Wetherspoons fared better than most of their competitors during the second half of 2022 as sales grew 13.1% in the period 25 weeks to 22 January 2023, compared to a year ago.
Despite sales rising 13.1%, trading for the period was still 0.7% lower than before the pandemic.
During the 12 week Christmas trading period, Wetherspoons like-for-like sales were 17.8% higher than the same period a year ago, but were 2% lower than the pre-pandemic trade.
The jump in sales reflects the absence of fears around coronavirus, as well as drinkers choosing the more cost effective Wetherspoons offering.
However, Wetherspoon feel the cost-of-living crisis capped sales gains as consumers chose to purchase alcohol from supermarkets and stay at home to save money.
“Supermarkets pay zero VAT in respect of food sales, whereas pubs and restaurants pay 20%. This tax benefit allows supermarkets to subsidise the selling price of beer,” said Wetherspoon chairman Tim Martin.
Wetherspoons estimate supermarket have taken around half of pub beer sales since 1979.
“Naturally, pub chain Wetherspoons did better in the Christmas just gone than the Omicron-marred festive period in 2021 – that’s not really news. It would have been difficult to do worse given restrictions are no longer in place and the fear factor associated with going about normal life has receded,” said AJ Bell investment director Russ Mould.
Mould went on to explain why investors could be disappointed with today’s update and reasons for today’s 2.7% drop in Wetherspoons shares.
“What is damaging for Wetherspoons is that trading is still behind where it was pre-pandemic. Wetherspoons has always had a model of prizing volume over margins, so when you consider how fast costs are rising it is not surprising profitability is under pressure.
“Outspoken chair Tim Martin points to the threat posed by supermarkets, with people buying booze in stores and drinking at home – a situation he notes is exacerbated by the disparity in tax treatment.