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Wetherspoons is to pay a dividend for the first time in five years after the no-frills pubs group reported a 74 per cent rise in annual profits.
Spoons, as it is known by regulars, posted a 5.7 per cent rise in revenue to £2.04 billion in the 12 months to the end of July, up from £1.93 billion in the previous financial year. The increase came despite it having closed a number of sites, as well as Euro 2024 and the Olympics this summer, which could have lost it customers because it does not generally show sport in its pubs.
Adjusted pre-tax profits rose 74 per cent from £42.6 million to £73.9 million, comfortably the group’s best result since before the pandemic, when it would regularly surpass £100 million.
Statutory pre-tax profits fell by a third to £60.6 million from £90.5 million due to one-off charges, including the costs of selling some pubs, of £13.3 million. The previous year Wetherspoons benefited from gains of £48.3 million from one-offs.
The company said that, “as a result of [its] improved trading and financial position”, it would bring back the dividend, which it had not paid since 2019. Shareholders will receive 12p a share, equivalent to the 2019 payout, on November 28.
The chain’s employees have also benefited from the pick-up in profits. It handed out £49 million of bonuses and free shares in the past year, almost all of which went to staff below board level.
Fintan Ryan, a consumer analyst at Goodbody, said the return of the dividend “is a clear signal from management of the strength of the JD Wetherspoon operating model and balance sheet [and] should be taken well” by the stock market. Wetherspoons shares were up by ½p, or 0.1 per cent, at 725p on Friday afternoon.
Tim Martin founded the business in 1979 on the site of a former betting shop in Muswell Hill, north London. The pub was originally called Martin’s Free House before he renamed it JD Wetherspoon after one of his teachers.
The chain, which had 44 pubs at its flotation in 1992, is famous for its low prices. As well as serving beers including Ruddles Best and Ringwood Old Thumper, it is one of the UK’s top sellers of coffee.
Drinks sales were the biggest driver of growth last year, with like-for-like bar sales increasing 8.9 per cent compared with the previous year. Food sales rose by 5.6 per cent and income from its hotel rooms increased by 2.7 per cent. Fruit machine sales, a comparatively small part of the business, were up almost 11 per cent.
Martin, 68, said sales continued to improve, although the pace of growth had slowed, with like-for-like sales, which strip out the impact of opening and closing pubs, up 4.9 per cent in August and September.
The company told the stock market that it “currently anticipates a reasonable outcome for the current financial year”, even if Martin “continues to be concerned about the possibility of further lockdowns”, as he has said before.
There are 800 JD Wetherspoon pubs around the country, from Penzance to Inverness, but that is down from a peak of 951 in 2015, partly owing to rising taxes, soaring staff costs, the pandemic and the cost of living crisis. However, Martin said that the company was “back in growth mode”, repeating his “best estimate” that the company has potential to reach 1,000 in the UK one day.
Tim Martin take aim at the schooner in his comments in his pub group’s latest annual results.
He said a proposal for a two thirds of a pint measure, sometimes called a schooner, was “slightly daft”. Researchers at Cambridge University have suggested that reducing glass sizes would lead to people drinking less, but Martin is unconvinced.
“Common sense indicates that reducing glass sizes is unlikely, due to human nature, to reduce alcohol consumption in pubs,” he said. “For example, our Aussie cousins — notorious guzzlers — already use schooners without any noticeable reduction in consumption.”
Martin’s main concern is that if he were forced to sell beer in schooners rather than pints he would lose even more business to supermarkets. Any reduction in pubs’ opening hours, which ministers have reportedly been discussing, would have the same effect.
“Both these proposals seem likely, if implemented, to encourage off-trade consumption at the expense of the on-trade, thereby exchanging the relatively highly priced and supervised pub environment for the inexpensive and unsupervised alternative of home, park and party consumption,” Martin said.