JD Wetherspoon has resumed dividend payments for the first time since the pandemic, as analysts hailed the resilience of the company’s performance amid tough conditions in the hospitality industry.

The pub giant, which has around 800 outlets across the UK, beat market expectations by posting a 73.5% rise in profit before tax to £73.9m, on an operating margin up to 6.9% from 5.6%, for the 52 weeks ended July 28. Like-for-like sales climbed by 7.6%, with revenue up by 5.7% to £2.035 billion, and growth has continued into the current period, the firm announced, with sales up 4.9% in the nine weeks to September 29.

City watchers said Wetherspoon is performing well in a sector which continues to face significant inflation, chiefly on wages, utility costs and repairs, highlighting the company’s ability to keep prices affordable for cash-conscious consumers.

Bosses underlined their confidence in the company’s prospects by recommending a full-year dividend of 12p per share.

Read more:

However, while sales are continuing to improve, Wetherspoon chairman Tim Martin said the business “continues to be concerned about the possibility of further lockdowns and about the efficacy of the government enquiry into the pandemic, which will not be concluded for several years”.

“Wetherspoon has enjoyed a good year, reporting a significant recovery in sales and profits and a return to the dividend register,” said Charlie Huggins, manager of the Quality Shares Portfolio at Wealth Club, which provides research information for high-net-worth individuals and sophisticated investors.

“With many pub and restaurant companies struggling in the current environment, this is an impressive performance.

“Despite the challenging economy, consumers are still spending. However, they are becoming increasingly discerning. Wetherspoon's commitment to low prices and doing the basics well are helping to keep punters loyal.

“The backdrop still remains very difficult, with the rise in wages posing a considerable cost headwind for the sector. But Wetherspoon looks better placed than its rivals to shoulder this. With interest rates now starting to come down and inflation moderating, the outlook for the consumer also looks better than it has for some time.

“In an environment where the strong seem likely to get stronger, Wetherspoons looks well placed to grow market share and sustain its recent sales momentum."

Derren Nathan, head of equity research at Hargreaves Lansdown, observed that like-for-like sales growth at the firm had slowed in the first weeks in the current financial year, but said the pace of expansion was “still pretty robust, in a lower inflation environment”.

He added: “The group’s now trading from a leaner, meaner estate of 800 pubs but has re-iterated the potential to expand towards 1,000 units, with recent openings including high footfall venues such as London’s Euston and Waterloo stations and Heathrow Airport.

“Overall, the company is well placed to continue its growth trajectory and soak up market share as independent watering holes continue to fall by the wayside.”

Mr Martin said: "The company currently anticipates a reasonable outcome for the current financial year, subject to our future sales performance."