Pub chain JD Weatherspun (LSE: JDW) The share price has risen almost %% I am writing this Friday afternoon, its share price has risen about 25% last year. I have to admit, I’m confused. The company just reported the results, which leaves much to be desired. Let me explain.
Damage to the balloon
For the full year ending July 25, it lost about %% of revenue and even reported a ballooning in losses. This was to be expected. The pubs were closed during the lockdown for most of last year. Even when they were open, most of the time, the alert was still there. Just a few months ago things started to get easier. But by the time we reached Independence Day, Weatherspun’s entire financial year was almost over. As a result, these results do not reflect any growth in pub activity that may be seen in the following months.
Weak trading update for Weatherspun
But rubbed here. In addition to full year results, the company has also released its latest trading updates for August and September. And that’s not encouraging either. It says that compared to 2019, the year before the epidemic, sales like this (LFL) for this period have decreased by 8.7%.
Some of this may be explained by the fact that airport pubs have not yet returned to pre-epidemic activity. As a result, it is not surprising that their LFL sales have dropped by a whopping 47%. But even if you separate them from the overall number, the results don’t change much. Sales are still down 7.1%.
The suffering of labor
The company also identified low staff availability as a challenge. In his remarks, company chairman Tim Martin said, “Some areas of the country … find it difficult to attract workers”, And adds, “The pressure on pub managers and staff was particularly intense …” . It follows his recent remarks highlighting the challenges of starting paying Value Added Tax (VAT) from October.
In short, Weatherspun is still in a tough spot. The relationship with this is why I was confused when its share price rose in yesterday’s trading. But I can think of reasons that make investors optimistic.
Why optimistic about JDW stock?
The first is that although the company’s LFL sales have been declining since the complete ban was lifted. The level of fall The last four weeks have been slow. So September 2019 has seen a smaller decline than August. This indicates that demand is on the way back. While consumer demand is expected to increase with the return of public spaces, I think it makes sense to expect it to get better over time.
Also, JD Weatherspun’s share price has fallen nearly 25% since the beginning of April, when it reached a one-year high. And from here on out things can’t be too bad for it. So, this might seem like a good time to buy Weatherspun. To me, however, other pubs seem more optimistic about their results, although they use different comparative times. I will wait for another update before considering whether to buy it.
Manika Premsingh has no position in any of the shares mentioned. Motley Flower UK has no position on any of the shares mentioned. Opinions expressed in the companies mentioned in this article may differ from those of the author and therefore our official recommendations in our subscription services such as Share Advisors, Hidden Winners and Pro. Here at The Motley Flower we believe that considering a variety of insights makes us a better investor.