J D Wetherspoon plc (LON:JDW) presented its Q1 trading update for the 13-week period up to 28 October 2018.
Current trading
For the 13 weeks to 28 October 2018, like-for-like sales increased by 5.5% and total sales by 6.2%.
Property
The Company has opened two new pubs since the start of the financial year and has closed or sold three. We intend to open between 5 and 10 pubs in the current financial year.
Financial position
The Company remains in a sound financial position.
Corporate governance and health issues
The chairman of Wetherspoon, Tim Martin said:
“I am currently recovering from an operation after a burst appendix, so intend working part time from home for several weeks. Many thanks to the fantastic doctors, nurses and staff at the Royal Devon and Exeter hospital.
“As most people understand, an experienced board, as at Wetherspoon, can be a great advantage. My recent health scare emphasises this point.”
The Company’s General Meeting on 15 November 2018 will be chaired by Liz McMeikan, the Company’s Senior Independent Director.
Outlook
Tim Martin said:
“I have written a few hundred words below on the advantages of free trade, which greatly outweigh the illusory benefits of a ‘deal’ with the undemocratic EU. Free trade will benefit consumers and the economy, yet few commentators today make the case for it, or appear to understand it.
“If you can look into the seeds of time, and say which grain will grow and which will not, speak then to me…..”
W. Shakespeare.
“For millennia people have been sought advice from soothsayers like the Oracle at Delphi- or today from Mystic Meg.
“In business, the world’s greatest investor, Warren Buffett, has warned that “Forecasts tell you a lot about the forecaster, but nothing about the future.”
“But some forecasters lack Buffett’s humility and insight. Pro-EU economists like David Smith of the Sunday Times or Paul Johnson of the IFS, full of scare stories about a post-Brexit future, are confident in their powers of prophecy.
“In reality, I believe the most consistently INACCURATE forecasts of the last 40 years have been made by pro-EU economists, bankers, academics, MPs, and organisations like the CBI, City accountants and the Financial Times.
“The predecessor of the euro, the exchange rate mechanism (ERM), was supported, almost universally, by these individuals and organisations.
“It was supposed to bring economic stability, but it brought the opposite – record high interest rates, recession, bankruptcies and negative equity.
“After this débâcle, broadly the same voices were evangelical in support of the euro, even though no currency has survived in history, as Wetherspoon pointed out at the time (appendix 1 below), without a government to collect taxes and redistribute them throughout the ‘country’.
“It was predicted (appendix 2) that the U.K. would suffer terribly if it failed to join the euro, but the U.K. has since greatly outperformed the Eurozone, which has impoverished much of Southern Europe.
“The pro-EU dogma is the product of an undemocratic ideology, mainly- and surprisingly – promoted by Oxbridge graduates in influential jobs.
“Even so, a minority of Oxbridge nonconformists, including MPs like Michael Howard and Tony Benn, journalists like Neil Collins, bankers like Mervyn King, business people like Simon Wolfson and academics like Patrick Minford played a big role in defeating their Oxbridge colleagues over the euro.
“Pro-EU arguments reached a hysterical zenith during the referendum, with the Chancellor George Osborne, the Treasury, most academics, PWC, Deloitte, most PLC directors, the CBI, the FT, the OECD and the IMF supporting the view of an immediate economic downturn in the aftermath of a Leave vote. Unsurprisingly, the opposite happened.
“About 500,000 jobs have been created since, rather than the loss of 500,000. Mortgage rates have been lower, not higher, the stock market has risen, not fallen, City jobs have increased, not declined-and so on.
“A curious aspect of the hopelessness of these economic forecasts over 40 years is that the “man on the Clapham omnibus” (ie. the public) understood the issues well, rejecting the euro and the arguments about a downturn post-referendum.
“Democracy works, partly because elite education can create arrogance and an ‘echo chamber’ of groupthink, which inhibits good judgement.
“The dominant theme of the Oxbridge ideology today is that the U.K. will be worse off without a ‘deal’ with the EU.
“This view has been backed by a dishonest and surreal campaign (appendix 3) to persuade the public that food prices will rise without a deal – the opposite of the truth. Unfortunately, a section of the elite wrongly believes the public is gullible and stupid.
“This ‘deal at any price’ exhortation has been accepted by, I believe, a weak PM with autocratic tendencies, who dislikes genuine debate, and is locked in a tiny ‘echo chamber’ of like-minded people (appendix 4).
“In fact, ‘no deal’ really means ‘free trade’. On 29 March next year MPs can end EU import taxes on oranges, coffee, wine, bananas, children’s clothes and 12,651 products, thereby reducing shop prices. Many commentators do not understand that the UK can adopt free trade, ending import taxes, without the need for consent or permission from the EU.
“Today, these taxes are collected by the U.K. government and sent to Brussels. So enriching the public comes at no cost to the Treasury.
“The U.K. can simultaneously regain control of fishing waters and save £39 billion which the desperate Theresa May has offered the EU – even though there is no legal obligation to pay anything (“Brexit: UK could quit without paying…say Lords”, 4 March 2017, The Guardian).
“Wetherspoon has set an example by swapping EU products like Jägermeister, Courvoisier and German beer for UK or non-EU products of equal or better quality and price. It follows that UK businesses and consumers have the power to reduce EU exports to the UK to zero, or almost zero.
“Everything that can be bought from within the protectionist EU club can be bought from the 93% of the world outside the EU – if you look hard enough.
“In a recent interview the former Chancellor George Osborne told Newsnight that “a minority of people were interested in rather esoteric issues of constitutional sovereignty.”
“In fact, the desire for democracy and self-determination is not ‘esoteric’ (ie. only the concern of a few).
“North America, Japan, Singapore, India, Ireland and Australia, among many examples, have thrived following the end of what they saw as remote or arbitrary rule.
“The former prime minister of Australia, Tony Abbott, showing more economic insight than Osborne, has mocked the UK government approach – and succinctly summed up the arguments for free trade in the Spectator magazine (27 October, appendix 5).
“The economic truth is that no deal/free trade will leave the U.K. better off on the day we leave the EU in March next year. The risk to the future lies in staying linked to the chaotic and undemocratic Brussels regime.
“Boiling all these issues down, there are four simple tests which the public can use on 29 March next year to work out whether Theresa May and MPs have implemented the referendum result, and left the EU, as promised, or whether we have been hoodwinked:
1) Does the UK still charge protectionist import taxes (tariffs) on non-EU imports and send the proceeds to Brussels?
If the answer is “yes”, the UK hasn’t left the EU.
2) Has the UK paid or is it continuing to pay money to the EU in return for trade?
If “yes”, we are unlikely to have left.
3) Has the UK regained control of its fishing waters?
If “no”, we haven’t left.
4) Is the UK still subject to European laws?
If “yes”, we haven’t left.
“As regards Wetherspoon, sales continue to grow strongly, although ‘comparatives’ are now tougher.
“As has been widely reported, unemployment is at a record low, putting upward pressure on wages. As a result, Wetherspoon is increasing pay of our staff starting from this week.
“Having had several recent years of record profits, we are not immediately seeking to recoup these increased costs through higher pricing or ‘mitigation’, but will review that during the year.
“It is difficult to be too precise at this early stage of the current financial year, but we now expect a trading outcome slightly below that achieved in the previous financial year. We will provide further updates on our trading as we progress through the year.”
