Associated British Foods reports mixed performance amid UK retail challenges

UK Investor Magazine
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Associated British Foods reports mixed performance amid UK retail challenges

Associated British Foods plc has reported its latest trading figures for the 16 weeks to 4 January 2025, revealing a challenging period for its UK retail operations despite growth in other markets. 

Slowing sales in AB Food’s retail business will be a cause for concern for investors given it accounts for around 45% of group revenue.

The group’s overall revenue declined by 2.2% at actual currency rates, though it showed a modest 0.5% increase at constant currency.

Primark, the group’s retail division, experienced a notable downturn in its UK and Irish markets, with sales falling by 4% and like-for-like sales dropping by 6.4% in the UK. This decline was attributed to cautious consumer sentiment and unusually mild autumn weather affecting seasonal purchases. However, the retail chain saw stronger performance during the Christmas period and continued success with its Click & Collect service, now available in 113 stores.

In contrast to UK performance, Primark demonstrated robust growth in other territories, particularly in Spain and Portugal where sales increased by 9%, and in the US which saw a 17% rise. The company’s expansion continues apace in America, where it now operates 29 stores with plans for further growth.

“Primark owner, Associated British Foods (ABF) enjoyed mixed trading this festive season, as revenue only edged slightly higher. Primark continues to be the main story, bringing in around half of the group’s revenue, but even here performance was varied across regions,” said Aarin Chiekrie, equity analyst, Hargreaves Lansdown.

“Weak consumer sentiment, a strong comparative period, and unfavourable weather were all blamed for keeping Christmas shoppers from flocking to its stores in the UK, which saw the group lose market share and like-for-like sales fall 6.4% on home soil. Primark’s international performance was much better though, more than offsetting this decline. That’s thanks to the group pressing ahead with its store rollout programme, opening seven new stores across the US and Europe over the period. Despite this, Primark’s full-year revenue guidance has been lowered slightly from mid single-digit to low single-digit growth.”

The group’s other divisions showed varying results. The Grocery segment achieved 1% growth, driven by strong international performance from brands such as Twinings and Ovaltine. The Ingredients division posted 4% growth, while the Sugar and Agriculture segments experienced declines of 2.1% and 4.1% respectively at constant currency.

AB Foods shares were down 2.4% at the time of writing.

The ‘total return kings’ revisited

Temple Bar Investment Trust
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The ‘total return kings’ revisited

Since we believe that fund manager ‘start of year outlooks’ are rarely of any use, we do not intend adding to the dozens that have already been published. Instead, our natural contrarian instincts inspire us to look backwards rather than forwards, so below we review what we were saying early last year and how it has turned out.

In one of our newsletter articles last year, called ‘The return of the total return kings’, we identified two catalysts that we thought could realise some of the significant levels of value that we observed in the UK equity market – corporate takeovers and share buybacks. So how did that work out?

1. Corporate takeovers

In the previous note, we stated the following:

“The relentless selling of UK equities has driven valuations to such low levels that overseas corporates have spotted an opportunity to acquire UK assets at prices that offer serious future return potential.”

Indeed, 2024 turned out to be a year in which UK plc had its ‘Barbarians at the gate’ moment1 as overseas corporate buyers and private equity firms took advantage of the low valuations of UK businesses created by the valuation-agnostic selling of UK equities. The trust benefited from this activity, with IDS and Direct Line being taken over, whilst Currys and Anglo American received approaches that they successfully rebuffed.

2. Share buybacks

In the same note, we demonstrated how firms consistently buying back lowly valued shares can create significant value through the case study of Next plc, highlighting how some of our current investments had the ability to replicate this (hence the title ‘The return of the total return kings’.)

Having urged many of the companies that we invest in to take advantage of their lowly valued shares, we were delighted to see many of them implement share buyback policies in 2024, often with considerable benefits to remaining shareholders. The biggest successes were NatWest and Barclays, which reduced their share count by 9% and 5% respectively and saw their share prices rise by 83% and 72%2.

Where does this leave us now?

As previously mentioned, the share prices of several stocks in the trust portfolio rose considerably during 2024. Some were the result of bid activity, others were beneficiaries of consistent and sizeable share buybacks. This may prompt some investors to reflect on their strategy as we transition from one year to the next, but we believe this would be a mistake driven by a cognitive bias known as anchoring.

The anchoring effect is “a psychological phenomenon in which an individual’s judgments or decisions are influenced by a reference point or ‘anchor’ which can be completely irrelevant”.3 In one famous study by Amos Tversky and Daniel Kahneman4, participants were asked to estimate the percentage of African countries in the United Nations. Before estimating, the participants first observed a ‘wheel of fortune’ that was rigged to stop on either 10 or 65. Participants whose wheel stopped on 10 guessed lower values (25% lower on average) than participants whose wheel stopped at 65 (45% higher on average). Thus, their estimates were influenced or ‘anchored’ off a data point that had no relevance to what they were being asked to forecast.

Similarly in the stock market, investors tend to anchor off certain share prices which actually contain little information about the value of the stock they are analysing. Instead, we would argue that current valuations are a better guide to future returns than historic or current share prices.

Despite the strong performance seen in 2024, we believe the valuations of the shares in the Temple Bar portfolio are still at very attractive levels, as demonstrated in the table below. This, more than anything else, should give investors optimism about the future long-term returns that these stocks could deliver.

Conclusion

In a world in which many investors seem obsessed with the large US technology companies (colloquially known as ‘The Magnificent Seven’), it is worth noting that some of the Temple Bar portfolio holdings produced returns last year that were on a par with them. And yet, in contrast to the reassurance we find in the low PEs and high dividend yields evident in the portfolio, the high valuations of the Magnificent Seven stocks should give investors pause for thought about how sustainable these returns can be.

To conclude therefore, in looking back at the returns delivered in 2024, we find considerable fundamental reasons for confidence when looking at what the Temple Bar portfolio can deliver for shareholders in 2025 and beyond.

1 The phrase ‘Barbarians at the Gate’ originates from the title of a book by Bryan Burrough and John Helyar, chronicling the aggressive leveraged buyout of RJR Nabisco in the late 1980s – it is now regularly used to describe opportunistic corporate takeover activity.

2 Source: Bloomberg, 9 January 2025. Past performance is not a guide to the future.

3 Source: Wikipedia

4 Judgment under uncertainty: heuristics and biases, Tversky and Kahneman, 1974​

Past performance is not a guide to the future. The price of investments and the income from them may fall as well as rise and investors may not get back the full amount invested. Forecasts and estimates are based upon subjective assumptions about circumstances and events that may not yet have taken place and may never do so.

No investment strategy or risk management technique can guarantee returns or eliminate risks in any market environment. Nothing in this document should be construed as advice and is therefore not a recommendation to buy or sell shares. Information contained in this document should not be viewed as indicative of future results. The value of investments can go down as well as up.

This article is issued by RWC Asset Management LLP (Redwheel), in its capacity as the appointed portfolio manager to the Temple Bar Investment Trust Plc. Redwheel, is authorised and regulated by the UK Financial Conduct Authority and the US Securities and Exchange Commission.

Redwheel may act as investment manager or adviser, or otherwise provide services, to more than one product pursuing a similar investment strategy or focus to the product detailed in this document. Redwheel seeks to minimise any conflicts of interest, and endeavours to act at all times in accordance with its legal and regulatory obligations as well as its own policies and codes of conduct.

This document is directed only at professional, institutional, wholesale or qualified investors. The services provided by Redwheel are available only to such persons. It is not intended for distribution to and should not be relied on by any person who would qualify as a retail or individual investor in any jurisdiction or for distribution to, or use by, any person or entity in any jurisdiction where such distribution or use would be contrary to local law or regulation.

The information contained herein does not constitute: (i) a binding legal agreement; (ii) legal, regulatory, tax, accounting or other advice; (iii) an offer, recommendation or solicitation to buy or sell shares in any fund, security, commodity, financial instrument or derivative linked to, or otherwise included in a portfolio managed or advised by Redwheel; or (iv) an offer to enter into any other transaction whatsoever (each a Transaction). No representations and/or warranties are made that the information contained herein is either up to date and/or accurate and is not intended to be used or relied upon by any counterparty, investor or any other third party. Redwheel bears no responsibility for your investment research and/or investment decisions and you should consult your own lawyer, accountant, tax adviser or other professional adviser before entering into any Transaction.

THG shares drop despite revenue creeping higher on beauty strength

UK Investor Magazine
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THG shares drop despite revenue creeping higher on beauty strength

THG shares fell in early trade on Thursday as the company released only a very small increase in revenue driven by strength in the beauty division. Unfortunately, the nutrition business proved to be a major drag on the group’s overall performance.

THG Beauty delivered 4.6% growth in 2024, reaching £1.1bn in revenue. The division saw success across skincare, cosmetics and fragrances in the UK. Lookfantastic’s loyalty scheme grew to 2.8m members, with improved customer lifetime value. Notable achievements include becoming the first beauty retailer to partner with The White Company and strong performance during cyber sales periods.

Investors will be disappointed with the poor performance of THG Nutrition, with revenue declining 11.9% to £579.6m. While UK performance improved in Q4, Asian markets struggled due to currency fluctuations. However, offline sales grew 29% through licensing agreements and retail partnerships. The Myprotein brand maintains market leadership in the UK, ranking first in consumer loyalty and brand conversion.

Follwing the demerger of THG Ingenity, the sales of each business unit will be poured over investors for signs the company can produce attractive returns as an e-commerce business.

“There was plenty of excitement about its Ingenuity arm – seen as offering logistics solutions to third parties and compared to the out-of-box solution provided to global supermarkets by Ocado – whose star was very much in the ascendancy at the time. Now the Ingenuity arm has been spun off as a private entity, THG is being judged as a collection of beauty, health and nutrition e-commerce sites,” said AJ Bell investment director Russ Mould.

“There are no guarantees but if the company can start growing its revenue sustainably then it may in time be judged on its own merits and not on the unrealistic yardsticks in place at the time of its IPO.”

“Despite a fourth quarter drop in revenue these are actually performing OK – with the beauty side doing particularly well.”

THG expects mid-single digit revenue growth in 2025, supported by strong prestige beauty demand and anticipated recovery in Nutrition as whey prices normalise. The company aims to reduce capital expenditure to £20m annually and targets progression towards a neutral net cash position.

Investors were unimpressed and shares were down 8% at the time of writing.

Vietnam Ends 2024 Strong 

Vietnam Holding
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Vietnam Ends 2024 Strong 

Vietnam capped 2024 with a better-than-expected annual GDP growth of 7.09%, beating the government’s target of 6.5%.  

This brings the country into 2025 with confidence, even amid global uncertainty driven by war, the return of Donald Trump to the U.S. presidency, and other challenges. Before getting too far into January, it’s worth looking back on the past 12 months for Vietnam across socioeconomic and political events. 

Political uncertainty followed by calm  

The first half of 2024 saw President Vo Van Thuong and National Assembly Chairman Vuong Dinh Hue resign as part of the ongoing ‘blazing furnace’ anti-corruption campaign. This continued a two-year stretch of unprecedented turnover among top leadership.  

Then, in July, General Secretary Nguyen Phu Trong died at the age of 80 following a period of illness.  

He has since been succeeded by To Lam, the former Minister of Public Security, while Luong Cuong was elected President by the National Assembly.  

This leadership configuration, along with Prime Minister Pham Minh Chinh and new National Assembly Chairman Tran Thanh Man, has remained stable, providing much-needed calm after a turbulent period. 

Economic Recovery 

Quarterly GDP growth increased through each quarter of the year, hitting 7.55% in Q4 and ultimately driving the fourth-highest annual expansion in the last 15 years.  

Export-import turnover reached a new record, with the critical export sector hitting nearly US$385 billion in value, a 14.4% year-on-year increase. Registered FDI, meanwhile, was a healthy US$31.4 billion, with the government placing intense focus on the semiconductor and Artificial Intelligence industries.  

Competition in those sectors is fierce globally and especially in Southeast Asia, with Malaysia, Indonesia, and Thailand all securing major investment deals from the likes of Google and Apple. Vietnam remains a strong contender, as highlighted by Nvidia’s much-celebrated December announcement that it will invest in R&D in the country.  

Infrastructure and Energy 

Last year also saw several landmark developments in the infrastructure and energy sectors, both in terms of approvals for future projects and completion of key systems. 

The National Assembly approved the long-discussed North-South high-speed railway, expected to cost an astonishing US$67 billion while linking Hanoi and Ho Chi Minh City across 1,500 kilometers of track. 

With an estimated travel time of five hours, this would dramatically reshape domestic travel while linking a total of 20 provinces and cities. The construction timeline is incredibly ambitious, with work expected to begin in 2027 and trains running in 2035. That may be unlikely given the complexity of the project, but this is laudable nonetheless. 

Parliament also approved the resumption of nuclear energy development in Ninh Thuan Province after this plan was shelved over cost concerns in 2016. At the time, two nuclear plants were to be built with support from Russia and Japan, respectively. 

It’s not currently clear who will provide support for the new plan, or what type of reactors may be used, but Vietnam’s energy demand is growing at 13% annually while the government strives to meet its net-zero emissions commitment by 2050. 

In terms of public transit, Hanoi opened the above-ground section of its second metro line, while Ho Chi Minh City finally completed its first line after 12 years of construction, drawing enormous crowds while spurring hope that the city can move more quickly on further lines. 

Briefly stepping away from the country focus, Vietnam Holding also enjoyed a strong 2024. It was named ‘Best Emerging Markets Trust’ by UK Investor Magazine while also winning awards from Citywire and Investment Week, putting it in a strong position for 2025.   

The Year Ahead 

Similarly, Vietnam has moved into 2025 with a full head of steam.  

The government, led by General Secretary To Lam, is pushing forward with a dramatic streamlining of the lumbering state bureaucracy to modernize governance and improve efficiency.  

If all goes to plan, within 2025, multiple ministries and state agencies will merge, while those unaffected by mergers are expected to reduce the number of internal divisions by up to 20%. All told, up to 20,000 civil servants could be made redundant at a cost of around US$5 billion. 

This will be a difficult process, but it will address longstanding concerns over slow approval processes, overlapping legal responsibilities, and confusing regulations.  

Several significant challenges stand in the way as well. Energy supply remains a concern, while northern Vietnam – and especially Hanoi – currently faces a severe air pollution crisis that will require sustained action to address.  

As mentioned earlier, Trump’s return to power in the U.S., Vietnam’s largest export market, comes with the potential threat of trade tariffs. The president-elect has not specifically targeted Vietnam with his recent rhetoric, but the Southeast Asia country has the third-largest trade surplus with the U.S. after China and Mexico. 

As a result, this is something that bears close watching in the coming weeks and months. 

More long-term, officials are sounding the alarm about falling birth rates that threaten to impact Vietnam’s working-age demographics eventually. 

All of that being said, Vietnam’s fundamentals remain sound, and there is a clear sense of optimism following two underwhelming post-pandemic years. Risks aside, the country should certainly be able to reach the goal of 8% growth, and perhaps even higher moving forward. 

Share Tip: Gulf Marine Services – the shares of this energy sector services provider are about to lift-off 

Mark Watson-Mitchell
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Share Tip: Gulf Marine Services – the shares of this energy sector services provider are about to lift-off 

The brake could soon be lifted on the shares of Gulf Marine Services (LON:GMS). 
The £160m capitalised Abu Dhabi-based group is a world-leading provider of advanced self-propelled self-elevating support vessels, with its fleet of 13 SESV’s serving its offshore energy sector customers around the Middle East, South East Asia, West Africa, North America, the Gulf of Mexico, and in Europe. 
Some years ago, a competitor built up a near-29% stake in this offshore energy sector services provider, with a view to merging or even taking it over. 
But discussions ended with an amicable sol...

Mindflair announces AI defense technology investment

UK Investor Magazine
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Mindflair announces AI defense technology investment

Mindflair has announced that Sure Valley Ventures (SVV) led a £1.5 million investment round in AI defense technology company Vizgard, with Midwich Ignite and Focal also participating. The investment comes through SVV’s UK Software Technology Fund.

Mindflair has an investment in Sure Valley Ventures and the fund.

Vizgard, founded in 2021 by former Royal Navy submariner Alex Kehoe, develops AI-enhanced camera systems for defense and public safety through its FortifAI platform. The technology combines computer vision with Deep Learning to provide real-time threat detection and privacy features on commercial processors.

The company has secured contracts with the Ministry of Defence, HMGCC Co-Creation, and a major UK transport organization. Its customer base includes British camera manufacturer Sesanti and multiple police departments. Vizgard is also participating in a £12 million Innovate UK consortium.

Nicholas Lee, Director of Mindflair, explained how the investment fits with their long-term strategy: “We are pleased to see another investment led by SVV, particularly in a company as innovative as Vizgard. This aligns perfectly with our strategy of investing in AI-focused technologies, and we look forward to seeing Vizgard’s growth and its contribution to the sector.”

Herald Investment Trust wins Saba Capital vote in ‘victory for shareholder democracy’

UK Investor Magazine
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Herald Investment Trust wins Saba Capital vote in ‘victory for shareholder democracy’

Shareholders have rejected Saba Capital’s plans to take control of the Herald Investment Trust in what is being called a ‘victory for shareholder democracy’.

Saba Capital suffered a resounding defeat, which bodes well for six other investment trusts against which the US hedge fund has launched attacks.

Of the total votes cast, 65.10% voted against the requisitioned resolutions to remove Herald’s board and replace them with one selected by Saba Capital.

Highlighting the scale of the rejection of Saba’s plans, only 0.15% of votes from shareholders other than Saba voted in favour of the resolutions. Saba Capital has a 34.75% stake in the Herald Investment Trust.

“Today non-Saba shareholders have almost unanimously rejected Saba’s self-interested proposals,” said Andrew Joy, Chairman of Herald Investment Trust.

The fact that 99.78% of all votes cast by non-Saba shareholders were voted against Saba’s resolutions and in favour of the existing Board provides a clear, complete and incontrovertible rebuttal of Saba’s attempt to take control of your company and change its strategy against the wishes and interests of its non-Saba shareholders.”

The scale of the defeat raises the question of whether Saba Capital will call off votes they now seem very unlikely to win.

The remaining trusts subject to requisitioned resolutions are Baillie Gifford US Growth Trust, CQS Natural Resources Growth & Income, Edinburgh Worldwide Investment Trust, Henderson Opportunities Trust, Keystone Positive Change Investment Trust and the European Smaller Companies Trust.

Votes for each trust are scheduled over the coming weeks, and shareholders still have time to cast their votes in some of them.

The UK Investor Magazine was recently joined by Karen Brade, Chair of the Keystone Positive Change Investment Trust, to discuss the importance of retail investors voting against Saba’s proposals. Today’s results demonstrate the power retail investors have in shaping the future of their investments.

“It’s very encouraging to see Herald shareholders turn out to vote in such numbers,” said Richard Stone, Chief Executive of the Association of Investment Companies.

“This is a victory for shareholder democracy. There are six other trusts with votes just around the corner. It’s vital that all shareholders vote on the future of their investment trust. Shareholders need to act now.”

AIM movers: Engage XR education launch and difficult future for The Revel Collective

Andrew Hore
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AIM movers: Engage XR education launch and difficult future for The Revel Collective

Immersive technology developer Engage XR (LON: EXR) is unveiling its education offering at the EdTech conference Bett 2025 in London. The package has been developed for kindergarten up to 18 years old. Engage XR will be a partner with Meta for Education. The share price jumped 180% to 1.925p, which is the highest it has been for nine months.

Alaska-focused oil and gas explorer Pantheon Resources (LON: PANR) anticipates a resource upgrade in the Ahpun Eastern Topset area with at least four well tests planned for Megrez-1. The tests will start in the first quarter and should be completed by the end of June. There could be an increase in resources of up to 50% in the four reservoirs, which were estimated at 609 mmbbls prior to drilling. The executive order to proceed with the gas pipeline means that the required infrastructure should be available. The share price increased 28.8% to 50.5p.

Greatland Gold (LON: GGP) says processing plant input is ahead of plan with gold production of 30,000 ounces, which was better than expected, as was copper production of 1,189t. Cash was A$145m at the end of 2024. Guidance for 2025 will be provided in April. The share price improved 9.92% to 6.65p. The recent fundraising was at 4.8p/share.

Risk management software provider KRM22 (LON: KRM) reports annualised recurring revenues were 22% higher at £6.6m at the end of 2024 and since then it has reached £6.8m. The 2024 loss will be lower than expected at around £600,000. Net debt was £4.5m at the end of 2024. The share price rose 9.09% to 30p.

FALLERS

Bars operator The Revel Collective (LON: TRC) had a good Christmas, but it faces higher costs because of the National Living Wage and National Insurance increases. Annualised costs will rise by £4m. This has led to forecasts of larger than expected losses. Like-for-like Christmas revenues were 1.6% higher. Net debt is expected to be £24m at the end of June 2025. The share price slumped 31.3% to 0.275p.

Bradda Head Lithium (LON: BHL) is in a position to hopefully define a maiden NI 43-101 resource for the San Domingo lithium project. Approvals for drilling will help to define a bigger resource. The current lithium carbonate extract estimate is 2.8 million tons. Production via open pit mining is being targeted for early 2027. The share price declined 9.09% to 1.05p.

Quiz (LON: QUIZ) leaves AIM on Thursday. The share price slid 9.09% having been higher earlier in the day.

Mosman Oil & Gas (LON: MSMN) plans to sell its EP (A) 155 rights for A$350,000, including A$300,000 on grant of a licence by the Northern Territory government, and a 2.5% royalty. There is no value put on the asset in the balance sheet. This cash will finance helium exploration in the US. Due diligence is continuing for the acquisition of the Sagebrush oil and helium project, which is already producing. The share price fell 5.36% to 0.0265p.

Mindflair (LON: MFAI) has granted 41.5 million options exercisable at 0.25p each. Two directors and an employee are receiving the options. This compensates for the waiving and reduction of cash remuneration. The share price slipped 4.55% to 1.05p, which is still near the five-month high.

Ariana Resources (LON: AAU) produced 20,900 ounces of gold from its 23.5% owned Zenit mining operations in Turkey. Revenues were $54.7m. Mining is building up at the new Tavsan mine. A resource estimate is expected from Dokwe in Zimbabwe after further drilling analysis. The share price dipped 2.86% to 1.7p.

Trump optimism sends FTSE 100 to fresh record high

UK Investor Magazine
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Trump optimism sends FTSE 100 to fresh record high

The FTSE 100’s defensive attributes helped propel the index to fresh intraday highs on Wednesday as investors settled into the new narrative created by Donald Trump’s second term in the White House.

London’s leading index was 0.3% higher at the time of writing after printing all-time intraday highs above 5,580.

Donald Trump seems to be taking a similar approach to his first term by firing off sweeping remarks on possible measures but taking time to implement them, allowing markets to digest and react to changes.

Trump said he would end the war in Ukraine in one day, yet has so far only threatened Russia with the weaponisation of the oil price. This would be a process that could take months, even years, to have its desired effect on the Russian economy and Putin. 

The lack of major economic action by Trump is something of a comfort to markets. The new president has satisfied his base with proposed measures to remove illegal immigrants and close the southern border but has so far held off slapping 20% tariffs on Canada and Mexico. 

This could all change, but for now, Trump’s softer approach is being welcomed by markets.

“Investors are batting away concerns about the impact of President Trump’s policies on the global economy,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.

“The make up of the FTSE 100 also offers resilience in an uncertain world, with pharma, consumer staples, and utility stocks offering the prospect of stable returns whatever the economic weather. Although Chinese stocks fell back after POTUS pledged to hit China with an extra 10% tariff on goods imported into the US, there are hopes a tit-for-tat retaliation won’t materialise.”

Intermediate Capital Group surged to the top of the FTSE 100 leaderboard after reporting strong capital raising during the last quarter which will set the group up for higher management fees in the years to come. Asset under management rose 5.1% quarter-on-quarter. Intermediate Capital Group shares jumped 6%.

Easyjet was one of the FTSE 100’s biggest casualties after releasing a soft trading statement that raised questions about their outlook.

“EasyJet’s update lacked pizzazz. Saying that current booking trends are ‘supportive’ of full-year market expectations doesn’t exactly instil confidence. It’s woolly language which doesn’t go down well with investors,” said Russ Mould, investment director at AJ Bell.

“Admittedly the airline is only one quarter into its financial year, but the market needs reassurance that everything is going swimmingly for the business given the fragile economic backdrop and weakening consumer confidence. The fact the share price fell on the update suggests investors are disappointed.”

Wetherspoon sales jump but warning on costs a cause for concern

UK Investor Magazine
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Wetherspoon sales jump but warning on costs a cause for concern

J D Wetherspoon has reported a 5.1% increase in like-for-like sales for the 25 weeks leading to 19 January 2025, demonstrating resilient performance across most of its business segments.

The company witnessed particularly strong growth in its gaming operations, with slot and fruit machine revenue surging by 11.7%. Food sales showed healthy growth at 5.6%, whilst bar sales rose by 4.5%. However, the hotel division experienced a decline, with room sales falling by 6.5%.

The Christmas period proved especially encouraging for the pub chain, with like-for-like sales climbing 6.1% during the three weeks from 16th December 2024 to 5th January 2025. The second quarter of the financial year maintained momentum with a 4.6% increase in like-for-like sales.

However, while rising sales are an encouraging sign for the group, the Wetherspoon chairman, Tim Martin, took aim at the new Labour government and the impact of their plans to increase national insurance and the VAT treatment of supermarkets compared to pubs will have on the business.

“From 1 April 2025 labour-related costs at Wetherspoon will increase by around £60 million per annum,” Tim Martin said.

“Government-mandated wage increases have a significantly bigger impact on pub and restaurant companies than supermarkets.

“As previously highlighted, supermarkets pay no VAT in respect of food sales, whereas pubs pay 20%. This tax advantage allows supermarkets to subsidise the price of beer they sell.”

In terms of expansion, Wetherspoon has embarked on an ambitious growth strategy, with plans to open nine new establishments this year. The company has already launched two new venues in Marlow, Buckinghamshire and at London Waterloo station. Additional locations are scheduled to open at prominent transport hubs, including London Bridge station and Manchester Airport.

The pub operator is also strengthening its presence in the leisure sector through franchise partnerships with Haven Holiday Parks. Four new franchised establishments are set to open across popular holiday destinations, bringing the total number of franchised venues to seven.

Despite selling six properties during the period, which generated £4.1 million in cash, the company’s total sales grew by 4.0%. The slight difference between total and like-for-like sales growth reflects these property disposals. Wetherspoon currently operates 796 pubs across its estate.

“Wetherspoons have served up a lukewarm trading update this morning after rising food and drink sales during the Christmas period were all but watered down due to the rising cost of operations,” said Mark Crouch, market analyst at eToro.

“Despite coming off the back of a record year, the pub operator is facing significant pressure from increasing expenses which has led Wetherspoons’ chairman, Tim Martin, to publicly call out Sir Keir Starmer in the latest trading update, urging a resolution to the “tax discrepancy” surrounding the 20% VAT on food sales.”

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