J D Wetherspoon plc (JDW) Ordinary 2p

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JD Wetherspoon’s like-for-like sales increased by 5.1% in the 12 weeks to 20 July 2025. Year-to-date like-for-like sales also increased by 5.1%, supported by favourable weather conditions.

The company exited nine pubs in the current financial year and opened eight, including five new franchised pubs.

Profits are expected to align with market expectations, which point to operating profit of £140mn, marginally ahead of last year.

Net debt is expected to be around £720mn at year-end. So far this year, £66mn has been spent on share buybacks.

The shares remained flat in early trading.

Our view

The sun’s been shining on JD Wetherspoon’s in its final quarter, but that’s not encouraged quite enough extra pub visitors to provide an uplift to full-year guidance. However, given the additional cost burden from increased wage rates and taxes, a slight increase in operating profit compared to last year would be a respectable outcome.

The strong brand perception holds it in good stead, helping build out its position as the most visited licensed chain in the country, where its value proposition is helping it increasingly steal custom from casual dining operators. That’s been driven by an ongoing pivot towards a younger and more family-oriented demographic, which explains the growing importance of food in Wetherspoon’s sales mix.

Flagging consumer confidence is a risk we’re keeping an eye on, but so far leisure spending is proving to be resilient. And overall Wetherspoon looks well placed to outperform the market in terms of topline growth.

After a period of reducing the estate by selling underperforming units, the group is back in expansion mode. A further fifteen managed pubs are expected to be added to the 794-strong estate in the year to July 2026. Recent site launches have been focused on high-footfall locations such as airports and travel hubs.

The rollout of franchised sites is also accelerating with openings expected to match those of managed units over the same period. We see this as a relatively low-risk and scalable route to growth. The Group’s also been acquiring the freeholds of some rented premises, which should help to improve profitability.

Cash flow has been a little disappointing of late, and with costs going up, there’s work to be done if cash generation is to improve. Earlier steps to strengthen the balance sheet now look to have been prudent moves.

The recently reinstated dividend remains on the table, and share buybacks have been continuing. But no further payouts can be guaranteed, particularly if the group accelerates its estate investment or trading conditions deteriorate.

The valuation has seen investors shrug off initial concerns around the hike in UK labour costs, but it still doesn’t look too demanding compared to the peer group. We think in the long term, there’s an opportunity to grow market share significantly. However, the combination of economic uncertainty and pressures on the cost base means there could still be more pitfalls ahead.

Environmental, social and governance (ESG) risk

Consumer services companies are medium-risk in terms of ESG, and very few companies are excelling at managing them. That leaves plenty of opportunity for forward-thinking firms. The primary risk-driver is product governance. The impact of their products on society, labour relations and environmental concerns are also key risks to monitor.

The company's overall management of material ESG issues is average according to Sustainalytics.

Significant issues regarding the Board's quality and integrity have been identified, including worries about the length of service and independence of non-executive directors. ESG reporting practices are not aligned with leading reporting standards, and the Company's environmental policy is assessed as weak. Moreover, sustainability performance targets are not incorporated in the executive compensation plan. In terms of responsible drinking, there is a strong code of conduct in place with evidence to suggest this is an area the chain takes very seriously.

This article is original Hargreaves Lansdown content, published by Hargreaves Lansdown. It was correct as at the date of publication, and our views may have changed since then. Unless otherwise stated estimates, including prospective yields, are a consensus of analyst forecasts provided by Refinitiv. These estimates are not a reliable indicator of future performance. Yields are variable and not guaranteed. Investments rise and fall in value so investors could make a loss.

This article is not advice or a recommendation to buy, sell or hold any investment. No view is given on the present or future value or price of any investment, and investors should form their own view on any proposed investment. This article has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is considered a marketing communication. Non-independent research is not subject to FCA rules prohibiting dealing ahead of research, however HL has put controls in place (including dealing restrictions, physical and information barriers) to manage potential conflicts of interest presented by such dealing. Please see our full non-independent research disclosure for more information.

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