Pub group JD Wetherspoon thinks its pubs are unlikely to open before at least the end of March amid ongoing national lockdown restrictions.
This week the chain has raised around £93.7million via a share placement to bolster its balance sheet while the pandemic rolls on.
Some of the cash raised will also be used to snap up struggling pubs at cheap prices.
He’s in charge: JD Wetherspoon chairman Tim Martin thinks pubs won’t open until at least the end of March
Recent findings suggest over 2,500 pubs have shut for good in the past year, which is nearly double the number seen in previous years.
In a stock market statement, Wetherspoon said some of the cash raised would be used to ‘facilitate the acquisition of new properties, which are likely to be available at favourable prices, as a result of the pandemic.’
The group, which has 871 pubs across the country, said it was targeting pubs to buy in central London, which have been hard hit by the loss of tourist traffic and office workers. Many have also been closed for longer than large, rural pubs because they cannot meet social distancing standards.
‘It may be possible to achieve a higher-than-average return on capital on properties acquired in the next few years, based on the company’s past experience,’ Wetherspoon said.
This is Money has asked the Wetherspoon to confirm how much money it has received in Government support since the pandemic started.
With pubs closed up and down the country, since 31 December Wetherspoon’s sales have been zero. In the 15 weeks to 8 November, the group reported a 27.6 per cent drop in like-for-like sales.
In October, the group reported its first annual pre-tax loss since 1984 as it laid bare the impact of coronavirus restrictions on the sector.
It posted a £105.4million loss on sharply lower sales in the year to 26 July.
The chain said sales across its pubs and the entire hospitality sector had been hit by the introduction of tiers, a 10pm curfew, a requirement to order all food and drink at the table and the mandatory use of face masks when moving around inside pubs.
On the lookout: JD Wetherspoon will use some of the cash it has raised to buy more pubs
Missing this? Shutdowns have hammered the hospitality sector during the pandemic
Wetherspoon said it spent £13.1million before reopening in July and August on implementing Covid-secure health and safety measures across its sites.
The group has furloughed 99 per cent, or around 37,000, of its staff and made 378 staff at its head office and airport sites redundant in recent months.
The group said: ‘The costs of non-furloughed employees, plus the taxes and other costs of furloughed employees, are £0.8 million per week during the closure period.’
On top brass pay, the group said the chairman and non-executive directors had seen their pay cut by 50 per cent during the current shutdown, while the chief executive’s pay has been temporarily reduced by a quarter.
Tim Martin, the company’s chairman, said the pandemic was having a ‘severe’ impact on the pub sector.
He added: ‘After a number of false starts, the hospitality industry generally anticipates a return to more normal trading patterns in the spring and summer, as a result of the introduction of a mass vaccination programme.
‘The equity placing will help the company, along with the other actions it has taken, to emerge from the pandemic in a strong position.’
Commenting on its share placement, the company said 8.4million new shares had been placed at 1,120p a share, representing a discount of over 5 per cent to Tuesday’s closing price.
Shares in the FTSE 250-listed company are up 4.99 per cent or 59.00p to 1,242.00p this afternoon.
David Madden, an analyst at CMC Markets UK, said: ‘Wetherspoon has suffered greatly because of the health emergency.
‘For a large portion of 2020 its pubs were either closed because of lockdowns or else they were operating in restricted environments, where capacity numbers were below that of 2019. The latest restrictions in the UK are very severe and there is chatter they will remain in place until Easter, which spells further misery for the group.
‘The pandemic derailed Wetherspoon’s success as its share price hit a record high in December 2019, but in early 2020 it retreated a little. As the health emergency sit in, the stock price came under pressure but subsequently it rebounded.’
Analysts at Jefferies said: ‘We like Wetherspoon’s relentless consumer focus, employee engagement, largely freehold estate and history of evolution. This profile should allow JDW to fast return to its former profitability.’
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