JDW, RTN, MARS: Good time to invest in these hospitality stocks?

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 JDW, RTN, MARS: Good time to invest in these hospitality stocks?
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Highlights:

  • About 37% of people in London are still working from home, leading to challenges for hospitality and travel-related businesses.
  • This has also led to a significant fall in sales for bars and pubs.

Offices in London have started to reopen after staying closed for more than two years due to the COVID-19 restrictions. However, the workplaces are yet to see full attendance as more than one in three people are still working from home. Recently released figures from the Office for National Statistics (ONS) have revealed that 37% of people in the capital continue to stay away from the office, carrying out their job responsibilities from home. This number was 14% before the pandemic.

The work-from-home practice has resulted in challenges for several businesses, like those in the transport and hospitality sectors. Pubs and bars are struggling to find customers, leading to a significant drop in sales numbers. 

Restaurant owners say the sales have rebounded in several cities, but the situation is different in London. According to pub group Wetherspoons, sales in city centres like Newcastle, Manchester and Glasgow, except London, have been more robust compared to smaller towns.

Bars and pubs are registering a significant fall in sales

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Another challenge is the staff shortage. With the rising labour costs, one in seven vacancies across the sector is unfilled, as per separate figures released by the industry association UKHospitality.

Let us explore some London-listed hospitality stocks and see how they have been performing in the current situation.

Wetherspoon (J.D.) Plc (LON: JDW)

The FTSE 250 listed pub chain operates in the UK and Ireland. The company has said it is facing losses worth £30 million this year due to a drop in customers. For the first 11 weeks of Q4 of the current financial year, its sales remained 0.4% lower than the pre-pandemic levels of 2019. Over the past year, the stock value has declined by over 46%, while it has slipped by nearly 40% on a year-to-date basis. Its earnings per share (EPS) currently stand at -1.47. Shares of Wetherspoon were trading at GBX 582.00, up 0.78%, as of 8:05 am GMT+1 on 14 July 2022, with a market cap of £743.53 million.

Restaurants Group Plc (LON: RTN)

Restaurants Group Plc, which operates around 400 restaurants and pubs across the country, boasted of a market cap of 323.62 million. RTN's shares were down by 0.95% and was trading at GBX 41.90 as of 8:21 am GMT+1 on 14 July 2022. The company's share price has been witnessing a downward trend for almost a year, falling more than 64%. The year-to-date return has slipped over 55%. 

Marston's Plc (LON: MARS)

Marston's is a Wolverhampton-headquartered pub operator with around 1,500 pubs in its portfolio. With a market cap of £288.41 million, its shares were 1.01% higher at GBX 45.94 as of 8:10 am GMT+1 on Thursday. The stock hasn't performed particularly well in the last 12 months and has plunged 44.61%. The EPS stands at -0.57.

Note: The above content constitutes a very preliminary observation or view based on market trends and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.

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