Investment: Time to buy another round of Wetherspoon
Wednesday 16 September 1998
Profit forecasts were scaled back from pounds 26m to less than pounds 21m over the year as the company faced a series of margin squeezes. It gave staff a pay rise, introduced larger glasses and found that its newer sites were taking longer than expected to achieve their full potential. Then Wetherspoon's no-nonsense pubs suffered from their decision not to provide television coverage of the World Cup. The profits warning from rival Regent Inns in late June added to the woes.
The result is that Wetherspoon shares have lost more than half their value since the start of the year and have underperformed the market by more than 50 per cent.
So, with the shares down to their lowest point for more than two years, is it time to start buying back in?
Prospects certainly look encouraging. Full-year profits were 15 per cent higher at pounds 20.2m, and Wetherspoon says its pubs are showing no sign of any downturn. Anyway, the management argues, Wetherspoon's lower prices and no-frills approach make its format more resilient in tougher times. The business has grown in downturns before.
Whitbread may be slowing its investment in high-street pubs but Wetherspoon, which picked up some bargain sites in central London during the last slump, is carrying on. It opened 68 new pubs last year and has licensing permission for a further 91. Capital expenditure is increasing from last year's pounds 67m to pounds 114m.
Like-for-like sales growth has reversed from a 2.2 per cent increase last year to a 1 per cent fall in current trading, although the trend is improving. On current-year forecasts of pounds 24.5m the shares - down 7p to 160.5p yesterday - trade on a forward rating of 14. That looks decent value.
- 1 Frank Lampard's face drops when Holly Willoughby introduces him as a 'Man City legend'
- 2 Sofyen Belamouadden murder: The inside story of a crime that horrified Britain
- 3 Company breaks open Apple Watch to discover what it says is 'planned obsolescence'
- 4 The Visit: Trailer for M Night Shyamalan's latest horror film is terrifying
- 5 9/11: Iranian General accuses US of organising September 11 terror attacks
General Election 2015: Tories sack candidate who said she would never support 'the Jew' Ed Miliband
9/11: Iranian General accuses US of organising September 11 terror attacks
General Election 2015: Stephen Hawking says he will vote Labour
Manny Pacquiao begs Indonesia president to spare life of drug smuggler Mary Jane Veloso about to be executed
Yazidi sex slaves undergoing surgery to 'restore virginity' after being raped by Isis militants
General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband
The sickening truth about food banks that the Tories don't want you to know
Aaron and Melissa Klein: Oregon anti-gay bakers ordered to pay $135,000 after refusing to make cake for same-sex wedding
Andrew Lloyd Webber: Phantom of the Opera writer mocked after issuing a warning about Ed Miliband and Nicola Sturgeon
General election 2015: Labour will toughen hate crimes legislation surrounding Islamophobia
HSBC review into moving headquarters from UK 'underway'
iJobs Money & Business
£20000 - £60000 per annum: Recruitment Genius: Are you recently QCA Level 4 qu...
£20000 - £22500 per annum + OTE £30K: SThree: SThree Group have been well esta...
£25 - 30k: Guru Careers: We are seeking an Application Support Analyst / 1st L...
£45K - £55K (DOE) + Benefits: Guru Careers: We are seeking a full stack .NET D...