The death of Wetherspoon? Pub giant is set to announce dramatic sales plunge after lockdown forced bars to close over key Christmas trading period
- All Wetherspoon pubs are currently shut as a result of the nationwide lockdown
- In November, firm said it would burn through £14m a month while pubs are shut
- Pub giant reported 27.6% plunge in first-quarter sales for 15 weeks to November
- Boss Tim Martin has repeatedly criticised Government’s handling of pandemic
Pub giant JD Wetherspoon is set to announce a dramatic sales slump over the key Christmas period after being impacted by coronavirus restrictions.
Investors in the pub group will be keen to see the full extent of the impact of November’s lockdown in England as well as tighter tiered restrictions in December when it posts its latest trading update on Wednesday January 20.
All of the budget pub group’s UK sites are currently shut as a result of the nationwide lockdown.
In November, the group said it would burn through £14 million for each month its pubs remain shut to customers across the country.
At the end of last year, chairman and founder Tim Martin lashed out at the Government for its ‘baffling and confusing’ coronavirus restrictions as Wetherspoon reported a 27.6% plunge in first-quarter sales for the 15 weeks to November 8.
Pub giant JD Wetherspoon is set to announce a dramatic slump in sales over the key Christmas period as pubs were closed due to lockdown restrictions. Pictured: Founder Tim Martin
Last month Mr Martin offloaded 431,500 of the company’s shares at a price of £11.66 each on Tuesday, leaving the firm’s founder and chairman with a 27 per cent stake.
He also sold £5 million worth of shares in the summer.
Prior to the introduction of the tier system across the country, Mr Martin accused the Government of making ‘reckless decisions’, with MPs only having an occasional opportunity to intervene.
‘There is overwhelming scientific evidence that lockdowns and quasi-lockdowns can be counterproductive, as the World Health Organisation has recently emphasised.
He also said that Boris Johnson was implementing ’embarking on economically ruinous policies, with no health benefits’ by imposing the contentious new tier system.
Restaurants, pubs, hotels, bars and many other venues in the hospitality industry have been forced to closed several times since the nationwide lockdown was implemented in March 2020, and remain closed today across most of the UK.
Mr Martin, founder and chairman, has previously accused the Government of embarking on economically ruinous policies. Pictured: A staff member in a Wetherspoons pub in London
As various lockdowns and tiered restrictions have been implemented in the months since, the sector, which is responsible for five million jobs and generates a £130billion contribution to the economy, has been asked to respond accordingly often at short notice.
Sales are set to tumble further as a result of the November lockdown and tiered measures, with the company keeping 366 of its 872 pubs shut at the start of December after pubs were stopped from serving dine-in customers in Tier 3.
By the end of the month, all of the pub firm’s sites were within Tier 3 and Tier 4 areas and therefore forced to close.
Emma Lou Montgomery, associate director for personal investing at Fidelity International, said shareholders will have questions around when Wetherspoon can return to profit even after sites reopen due to the impact of restrictions.
‘The hospitality sector, in general, works on such tiny margins that even being down 10% can be enough to force many publicans to call time on their pubs,’ she said.
‘For Wetherspoon pubs that all need to be packed out to thrive, following a variation of the pile ’em high, sell ’em cheap business model, how they can function profitably long-term with social distancing in place is the big question.’
A sign in the window of the Wetherspoon pub in Windsor, Berkshire, as restrictions came in
However, Liberum’s analyst Anna Barnfather said pub groups should have reason for optimism after there was evidence of pent-up demand following previous lockdowns, alongside vaccine progress.
‘We are cautiously optimistic of the easing of restrictions across England and the rest of the UK as of March/April 2021, in line with a successful roll-out of a vaccine to those most at risk,’ she said.
‘This provides some optimism for the sector after a difficult winter and almost non-existent festive period.
‘Encouragingly, the sector saw high levels of pent-up demand for leisure activities and socialising following Lockdown 1.0, and we are optimistic that this will be the case when the sector reopens, with an even swifter recovery once health and safety concerns have minimised.’
Earlier this week, No10 was said to be privately gloomy about the prospects of an end to the third lockdown next month and Prime Minister Boris Johnson has already warned that lockdown measures are unlikely to all be lifted at once.
A source told the Sunday Times that the May Day bank holiday was a more likely reopening date for pubs and restaurants.
Responding to the speculative date, the British Beer & Pub Association said pubs across the UK will be lost for good if they cannot reopen until May 2021 and do not get extended financial support from Government.
The trade association also said the Government needs to be clear on its roadmap for the reopening of pubs.
Emma McClarkin, Chief Executive of the British Beer & Pub Association, said: ‘We strongly believe that pubs are safe places to socialise and can play an important role in our social and economic recovery.
‘If pubs are forced to stay close until May, it would mean they have faced 14 months of lockdowns and restrictions. How on earth could the Government expect them to survive?
‘UK pubs will be screaming ‘mayday’ long before a May reopening without significantly more financial support from Government.
‘The Government has a duty to tell publicans when it plans to let them reopen with a clear roadmap alongside the vaccination programme.
‘If it won’t be until May then it needs to extend financial support for them to survive and to brewers whose businesses also face jeopardy.
‘In the more immediate future this means an extension to the Chancellor’s latest grant support package and not just for pubs, but also breweries.
‘In the longer term it means extensions to the Business Rates holiday and VAT cut, as well as a beer duty cut throughout 2021 and beyond.
‘Without such support, local pubs in communities across the country will be lost forever. We hope though that we can open safely and serve our customers and communities as soon as possible.’
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