retirement.

“Many people are now working from home rather than from offices, which in particular has had a significant impact on the transport and hospitality businesses.

The “fear factor” used by governments to encourage continued lockdowns and restrictions also had lasting effects, with many people still wary of leaving their homes, he wrote.

Shares fell 6% in early trading.

Matt Britzman, equities analyst at Hargreaves Lansdown, said: “The booming recovery in pub sales that Wetherspoon’s had hoped for has not quite materialised, with sales almost within striking distance of pre-pandemic levels.”

He added: “Significant investment in manpower, renovations and marketing to try to rebuild the customer base means costs are rising rapidly.

“This is expected to push earnings into negative territory for the full year, which is disappointing, but ultimately these costs are a necessary evil.

“The difficulty now for the entire pub sector is that drinking and eating at home seems to be staying longer at first glance. This trend is likely to continue as the cost of living crisis looks set to accelerate the tightening of the wallet.”