Leading sector analyst Paul Hickman predicts “lacklustre” Q3 growth for JD Wetherspoon, and suggests that its keen price points are becoming less of an advantage because consumer spending is “very gradually unfreezing”. Hickman, of Peel Hunt, issued a Hold recommendation for the managed operator, which is to release an interim management statement on Wednesday (2 May). “We believe LFL sales are likely to have declined by around -0.5%,” said Hickman. “Current-period sales at the interim announcement, at -0.7%, gave the clue that growth in the quarter is lacklustre. Comps were trending a little weaker this time last year, but not much – they went from +2.4% in Q3 to +1.6% in Q4. “Meanwhile we understand that Greene King’s spectacular LFL sales of +4.6% over the last quarter was not particularly biased in favour of that company’s 50% of destination houses (it describes the other 50% as Locals, although that is not quite the same as Wetherspoon’s High Street market). “That suggests to us that either (i) Wetherspoon is currently losing out to competition, possibly from concepts with a broader menu, or (ii) the local market is doing better than the High Street, because cash-strapped consumers are just not going into town.” Hickman dismissed the idea that renewed austerity brought by the double-dip recession would favour Wetherspoons. “This is not the way we believe the consumer market is going. We remain of the view that consumer spending is very gradually unfreezing. “We were struck by Wetherspoon’s reporting at the interims that it was its steak promotion, at £8.99 right at the top of its menu range, that had succeeded so strongly. Three years ago it would have been pasta at £3.99 that was breaking records. “Other companies may provide value if customers want to continue trading up the menu scale. So continuing low LFL sales at Wetherspoon will tend to confirm us in the view that (for example) Greene King (Buy, TP 561p), at a calendarised 2012E PER of 9.4x, provides better value right now than Wetherspoon’s 11.4x.”