By Scott Kanowsky
Investing.com -- Shares in J D Wetherspoon PLC (LON:JDW) surged on Friday after the U.K. pub chain reported a narrower annual loss despite pressures from energy and labor costs.
The firm's loss before tax and exceptional items for the 53 weeks ended on July 31 came in at £30.4 million. In the prior year, the group posted a steeper decline of £167.2 million.
The lifting of COVID-19-era restrictions helped spur an increase in revenue for the year. Sales rose by about 125% to £1.74 billion, although the figure is still under pre-crisis levels.
Meanwhile, operating costs nearly doubled to £1.71 billion, with the firm citing higher labor and repair expenses, as well as an uptick in interest and energy prices.
"Most commentators, including most publicans, understandably predicted a post-lockdown boom, in which the public would react to enforced cabin fever by embarking on a celebratory spree, but the reality has, in contrast, been a painstakingly slow recovery in sales, for some but not all, accompanied by great inflation in costs," the company said in a statement.
As a result, chairman and founder Tim Martin flagged that predictions about the outlook for the business are currently difficult to make, although he remained "cautiously optimistic."
Martin, long a critic of the British government's decision to temporarily shutter restaurants and bars during the pandemic, only warned that the biggest threat comes from the possibility of further COVID-related lockdowns and restrictions.
In a note, analysts at Morgan Stanley flagged that Wetherspoons did not provide any specific income guidance or formal cost outlook in its latest update, adding that they expect the firm to remain on a "slow path" to returning to pre-COVID profit levels.