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Shares in JD Wetherspoon (LSE:JDW) have underperformed the FTSE 250 this year. The stock’s down 23%, compared to a 7% gain for the index.
There are reasons for this and I think the share price could have further to fall. But I won’t keep anyone in suspense – I’ve been adding to my investment at today’s prices.
Profit warning?
The Budget isn’t the only reason the stock has been under pressure, but it has been a big factor. Chairman Tim Martin told the Financial Times he expected around £60m in cost increases. It’s easy to see why investors viewed this negatively. It isn’t a profit warning as such, but with the exception of 2019, £60m is Wetherspoon’s highest annual net income over the last 10 years.
At first sight, it looks like the company’s profits might go to zero, but it’s not as straightforward as this. The most obvious strategy for offsetting…
