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JD Wetherspoon has swung back to profit as an absence of Covid-related restrictions continued to provide a boost to sales.

Tim Martin’s business, one of the UK’s largest pub chains with 826 venues, revealed it made pre-tax profits of £42.6million for the year ending 30 July.

This compared to a £30.4million loss in the prior 12 months when soaring inflation and the Omicron variant’s emergence discouraged people from visiting hospitality venues.

Toast to that: JD Wetherspoon, one of the UK’s largest with 826 establishments, revealed it made pre-tax profits of £42.6m for the year ending 30 July

Although cost pressures have carried on affecting households and the pub sector, Wetherspoon’s revenues still increased by 10.6 per cent to £1.93billion last year.

Food sales drove most of this growth, jumping by more than £100million to £742million, while drink sales still comprised most of the company’s turnover.

Since the period ended, the firm noted trading has continued to do well, with like-for-like revenue up 9.9 per cent in the first nine weeks of the new financial year.

Martin, who founded Wetherspoon’s in 1979, hailed the result but warned that ‘perhaps the biggest threat to the hospitality industry is the possibility of further lockdowns and restrictions’.

The New Zealand-born chairman was a noted critic of the Government’s response to the pandemic and the enormous losses in jobs and finances experienced by the pub sector as a result.

He has also been outspoken regarding the differences in how pubs, restaurants and supermarkets are taxed.

On VAT, Wetherspoon notes that pubs pay around 20 per cent on food sales, while supermarkets pay a zero rate. 

For business rates, it noted that pubs hand over about 20p a pint, while grocers only pay about 2p.

Wetherspoons shares were 4.4 per cent lower at £6.72 on Friday morning, making them the worst-performer on the FTSE 250 Index.

While they have still risen by about half this year, the shares remain far below their pre-pandemic levels.

Mark Crouch, an analyst at investment platform eToro, said: ‘While shareholders will raise a glass to the fact the firm has returned to the black, its profits are less than half the level they were at their peak in 2018.

‘Part of that, of course, is down to rising energy and other costs, which have risen considerably for firms over the past 18 months.

‘That might hobble its growth plans over the coming year or two, but overall and longer-term, we are feeling considerably more positive about Wetherspoon than we were just a few months ago.’

Content source – www.soundhealthandlastingwealth.com

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