Staffing costs dampen Wetherspoon results

UK pub chain JD Wetherspoon has blamed increased labour costs on its subdued quarterly financial results, which are out today.

JD Wetherspoon chairman Tim Martin (Photo: Wetherspoon)

The pubco said the 13% rise in starting rates for its hourly paid staff since October 2014 had a bigger-than-expected impact on its operating margin, which is expected to have shrunk by 1.1% this quarter.

This is despite the 3.3% increase in like-for-like sales in the 12 weeks to 17 January, and the 2.8% increase across the financial year.

It has led chairman Tim Martin to warn that profits for this financial year will also be negatively affected.

He said: “Like-for-like sales have improved in the second quarter so far. However, increased labour costs will be an important factor in the outcome for this financial year.

“Our current view is profits for this year are likely to be towards the lower end of analysts’ expectations.”

The company share price dropped by 5.7% on the news.

However, the company is expecting to open 10 to 15 pubs in 2015/16, and has already opened five. Only two of its pubs have closed in the 25 weeks to January.

“The Company remains in a sound financial position,” it said in a statement to investors.