Our long/buy idea in JD Wetherspoon made more than 10% investment returns for clients after the UK Pub chain defied gloom analyst predictions.
On 13th September 2019, JD Wetherspoon reported a 7% increase in like for like sales across it’s UK store estate coupled with a higher annual pretax profit as more Britons visited its pubs, defying weaker overall consumer confidence as spending continues to be squeezed due to Brexit uncertainties.
JD Wetherspoon, which operates more than 900 pubs in the UK, said pretax profit after exception items rose to 95 million GBP for the year ended July 28, up from 89 million GBP versus the same period last year.
Wetherspoon reported that they continued to see increased costs due to minimum wage hikes, higher property prices, and energy/utility bills which remains a drag on pub profitability.
Management’s trading statement highlighted strong sales growth trends across food and bar segments; in-line with Woozle’s channel checks
2019 Cost increases shows continued margin pressure at pub locations on the back of increased staff wages, utilities, and renovations as highlighted in our earnings preview.
Woozle’s team of primary research uncovered evidence of continued positive YOY fundamental trends at JD Wetherspoon with mid-single digit like for like sales trends across our interviewed sample driven by improving foot traffic and average spend trends as new menus, alcohol-free ranges, and pub refurbishments lifted results. Several locations continued to cite a combination of mobile apps improvements, price hikes, and promos on food and drink as tailwinds to future trading.
Woozle reiterated our long/buy Idea on JD Wetherspoon on 2th August ahead of their Trading Statement Today.
Clients were able to scale or initiate their long positions following our reiterated long/buy idea with enough time to capitalise on a roughly 10% increase in the share price in the lead in to earnings.