City down on Wetherspoon results

The City is predicting a slump in JD Wetherspoon's half year profits when they are announced this Friday.

A slow down in expansion, shadowed by a decline in margins and the estimated impact of a smoking ban are all factors cited as contributing to Wetherspoon's over-valuation.

The group has recently scaled back expansion plans and is selling off 15 sites, while continuing to introduce a limited smoking ban to be rolled-out in new additions to its estate.

Analyst Douglas Jack at Panmure Gordon reported that "results should be dull, with like-for-like trading and expansion both being muted". In view of high regulatory risks, his advice on Wetherspoon shares remained at 'sell'.

Wetherspoon's move to introduce a partial smoking ban across a percentage of its estate ahead of government legislation has been met with mixed reactions from the City.

There is much speculation that the company's colourful boss, Tim Martin, may be seeking to take his high street chain private and that JD Wetherspoon's self-imposed smoking ban is a pre-emptive move to side-step greater financial pain when a government ban is enforced.

Another theory is that Tim Martin is testing the waters, shaping his company for an all-out ban, while lobbying the government to tighten its legislation.

"Tim Martin is one of the shrewdest operators in the business," said corporate advisor Peter Hansen. "He could well be introducing his anti-smoking measures as part of a strategy to help persuade the government to consider an all-out industry ban so his business will not be so hard hit."