- Wetherspoon aims for 1,000 UK pubs after strategic expansion shift
- Recent profit jump to £36 million, with significant sales growth
- Company cautious on rapid expansion, focusing on strategic locations
In the past, the firm’s branch openings caused a “rush of blood to the head,” according to chairman Sir Tim Martin, but the company is now expanding its estate more strategically.
JD Wetherspoon anticipates opening its one-thousandth pub in the United Kingdom shortly, following another profit increase.
Presently boasting over 800 locations, the chain affirms that its “best estimate” indicates the possibility of an additional 200 branches within the next few years.
It follows the pub giant’s announcement that its pre-tax profits for the six months ending in January increased to £36 million, an eightfold increase from the £4.6 million it earned during the same period last year.
Food sales increased by 7.6%, whereas pub sales increased by 11.6%.
Since December 2015, when the total number of Wetherspoon pubs crested at 955, the company has sold dozens of locations.
Founder and chairman Sir Tim Martin acknowledged that the firm’s previous expansion caused a “flurry of activity”. Still, he stated that the company was now expanding its estate throughout the United Kingdom more strategically.
He stated, “I believe what we discovered was that we placed two pubs where one should have been in quite a few towns.” As a result, we tend to return to one and enlarge the remaining one.
We have just experienced a haemorrhage of the skull.
When asked when Wetherspoon would open its one-thousandth location, Sir Tim responded, “The transition from 500 to 800 [pubs] is relatively swift, but closing the last few is more time-consuming.
Therefore, I avoid setting an excessively rigid timetable but anticipate no more than a dozen per year.
During the half-year period ending in January, Wetherspoon disclosed that it had disposed of five pubs, leased back five others, and sublet three additional locations.
A report detailing the company’s interim results, released on Friday, stated, “Sales have continued to rise despite a decrease in the total number of pubs; they are now approximately one-third higher than they were in 2015.”
Notwithstanding the favourable profit figures, Wetherspoon shares experienced a decline on Friday morning, surpassing a 7% decline by the afternoon.
It followed the disclosure in the interim results that like-for-like sales growth had decelerated to 5.8% in February and March thus far, from 9.9% in the six months leading up to the end of January.
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Sir Tim expressed astonishment at the market’s response, stating that Friday’s results were “the best we’ve produced in years.”
Sir Tim stated in the interim results report that sales growth was continuing.
Furthermore, he stated that the organisation expects a rational fiscal year result, contingent upon our forthcoming sales performance.
Derren Nathan, director of equity research at Hargreaves Lansdown, remarked, “A substantial amount of capacity has been released from the market, and the indication that there is potential for an additional 1,000 pubs beyond the current 814 could signal the beginning of the estate’s recovery.
“As a consequence, the dividend schedule may be delayed.”
“Recent additions to the Star Light at Heathrow Airport and the Stargazer at the former Millenium Dome in Greenwich are examples of how location is crucial.” In general, reinstating the estate to expansion may constitute a favourable progression.
