A key takeaway from Wetherspoons’ otherwise steady as she goes trading update was the news it is no longer going to be reliant on the slack offered by lenders during Covid as it brings its borrowings under control.
AJ Bell’s Danni Hewson said: “The move away from covenant waivers is a sign Wetherspoons has finally been able to put the pandemic behind it, allowing the pubs group to capitalise on an opportunity to draw in more cost-conscious punters and gain market share as a survivor in a sector which has endured an apocalyptic few years.
“Wetherspoons has been particularly exposed to inflationary pressures thanks to a longstanding business model of prioritising volumes over margins, however it is now streamlining its estate, implying an attempt to become a leaner business. There are also encouraging signs that costs are starting to level off.
“The company is at pains to stress the divestment of pubs is not a fire sale of assets in response to the difficulties facing the hospitality sector. Instead, this is a move to close pubs which were effectively cannibalising its own sales elsewhere because they are located so close to other Wetherspoons venues.
“Sales are showing good momentum and this implies a strong thirst, which for so long went unquenched thanks to lockdown restrictions, for socialising over a drink. Wetherspoons’ mix of decent quality beers, food and keen prices is likely to stand it in good stead.”
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