Coronavirus: Wetherspoon scraps dividend and warns on profit
Wetherspoon boss Tim Martin has scrapped the pub chain’s dividend and issued a profit warning after Boris Johnson urged Brits not to visit pubs and restaurants amid the UK coronavirus outbreak.
A rapid escalation in UK coronavirus cases has already seen a 4.5 per cent decline in Wetherspoon pub sales in the week to 15 March.
But Martin warned today: “Following the Prime Minister’s advice to avoid pubs, sales have declined at a significantly higher rate.”
That has led Wetherspoon to delay spending on pubs and cancel its interim dividend despite strong profit growth in the first half of its financial year. Martin also warned full year profit will miss market expectations.
“We now anticipate profits being below market expectations, so long as the current health scare continues,” Wetherspoon chairman Martin said.
“As a result of this uncertainty, it is impossible to provide realistic guidance on our performance in the remainder of the financial year.”
However, Martin said Wetherspoon’s measures, as well as the government’s pledge to cancel business rates for retailers, should help it survive.
“The company believes it has sufficient liquidity to maintain operations at a substantially lower level of sales,” Martin said.
While like-for-like sales rose 3.2 per cent in the six weeks to 8 March, they sank 4.5 per cent in the week to 15 March. Since then Wetherspoon sales have fallen much more sharply.
Earlier this week Martin warned a lockdown of the hospitality sector could “cripple” the economy.
Pubs and restaurants are set to record huge falls in sales as people stop visiting amid the coronavirus outbreak. Johnson has warned people to avoid gatherings at pubs to curb the spread of coronavirus. However, he has not ordered pubs and restaurants like Wetherspoon to close.
The figures
Wetherspoon saw profit before tax rise 15.2 per cent year on year to £57.9m for the six months to the end of January, it said today.
Revenue also climbed 4.9 per cent to £933m while like-for-like sales rose five per cent. And earnings per share rose almost 16 per cent to 43.3p.
Free cash flow sank 31.2 per cent to 46.7p, down from 67.9p in 2019. Wetherspoon blamed the drop on the timing of supplier payments, an earlier payment for corporation tax and higher spending.