UK: JD Wetherspoon cancels dividend, investment
Pub chain JD Wetherspoon has cancelled dividend payments to shareholders and curbed investment for new bars in order to meet debt repayments.
Wetherspoon, which hit headlines this month for offering pints of beer at GBP0.99, said that dividends would be cancelled and capital expenditure "subsatially reduced" to ensure the group is able to meet its commitments on repayments.
The company, which said today (20 January) that like-for-like sales rose by 2% in the 25 weeks to 18 January, said that a US$140m private placement is due for renewal in September 2009.
Its statement today (20 January) is the latest example of a tough financial environment faced by the UK on-trade.
Nearly six pubs are closing daily, according to figures released this week by the British Beer and Pub Association, while Punch Taverns, the UK's largest pub owner, last week announced it would cut up to 100 jobs. Punch added that it would need to use spare cash flow this year to meet debt repayments.
Wetherspoon said that, despite a sales increase, operating margin was down 1% during its fiscal first half.
It remained confident of withstanding recession in the UK. "Our sales performance and cash flow have proved to be extremely resilient in the current economic environment and a number of cost increases experienced during 2008 are starting to abate."
Sectors: Beer & cider
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