Equity Analysis /
United Kingdom

GB : JD Wetherspoon - Trading improving but structural challenges remain

    Anna Barnfather
    Anna Barnfather

    Analyst - Leisure

    Andrew Wilkinson
    Andrew Wilkinson

    Analyst - Leisure

    CGS-CIMB
    25 March 2022
    Published by

    JD Wetherspoon has seen a return to more normal trading patterns in recent weeks, with sales -2.6% over the past three weeks (vs 2019). Nonetheless, we expect the recovery to lag its peers given its large sites, reliance on volume recovery and an older, more cautious customer base. Furthermore, changing consumer trends and an inflationary environment will continue to put pressure on its high volume, low margin model, with price rises likely to test the price sensitivity of its customer base. We reduce FY22E IAS 17 PBT to £30m (from £37m) based on rising cost pressures but leave TP unchanged at 900p. HOLD