On 17th November, I travelled to London to attend the annual general meeting of JD Wetherspoon. Several dozen shareholders were in attendance, including several members of the club.
The numbers at the top table have increased over previous years, as there are now two employee directors who are full members of the board, and an additional two ‘associate’ employee directors who also attend board meetings. These appointments are intended to ensure that board discussions remain well informed about the views of those working at the front line of the company.
The chairman started the meeting by introducing all the current board members and paying tribute to two directors who are leaving the company after many years of service. The tributes included some amusing anecdotes from the directors’ time with the company.
The formal business of the meeting was kept very short, before opening the floor to questions. In addition to those asked on the day, written questions submitted in advance of the meeting were also addressed.
Many of the questions followed several broad themes:
- The company’s financial position, including debt levels and potential for the resumption of dividend payments.
- Questions around specific pub closures.
- The company’s pricing policy, and the differential against other operators.
The chairman said that, following the shock of the pandemic, the company would be likely to carry lower debt levels going forward. No forecast could be made as to when dividend payments might be resumed.
Regarding pub closures, the chairman said that they currently had too many pubs that were too close to each other. In the past, they had believed that they could operate a traditional Wetherspoons and a Lloyd’s No1 bar (Wetherspoons with music) close together. However, this had proven to not be the case. They were focussing on a smaller number of larger pubs, as they get a better return on capital at the larger venues. All pubs that are sold are sold as a going concern and are not initially sold for other uses. Of past disposals, 90% have continued as pubs.
On pricing, since the pandemic other operators have increased their prices faster than Wetherspoons and the differential has increased. However, there is also competition from supermarkets who have kept prices low to seek to hold on to the additional trade they acquired during lockdown. While Wetherspoon’s prices will remain competitive, there may be some modest price increases in the coming months.
Other questions included new openings in Ireland (it’s a more complex market that the UK, with fewer suppliers), and LED lighting (it’s difficult to install in pubs, as it has the potential to ruin the ambiance and drive away customers).
After the meeting, I spoke to the board and asked about their experience of cask ale sales post pandemic. I was told that these remain lower than before, but are recovering, and the recent autumn beer festival was a success.
Overall, from an investment perspective, the company appears to have its finances under control and remains competitive in the marketplace.
Ian Brindley – CMIC Committee Member