Top story

Wetherspoon chairman Tim Martin has criticised the “tax inequality” between supermarkets and the leisure trade as the government’s temporary reduction in hospitality VAT nears an end in September.

The Chancellor reduced VAT on food for the hospitality industry to 5% last year, but VAT will now return to 20% for pubs and restaurants in stages, starting with a rise to 12.5% in September.

The September rise will, Martin said, result in Wetherspoon having to increase food prices by around 40p per meal and “will make the entire hospitality industry less competitive vis a vis powerful supermarkets”.

“For many years, UK governments have therefore behaved like Monty Python’s Dennis Moore - who robbed the poor (in this case pubs and restaurants) to help the rich (supermarkets),” he said.

“Treating the same product - food - the same way for tax purposes makes economic sense.”

“The main impact of tax inequality is on high streets and town and city centres, which heavily depend on a diversity of prosperous hospitality businesses for economic, social and employment success.”

The criticism comes as Wetherspoon continues to face pressure on its bottom line, with a trading update this morning stating the company expects to make a loss for the year ended 25 July as trading continues to lag pre-Covid levels.

As at 4 July 2021, 850 Wetherspoon pubs were open, out of a total of 860, with most of the closed pubs are at airports.

Between 12 April and 16 May, when only outdoor trading was permitted, about 500 pubs were opened, and like-for-like bar and food sales were down 49% compared to the pre-pandemic period of 2019.

Like-for-like sales from 17 May to 4 July, when pubs were fully open, were still down 14.6% on a two-year basis.

For the period from 17 May to 10 June, before the UEFA Euro 2020 football tournament started, like-for-like sales were -8.1%. But from 10 June to 4 July, during the tournament, like-for-like sales were 20.8% as the chain has not televised matches, with limited exceptions.

The company estimates sales in the financial year starting 26 July 2021 to be in line with financial year 2019, on the basis that restrictions are ended, as the government currently intends.

Wetherspoon shares are down 0.4% to 1,234p so far this morning.

Morning update

Global meal kit company HelloFresh has expanded its business into Norway, following successful ventures in the Nordic region in Sweden and Denmark.

The expansion is part of the group’s global strategy to expand its total addressable market and drive long-term sustainable growth.

To support the launch, HelloFresh has opened a state-of-the-art fulfilment centre in Moss, close to Oslo. In addition, HelloFresh aims to source fresh meat such as pork, beef and chicken from local Norwegian suppliers.

Thomas Griesel, co-founder of HelloFresh, commented: “We are excited to offer customers in Norway a new and refreshing alternative to shop and cook for dinner. By providing Norwegians with the most flexible and cost effective meal kit solution, we are bringing a superior product to the market. We are looking forward to becoming the go-to meal kit for Norwegians.”

“Norway is an established market when it comes to meal-kits. Following our strong performance in Denmark and Sweden, we are convinced that Norway offers the perfect conditions for further growth and expanding our total addressable market.”

Ahead of its AGM, logistics firm Wincanton has said that the strong revenue performance recorded in the second half of the prior year has continued into the first quarter of this financial year.

It said it has continued to see sustained growth and an attractive pipeline of opportunities in each of the group’s four sectors.

The group is trading in line with expectations, with profits up “significantly” on the same period last year.

It said the award of two contract extensions by Ikea to operate its customer distribution centres in Kent and Essex “underlines the sustained progress in the development of Wincanton’s Digital and eFulfilment offer”.

However, it added: “While the Group has maintained its positive momentum in the early part of the financial year, it is mindful of the sector-wide pressures related to the availability of drivers.

“Wincanton is taking steps to address this, including increased recruitment of permanent colleagues and the acceleration of training programmes.”

On the markets this morning, the FTSE 100 has bounced back 0.5% to 7,133.9pts so far.

Early risers include McBride, up 2.8% to 89.8p, Kerry Group, up 1.8% to €120.90 and Bakkavor, up 1% to 137.4p.

Fallers so far today include Total Produce, down 5.5% to 222p, Science in Sport, down 4% to 73p and Ocado, down 2% to 1,864p.

Yesterday in the City

The FTSE 100 ended Tuesday down 0.9% to 7,100.8pts.

Despite early share price progress on the signing of another international supply deal in Spain, Ocado ended the day down 4.2% to 1,901.5p on investor concerns over slowing retail sales and a lack of improvement in profitability as its pre-exceptional losses remained flat and it outlined and warnings its solutions business will provide a lower EBITDA contribution than previously expected.

Other fallers yesterday included Nichols, down 3.3% to 1,472.5p, Science in Sport, down 3.2% to 76p, Associated British Foods, down 3.1% to 2,259p, Wynnstay, down 2.8% to 530p, SSP Group, down 2.6% to 290.4p, Greencore, down2% to 129.6p and Marks & Spencer, down 2% to 154p.

The day’s risers included McColl’s, up 7.3% to 38p, Devro, up 3.5% to 210p, Deliveroo, up 2.6% to 314p, Total Produce, up 2.2% to 235p, PZ Cussons, up 2.2% to 259p, Finsbury Food Group, up 1.1% to 95p and Hilton Food Group, up 1.1% to 1,146p.

Sainsbury’s ended the day up 0.6% to 279.8p after raising its full year profits expectations on stronger than expected first quarter sales, while Tesco was up 1.2% to 234.3p.