I’ve been shopping for shares in FTSE 250 pub chain JD Wetherspoon (LSE:JDW) for a while. And the falling share price means I’m down round 20% on my funding. 

That clearly hasn’t gone based on plan, however the query is what ought to I do subsequent? Is the inventory now higher worth than it was earlier than, or ought to I write this one off and look elsewhere?

Why’s the inventory been falling?

On the face of it, issues have truly been going fairly effectively for JD Wetherspoon. In 2024, gross sales grew 5.7%, however some large value reductions meant earnings per share have been up 77%. That is the results of the agency determining how to do extra with much less. Closing a few of its pubs and shopping for freeholds to scale back lease obligations has made the enterprise much more worthwhile.

All of that is what I anticipated after I first purchased the inventory. However there have been some much less constructive developments and a few of these are extra apparent than others. Buyers have (rightly) been specializing in rising Employers’ Nationwide Insurance coverage Contributions and a rise within the Residing Wage. These are a menace to JD Wetherspoon’s revenue margins.

There’s nevertheless, additionally a much less apparent subject. The corporate’s like-for-like gross sales progress has slowed from 12.7% in 2023 to 7.6% in 2024, to five.1% within the first half of 2025. That’s been a broader theme throughout UK shopper companies and I believe it’s one thing traders contemplating the inventory ought to take note of. 

Ought to I be apprehensive?

Weak like-for-like gross sales progress has been a standard theme of late. Related British Meals, B&M European Worth Retail, Greggs and a number of other others have all reported one thing related.

I see this as an indication issues are robust throughout the sector in the intervening time. And I don’t anticipate finding JD Wetherspoon exempt from this when it experiences its half-year earnings later this month. 

I do nevertheless, suppose the corporate is an unusually sturdy one. Companies that promote issues to prospects for lower than their opponents are typically ones that I like to take a look at. The attraction of low costs is one thing that I believe is a sturdy one for customers. However there’s a catch – this technique solely actually works for corporations that may preserve their very own prices down. 

With JD Wetherspoon, I believe the corporate has some clear strengths on this regard. The dimensions of its operations permits it to barter higher costs from suppliers, which it may go on. On prime of this, its technique of proudly owning – reasonably than leasing – its pubs helps cut back rental prices. With each of those benefits nonetheless intact, I nonetheless have a constructive long-term view of the inventory.

My plan

The dangers of a troublesome financial surroundings weighing on gross sales and better workers prices weighing on margins are actual. However JD Wetherspoon’s long-term strengths nonetheless appear to be firmly in place.

Consequently, I’ve been shopping for the inventory earlier this week. And my intention is to proceed doing so except one thing in regards to the underlying enterprise modifications within the close to future.