JD Wetherspoon – Sales Under Pressure As Vulnerable Clients Drink At Home

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JD Wetherspoon plc (LON:JDW)’s like-for-like sales in the first 15 weeks of the year were 8.9% lower than in 2019 as bar, food and fruit/slot machine sales all declined. This was partially offset by an 11.5% increase in hotel sales.

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Although the group’s had some supply chain issues, they’ve eased in recent weeks. The group’s overall stocking levels have been in line with previous years. Wetherspoon also reported no widespread issues with recruitment.

Chairman Tim Martin said, “Whereas we have an increased element of caution about near-term sales, 'booster' vaccinations and better weather in the spring are likely to have a positive impact in the coming months.”

The shares were down 3.2% following the announcement.

A Shift In JD Wetherspoon’s Patrons

Laura Hoy, Equity Analyst at Hargreaves Lansdown:

“JD Wetherspoon’s seen a shift in its patrons as the pandemic weighs on confidence among the group’s older and more vulnerable clientele. Sales of drinks popular among younger customers have risen while the draughts favoured by more seasoned pub-goers are on the decline. Wetherspoons tends to cater to the latter group, so a permanent shift in that direction could be bad news. More likely is an abundance of caution among vulnerable populations as Covid continues to spread despite vaccine efforts. This attitude should wane as the pandemic comes under control, but there’s no telling how long that will take.

On the bright side, Wetherspoon noted that supply chain issues have been largely inconsequential for the pub chain and the tightness they have experienced has started to ease in recent weeks. On a similar note labour shortages haven’t had much of an impact on hiring.

There were few surprises in the numbers from Wetherspoon today, though the shift in clientele is something to keep an eye on for signs it could become a longer-term headwind.“

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