Though it repeatedly hit all-time highs of £13.25-plus, 2018 ended up being a rough one for Tim Martin’s pub chain. Opening at £12.50, it found itself at £11.06 as the year came to a close, marking an 11.5% decline across the 12 months.
It has had a rocket strapped to its back since the start of 2019, however. By early March it had once again bounced off £13.25 – which has proven a rather firm resistance level in the last year or so – with J D Wetherspoon PLC (LON:JDW) now at a current trading price of £12.75.
Contributing to the stock’s rise, if only slightly, was its second quarter update on January 23rd. For the first 12 weeks of its Q2, a period that covers Christmas and New Year, like-for-like sales were up 7.2%, with total sales jumping 8.3%. As for the 25 weeks of the year to day, comparable sales rose 6.3%, alongside a total sales increase of 7.2%.
Martin made sure to temper any enthusiasm by pointing to rising labour costs as an issue. Add onto that increases in interest, utilities, repairs and depreciation, and this interim period saw overall costs jump by around £30 million. That means pre-tax profit will be lower year-on-year.
On top of Martin’s no doubt extensive Brexit commentary, investors will be curious to see just how impacted Wetherspoons’ bottom line has been. As reference, last year it posted £62 million at the half way point. Any word on its cost forecasts for the rest of its financial 2018/19 will also be welcome.
JD Wetherspoon PLC has a consensus rating of ‘Hold’ alongside an average target price of £12.70.
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