Known as the home of cheap booze, Wetherspoons (LON:JDW) enjoyed the best of the festive period with the announcement that it will expand its pub portfolio during 2020.
The company reported an underlying 4.7% increase in sales for the 12 weeks to January 19, on top of a 4.2% increase in sales.
This strong financial performance was also reflected in Revolution Birds (LON:RBG), whose share price soared after the company announced record Christmas sales for the seventh year in a row.
Unfortunately, the same cannot be said for City Pub Group PLC (LON:CPC), whose festive performance was “subdued” and anything but cheerful. The company’s stock price fell 8% following the announcement, and the company expressed the view that it would not meet market expectations.
However, Wetherspoons’ progress was so expected that news that the company has opened one pub, sold five, and plans to open a further 10-15 sites during the financial year The shadow became thinner.
This is part of the pub’s strategy to spend £80m on new pubs and pub refurbishments by the end of the year.
Wetherspoon has spent £57m so far this year buying freehold reversions of 18 former tenant pubs. We expect repatriation spending for the full year to be around £85m.
Additionally, the company announced that it has spent £320m on share returns since 2014 and £516m on buying back or canceling 53% of its shares since 2003.
weatherspoon lawsuit
Commenting on the High Court case involving the pub chain, chairman Tim Martin said:
“In the important High Court case regarding Weatherspoon, the judge said he would consider written statements by witnesses to be true unless barristers objected in cross-examination.”
“This principle of enlightened justice is also implicit in the ‘comply or explain’ clause of the Corporate Governance Guidelines (the ‘Code’). ”
“Comply or explain must mean that the code assumes flexibility and does not advocate a ‘one type fits all’ approach.”
“If shareholders do not say anything about the company’s explanations to comply with the Code, it is reasonable to assume that there is shareholder consent.”
“But in practice, detailed explanations are ignored by many fund managers and their corporate governance advisors. Comply or explain is not a ‘comply or be publicly humiliated and voted out by the board. This is a risk that most NEDs are understandably reluctant to take. ”
“A possible reason for ignoring explanations contrary to regulations is that it is easier and more costly to apply arbitrary standards such as the 9-year rule than to engage in dialogue with companies and consider their explanations. That means it doesn’t cost anything.”
Anyone want to discuss Brexit over a beer?
In his usual fashion, Mr Weatherspoon had to state his opinion on Brexit:
“It’s unfortunate that pro-remain groups like the CBI and the Food and Beverage Federation are doubling down on the ‘Project Horror’ story even at this late stage.”
“A dramatic headline on the BBC’s main news website (“Brexit: Warns of price rises after prime minister pledges to diverge from EU rules”, 18 January) warns that if a “divergence” from the EU occurs; predicted dire consequences. ”
“This article included a warning on jobs from the CBI, which has so far promoted a disastrous exchange rate mechanism and the euro, and a warning on food prices from the Food and Drink Federation (FDF).”
“The CBI’s warnings of job losses and economic recession if there was a Leave vote in 2016 were proven to be a myth, with over a million jobs created.”
“The FDF’s warnings about rising food prices are ridiculous. The EU will impose tariffs and quotas on around 13,000 non-EU imports, including bananas, rice, oranges, coffee, wine and many other food and drink products. It’s a highly protectionist organization.”
“Tariff elimination will obviously lower prices.”
“The time has come for these organizations to take sensible steps and support Britain’s democratic decisions.”
Memo for investors
The company’s shares are now down 0.064% (1.00 pence) to 1,562.00 pence per share after a period of upward movement. Peel Hunt has reiterated his “hold” stance on the stock, with a P/E ratio of 20.25 and a dividend yield of 0.51%, which is not high at all.
