Wetherspoons sinks to record loss from COVID lockdowns

·3-min read
A member of bar staff wearing PPE (personal protective equipment) in the form of a face mask, pours drinks inside the Wetherspoon pub, Goldengrove in Stratford in east London on July 4, 2020, as restrictions are further eased during the novel coronavirus COVID-19 pandemic. - Pubs in England reopen on Saturday for the first time since late March, bringing cheer to drinkers and the industry but fears of public disorder and fresh coronavirus cases. (Photo by Tolga Akmen / AFP) (Photo by TOLGA AKMEN/AFP via Getty Images)
Revenue fell from £1.26bn to £773m in the last year after Wetherspoons was closed for 19 weeks. Photo: TOLGA AKMEN/AFP via Getty Images

Pub chain JD Wetherspoon (JDW.L) posted its biggest ever loss on Friday after national lockdowns heavily weighed on the sector.

The company saw a loss of £154.7m in the year to 25 July, compared to a £34.1m loss a year earlier, as sales slumped and it struggled to hire staff in staycation hotspots.

Revenue fell from £1.26bn to £773m in the last year after Wetherspoons was closed for 19 weeks due to COVID-19 measures.

The firm added that its airport sites had also struggled over the period, down 47.3%, as travel restrictions resulted in a sharp decline in footfall.

However, like-for-like sales in the last nine weeks, which strip out the effect of new pub openings, came in just 8.7% lower than in the same period before the pandemic, pointing to signs of recovery.

Shares were sharply lower after opening on Friday, but soon recovered. Chart: Yahoo Finance
Shares were sharply lower after opening on Friday, but soon recovered. Chart: Yahoo Finance

This was only the third time that a loss had occurred in the firm's 37-year public history, having only fallen into the red in 1984 and 2020 previously.

Tim Martin, the outspoken chairman of the company, said that the biggest threat to the pub industry was the “precedent set by the government for the use of lockdowns and draconian restrictions.”

He said: “During the pandemic, the pressure on pub managers and staff has been particularly acute, with a number of nationwide and regional pub closures and reopenings, often with very little warning, each of which resulted in different regulations.

“In the last year, the country moved, in succession, from lockdown, to 'Eat Out to Help Out', to curfews, to firebreaks, to pints with a substantial meal only, to different tier systems and to further lockdowns.”

Martin also called the handling of the pub sector during the pandemic “a threat to civil society and democracy”.

Read more: Brexit-supporting Wetherspoon boss calls for more immigration to plug staff shortages

Wetherspoons opened five new pubs during the year, but sold or closed another 16, leaving it with a total of 861 in its estate.

Pubs and restaurants were one of the hardest-hit sectors from the pandemic. Businesses dealt with lengthy closures and rule changes, but managed to support staff through the government’s furlough scheme, VAT holidays and local authority grants.

They are now facing difficulties with supply chain disruptions with heavy goods vehicle (HGV) drivers due to a post-Brexit exodus of European workers.

The shortage could pressure the industry over the usually busy Christmas season.

Read more: Why is the UK facing a HGV driver shortage and what could it mean for consumers?

Wetherspoons share price fell as much as 5% in London on the back of the news, before recovering slightly to be trading 1% lower.

Adam Vettese, analyst at multi-asset investment platform eToro, said: “While pubs are starting to put coronavirus behind them, a shortage of supplies and workers could come to a crunch at Christmas time – a key period for sales.

“We have already seen reports of Wetherspoon pubs running out of beer, while other pub chains are limiting menus or opening hours due to staff shortages. These are not easy problems to fix and it feels as though UK pubs have lurched from one crisis to another.”

Watch: Staff shortages could last up to two years, says CBI

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting