Wetherspoon sinks to first loss since 1984 amid warnings of 'last orders' for hospitality sector
Pubs giant JD Wetherspoon has sunk to its first loss in more than 30 years with its outspoken founder and chairman urging UK politicians to follow the Swedish model of lighter Covid restrictions.
The chain, which is one of the UK’s biggest hospitality businesses with hundreds of pubs, fell £105.4 million into the red after sales took a £556m hit from the pandemic.
While the firm saw an increase in trade in the weeks following the easing of lockdown measures, more recent restrictions and 10pm curfews have seen this fall back.
The loss is the first time founder and chairman Tim Martin’s chain has sunk into the red since 1984 but the company remains confident that it can continue to trade.
No details were provided on potential or recent job losses but two pubs were opened and nine were sold or closed. It has already warned of 450 job losses across its airport pubs business.
Martin eiterated his belief that 100 governments around the world were wrong to follow scientific advice and impose restrictions, instead telling shareholders the UK should follow the Swedish model of lighter restrictions.
Quoting business scion Warren Buffett from 1989, he claimed Swedish Professor Johan Giesecke is the epidemiologist equivalent and the UK should follow his lead.
Martin said: “The most damaging regulation relates to the 10pm curfew, which has few supporters outside of the narrow cloisters of Downing Street and Sage meetings.
“This has meant that many thousands of hospitality industry employees, striving to maintain hygiene and social-distancing standards, go off duty at 10pm, leaving people to socialise in homes and at private events which are, in reality, impossible to regulate.
“In marked contrast to the consistency of the comparatively successful Swedish approach, which emphasises social distancing, hygiene and trust in the people, the erratic UK government is jumping from pillar to post and is both tightening and tinkering with regulations, so we are now in quasi-lockdown which is producing visibly worse outcomes than those in Sweden, in respect of both health and the economy.
“Risk cannot be eliminated completely in pubs, but sensible social-distancing and hygiene policies, combined with continued assistance and co-operation from the authorities, should minimise it.”
In terms of sales, Wetherspoon revealed that sales in the year to 26 July fell from £1.82 billion to £1.26bn, with a loss of £105.4m. In 2019, under slightly different accounting rules, the group made a pre-tax profit of £95.4m.
Adam Vettese, analyst at investment platform eToro, said: “Barely standing after the first lockdown, at the moment the UK’s hospitality sector resembles a weakened boxer praying that they see it through to the final bell.
“Following the government’s new restrictions on pubs, there is a strong chance that the busy Christmas trading period, viewed as a lifeline by many in the industry, will be severely hampered.
“Even Wetherspoon, ever-profitable before the pandemic and probably the UK’s most resilient pub chain, is feeling the squeeze from the new Covid-19 rules, as evidenced by the sea of red in its preliminary results.
“Putting aside the validity of the government’s approach, the reality is that unless pubs return quickly to normal or receive substantial support, then it’ll soon be last orders for a significant number of favourite pubs and restaurants.”
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