J D Wetherspoon restores dividend after 4-year break, signals financial recovery

This content was published on October 4, 2024 - 10:48

2 minutes

By Yamini Kalia

(Reuters) -British pub group J D Wetherspoon has restored its dividend after suspending it for four years, it said on Friday, when it reported a nearly 74% jump in annual profit, citing resilient customer demand and pub disposals.

Pub groups that were hard hit by the pandemic and the cost-of-living crisis have become more confident about growth as inflation and interest rates have started to ease, increasing customers’ spending power.

Shares in the FTSE 100 company, which have fallen about 10% this year, rose by as much as 1.7% to 737 pence in early trade.

While Wetherspoon wasn’t affected much by an unseasonably wet summer in Britain, riots in August were a slight dampener on its performance, Chairman Tim Martin said in a text message to Reuters.

Across pub groups, sales were boosted in June and July when soccer fans gathered to watch the Euro soccer championship, offsetting the impact of the weather and disruptions caused by riots.

The pub group, sometimes referred to as “Spoons”, is prominently marketing coffee and breakfasts, which aren’t traditional areas of strength for pubs, to lure early customers, Martin said.

The group, which owns and operates pubs across the UK and Ireland, reported a pretax profit of 73.9 million pounds ($97.04 million) for the year ended July 28, compared with 42.6 million pounds a year ago.

It posted a 4.9% rise in like-for-like (LFL) sales in the nine weeks to Sept. 29, half of the 9.9% growth seen in the same period last year.

“The reduction in inflationary cost pressures is leading to a slowing of LFL sales momentum, but also an increase in operating margins over time,” Jefferies analyst James Wheatcroft said.

The dividend of 12 pence, the level at which it was halted four years ago, highlighted the return to financial strength post COVID-19, Wheatcroft added.

($1 = 0.7616 pounds)

(Reporting by Yamini Kalia in Bengaluru; Editing by Subhranshu Sahu and Barbara Lewis)