Wetherspoon sales up but profits down

JD Wetherspoon has announced an 8% increase in festive sales, but the company has warned that rising costs are likely to dent future profit margins.

The group, which owns around 860 pubs and employs nearly 30,000 people, said it expected its half-year margins to be around 1.1% lower than the previous financial year. Wetherspoon said that higher tax, utilities and labour costs as well as increased bar, food ad marketing expenses were to blame for the slight fall in profits.

Shares in Wetherspoons fell 2% yesterday on the back of the profit margin disappointment, along with the news that further profit pressure will be felt when in April when the above-inflation alcohol duty increases come into effect.

James Hollins, analyst at Investec Securities, cut his annual profit forecasts for Wetherspoon by 5% after the update, to £70.4 million.

He told the Press Assocation: “Wetherspoon has reported an exceptionally strong second quarter sales performance, highlighting the strength of its pub offering in any weather.

“However, the top-line growth has come at the expense of higher costs, notably a material uplift in utilities costs.”

The group enjoyed strong sales over the festive period in spite of wet weather and flooding, reporting that like-for-like sales have risen 7.6% so far this financial year.

The news follows Greene King, who also reported record sales over the festive period.

Wetherspoon recently celebrated 20 years as a listed company. When it floated on the London Stock Exchange in October 2012 the group owned 44 pubs and employed 1,200 staff.