JD Wetherspoon has slumped to the first loss in its history as the pub chain counted the cost of restrictions on socialising that its outspoken founder-chairman Tim Martin said were “capricious” and motivated by political expediency.
Wetherspoon’s had never lost money since it was founded in 1984, but sales plunged by 30% in the year ending 26 July, even though Covid-19 curbs were in place for less than half that period.
That sales slump, combined with the impact of £29m in extra Covid-related costs, the 867-strong pub chain, which had delayed its results by a week, sank £105m into the red. Shares in the company fell by 15% to 812p. At the turn of 2020 they were changing hands at more than 1660p.
Less than 18 months after Brexit-backer Martin endorsed Boris Johnson’s candidacy for prime minister over a beer, the Wetherspoon’s boss blamed him for “confusion” over restrictions such as the 10pm curfew and limits on household mixing.
“What’s disappointed me is that I wasn’t in favour of a lockdown but I completely went along with it,” he said.
“But actions in the last couple of months appear to be jumping wildly from pillar to post without a strategy, based possibly on pollster views as to what the public might like rather than on a proper long-term strategy that people and business can live with,” he said.
Martin refused to rule out calling on shareholders for a cash injection, after going to them for £141m earlier this year.
He also said more job losses could follow, having already started a consultation to cut 450 staff at its pubs in six airports, where trade has slowed to a trickle due to restrictions on travel. It is also reducing head office staff numbers by 108.
Confirmation of the cuts come a day after the pub and brewer Marston’s announced it was axing 2,150 jobs, the biggest cuts in the sector since the pandemic began. Last week, Greene King said it was cutting 800 jobs and closing 79 pubs and restaurants, amid a flurry of job losses that hospitality trade bodies have warned will accelerate due to new restrictions imposed across much of the country.
“We haven’t cut jobs in pubs ever but if trading conditions are terrible, we and others will have to,” he said.
The company has made no plans to tap chancellor Rishi Sunak’s job support scheme – the replacement for furlough – but Martin said it looked “very expensive”.
Wetherspoon’s said that since 4 July 429 employees have tested positive for coronavirus, 1% of its 43,000 total staff, in line with a 0.9% positive rate in the UK population.
Of its 867 pubs, 607 have had no cases among staff and 116 have had one, he said.
“You’d think that if it was ripping through the pub world, it would be more,” said Martin.
The company said like-for-like sales in the first 11 weeks of its new financial year are down 15% with “strong sales in the first few weeks followed by a marked slowdown since the introduction of a curfew and other regulations”.
But Martin said he was not optimistic about the prospects for the pub industry, with historic venues likely to suffer as owners convert them into other uses.
Again, he blamed government measures for the pressures on the industry.
Martin said: “It appears the government and its advisers were clearly uncomfortable as the country emerged from lockdown. They have introduced, without consultation, under emergency powers, an ever-changing raft of ill-thought-out regulations. None of the new regulations appears to have any obvious basis in science.”
Martin said the “most damaging” regulation for the hospitality industry has been the introduction of a 10pm curfew, “which has few supporters outside the narrow cloisters of Downing Street and Sage meetings”.
Analysts at Investec remain positive about the pub chain’s prospects despite the ongoing impact of restrictions and the prospect of a tough winter.
“The path of recovery rarely runs in a perfectly straight line, and new government restrictions will continue to buffet JD Wetherspoon,” Investec’s Alastair Reid said. “However, the company is well placed to ride out the storm and the results demonstrate it is well positioned to capture a growing share of demand as and when it returns. We expect the company to emerge even more robustly from the crisis.”
With a no-deal Brexit now looking more likely after comments by the prime minister on Friday, Martin said he still supported the policy.
But he admitted that it “will be an inconvenience in some respects, no question”.