Wetherspoons is a staple of the UK pub industry. Founded in 1979, and now owning almost 1000 outlets, the company is a prominent figure on both the London Stock Exchange and the FTSE 250.
Earlier this month, it announced that like for like sales had risen by 5% between 29th July 2017 and 29th July 2018, and before tax profits had risen by 4.3% to £107.2 million.
However, while the company has experienced another increase in sales (5.5%) in the first six weeks of the new financial year, it has warned of expected increased costs for the year, including labour costs, interest rates, and taxes.
Tim Martin, who leads the pub chain, announced the cost of food and drink for pub customers “may have to go up a bit” in conjunction with these expectations.
Wetherspoons is well known for its cheap prices and basic facilities, with sites located across the UK.
The pubs don’t play music, and often don’t offer televised sports in an attempt to keep overheads down. While this strategy usually works, it does mean that the chain missed out on the general increase in sales pubs experienced earlier this summer by showing the World Cup.
Equally, the vast majority of Wetherspoons’ pubs lack outdoor spaces and pub gardens, also meaning that customers were choosing alternative drinking establishments during the unseasonably hot weather experienced in the UK earlier this year.
However, investors should not be put off by short-term seasonal effects, instead, they should focus on the underlying sales growth, which remains strong. On the news, shares fell by 0.2%, just under the 2018 peak of £13.25 per share, with the current price valuing the company at around £1.3 billion.
Tim Martin is known for being a prominent Brexit supporter and hopes that Britain reaches a “No Deal” scenario, feeling that this will be the best possible outcome for the UK and its citizens.
Earlier in the year, the pub chain announced that it would stop selling prosecco and champagne, instead choosing to sell non-European sparkling wines as an alternative. Although a keen Brexit supporter, Mr. Martin has also suggested that the UK will need a considerable level of immigration in the coming years, which must be solved by the government while also embracing free trade deals the moment the UK leaves the EU.