JW Lees has reported record turnover for the year to 31 March 2023, with company revenue of £88m, up 16% on the prior year.
The 134-strong pub operator and brewer also reported profits were down 56% to £3.5m, attributed to energy costs, significantly reduced government support, and increased investment in the business.
The company was loss-making for the second half of the year – largely owing to a 148% rise in electricity costs and a 275% rise in gas prices – but was able to move onto flexible energy contracts from March 2023 and has now hedged its energy costs until 2026. Its carbon footprint, in terms of emissions intensity of CO2/£m, has fallen by 15% since 2020.
Performance in the 87-strong Pub Partner estate and Free Trade was resilient, reinforcing the strategy of building a balanced business with the stability of the JW Lees three-legged stool model - Managed Houses, Pub Partners and Free Trade - all of which make balanced contributions to the wider business, and vertically integrating wherever the company can add value.
The 47-strong Managed House division now operates 346 bedrooms, with bedroom sales now representing 20% of the company’s managed house turnover.
During the period, JW Lees spent £8.9m on refurbishing its properties, including 23 schemes of more than £50,000 with major investments of more than £500,000 at eight properties.
It reports it is now back on track for future growth following a period of lockdowns and ‘self-imposed freeze’ on capital expenditure, with the estate now back on a five-year rolling refurbishment programme.
During the year, JW Lees bought The Pointing Dog in Cheadle from Marston’s and sold two pubs, generating £332,000 book profit.
At year end, the company had cash balances of £10m and a revolving bank credit facility of £15m from NatWest. It has £25m at its immediate disposal to invest, with the funds marked for new pub acquisitions.
JW Lees welcomed Simon Townsend, former CEO of Ei Group, as a non-executive director in April 2023, as well as Dave Espley as director of property in July 2022. It recently made a number of senior promotions, with Dave Moran becoming head brewer, Lee Reeves becoming head of people and Sharma Cook becoming head of marketing.
Louis Lees-Jones became the first member of the seventh generation of original founder John Lees to join the family business in April 2023 as openings manager.
The company further paid tribute to former brewhouse manager Paul Wood, who died in December 2022, shortly after completing 50 years’ service at JW Lees.
William Lees-Jones, managing director, said: “It feels like we’ve been on a roller-coaster since 20 March 2020 when Prime Minister Boris Johnson ordered all UK pubs to close – sadly some pubs have never recovered but we are now seeing steady growth in all three parts of the JW Lees business. The government says that it recognises how important the hospitality sector is but needs to start to think differently about how it invests in the sector.
“There are so many simple things that government could do, including the long-promised root and branch review of business rates and fairer rates of both alcohol duty and VAT, which are among the highest in the world. The current year’s challenges include continued high energy costs and inflation; we are also starting to see the impact of the Alcohol Duty Review which came into effect in August.
“While we remain keen to acquire more pubs, inns and hotels, there have been limited opportunities for us to acquire the right sites at the right price and so we are about to embark on a major investment programme in our brewery, as we approach our 200-year anniversary in 2028 as well as adding a number of new bedroom blocks to our existing pub estate. Our brewery in Middleton Junction is at the heart of the JW Lees business, with Managed Houses, Pub Partners and Free Trade all working together to build the JW Lees brand in the North West. We are proud that our overall guest satisfaction score is now 9.1/10 and we remain committed to delivering an exceptional guest experience at all times in our pubs, inns and hotels.”
