Zero income for chain
Wetherspoon planning to reopen pubs in June
Ready to reopen with new guidelines (pic: Terry Murden)
Pub chain Wetherspoon’s is planning to reopen in June despite there being no date for exiting the lockdown.
The company’s decision came as it revealed “zero sales” since Boris Johnson ordered the closure of all bars on 20 March.
Founder and chairman Tim Martin believes that having larger pubs, many with outdoor facilities, will allow it to instigate social distancing measures.
In an after-hours stock market announcement, the firm said: “The company is likely to make some changes to its operating model, assuming increased social distancing, and anticipates a gradual recovery in customer numbers.
“Wetherspoon pubs are substantially larger than average, and most have outside facilities. The company believes these factors are likely to assist if social distancing measures apply.”
The company is assuming that initial sales will be about 15% below pre-closure levels and its estimates would result in a total sales decline in the year ending July 2020 of 26%, incorporating the closure period.
The Government’s business rates holiday from April 2020 to March 2021 has saved the company about £60 million and it expects to be eligible for up to £50m under the new Coronavirus Large Business Interruption Loan Scheme.
To stem the outflow of cash, shareholders will be tapped for £141 million through a placing of shares.
About 43,000 workers – 99% of the payroll – across 874 pubs received around 80% of their salaries in March. So far there has been no reduction in headcount, although that will remain under review.
The company said that sales in the six weeks to 8 March increased 3.2%, but fell 4.5% in the week to 15 March, with Prime Minister Boris Johnson announcing a full lockdown a week later.
Wetherspoon’s said: “The UK Government ordered the closure of pubs on 20 March 2020, from which point the company’s sales have been zero.”
It said it is implementing an “extensive set of measures to protect profit and cash” putting its pubs and hotels into “hibernation”.
New pub openings are not expected to restart until 2022 and £70 million of additional capital expenditure, planned for the rest of the second half of the financial year, has been deferred.
The company said it has paid suppliers due at the end of March, with 83% paid in full and extended payment terms agreed with a number of larger suppliers.
However, the majority of rents due in March were deferred. The company estimates that it has sufficient liquidity until the end of November 2020.
Mr Martin said he will take a 50% voluntary pay cut, along with chief executive John Hutson. Other directors have agreed to similar cuts.
Mr Martin and chief executive John Hutson have volunteered for a 50% pay cut while other directors Ben Whitley will reduce salary by 38%; Su Cacioppo by 42%; and each of the non-executive directors by 50%.
The chairman said: “The Covid‐19 outbreak is having a severe impact on the UK pub sector. In these challenging times I would like to thank everyone at the company, its suppliers, landlords, banks and the Government for their support and commitment.
“We’ve had to take significant action to reduce costs, decisions which have not been taken lightly. We look forward to re‐opening our pubs and hotels and welcoming back our teams in the near future.”