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JD Wetherspoon to feel the cash burn


Buried away in Friday’s interim results from pubs operator JD Wetherspoon PLC (LON:JDW) will be esoteric stuff such as sales and profits (or losses).

Before you reach the P&L you may have to wade through hundreds of words of ranting from ‘Spoons founder and chairman, Tim Martin.

Since the group last updated the market, the chancellor of the exchequer, Rishi Sunak, had delivered his budget, which is sure to give plenty of ranting material for Martin to get his frothing mouth into.

Martin’s attention of late has been on Brexit but with that issue hopefully done and dusted he might return to a favoured theme of the unfair discrepancy in tax treatments for pubs compared to supermarkets.

To be fair, he has a point.

The company raised roughly £94mln in January, placing shares at 1,120p a pop, putting to bed liquidity fears The shares now trade at 1,336p.

The company said the extra liquidity will enable it to cope with “very low sales after reopening” – a barbed reference to what the group sees as draconian restrictions on the pubs industry – and also provide it with some firepower to buy properties in central London that likely will be available at knockdown prices.

“Over the past few weeks, the share price has seen an uplift on the basis that we’ll see pubs reopen sometime during the second quarter [Q2] of this year; however, as far as Wetherspoons own Q2 is concerned it’s really a matter of minimising cash burn, with 99% of its employees currently on furlough, and the costs of non-furloughed employees estimated to be at £800mln per week,” said CMC’s Michael Hewson.

“With other general costs including maintenance set at around £1.4mln per week, the unlock can’t come soon enough so that the likes of Wetherspoon and other hospitality firms can make the most of the extension of the VAT tax cuts that were announced in the budget,” Hewson added.

On the macro front, the GfK consumer confidence survey for March will be published, along with public finances data for February.

“A modest improvement in the headline consumer confidence indicator is expected, to -20 in March, albeit leaving it some way off the level recorded in the same month last year as the pandemic built up steam (-9),” said Daiwa Capital Markets.

“Meanwhile, public sector net borrowing (excluding banks) is expected to come in at £23.0bn in February, up from just £1.4bn a year earlier but down from the high of £47.2bn in April last year,” Daiwa added.

Significant announcements expected

Trading announcements: Investec PLC (LON:INVP)

Finals: ContourGlobal PLC (LON:GLO), Sanne Group PLC (LON:SNN)

Interims: JD Wetherspoon PLC (LON:JDW)

Economic data: UK consumer confidence, UK public sector borrowing

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