By many metrics, JD Wetherspoon (JDW) pubs appear to be the nation’s favourite. In a late January trading update, the group revealed that like-for-like sales rose by more than 15 per cent in December, while growth across the wider hospitality sector was just under 9 per cent. The group has now outperformed the industry’s CGA business tracker for 16 consecutive months – and its valuation is reflecting this success.
Its shares currently trade at around 21 times projected earnings for the 2024 financial year, which ends in July. This makes it significantly pricier than Mitchells & Butlers (MAB), its fellow pub and restaurant chain, which trades on a forward multiple of only 12 times. However, the latter is not materially struggling, either – its revenue for the 15 weeks to 13 January was up 7.7 per cent on last year.
The inflationary pressures that plagued businesses and consumers last year have, mercifully, started to abate. Mitchells & Butlers said in November that cost growth should slow from 10 per cent – or £175mn – to 3 per cent this year. That is in spite of the 9.8 per cent increase in the national living wage that will apply as of this April.