JD Wetherspoon was almost single-handedly responsible for dragging the M&C20 Leisure Index higher this week, contributing 13 of the 20 point rise that took it to a record 1,055. The FTSE All-Share Index trailed in its wake, suffering a one point fall to 1,017.
Investors in the managed pub chain were cheered by better-than-expected fourth quarter results that showed a 3.5% jump in sales for the 11 weeks to 14 July, driving the share price up by 14.1% to 764p at the time of writing. HSBC raised its target price for Wetherspoon’s to 700p, up from 520p. And Numis raised its rating to ‘add’.
Concerns about the group’s eroding profit margin appear to have subsided. Nick Batram at Peel Hunt said: “Although a number of one-off factors boosted the Q4 margin, the underlying trend was still better than expected. It looks as though H1 was the nadir as far as margin was concerned and, if we can get more confident that the picture has stabilised, then we see room to take a more positive stance.”
A series of pubco trading updates provided this week helped to advance share prices within the M&C20 Index. Marston’s shares gained 5.3% week-on-week after the company reported like-for-likes in its Premium and Destination pubs up 6% in the 10 weeks to 20 July, and own-brewed beer volumes up by the same proportion in a declining market.
Fuller’s shares also advanced by 3.7% as its Q1 trading update was well received.
This week’s biggest loser was Domino’s Pizza, down 6.1%. The company, which is suffering from losses in its German business, was the subject of analyst forecasts for “flat pre-tax profit” in H1.
