Wetherspoon profits hit by smoking plans

JD Wetherspoon's investment in no-smoking initiatives will hit the group's full year profits, it announced today.

Updating the market on its third quarter trading, Wetherspoon said it was investing at levels "in advance of our previous plans", although it did not reveal the sums involved.

"We believe that these are important areas and will produce significant underlying benefits during the change to a non-smoking environment.

"The scale of these initiatives will result in a short-term impact on profitability and the full year profits outcome is expected to be marginally below current market expectations," the group added.

Sales for the 13 weeks to April 29 2007 rose by 3.4 per cent, against a 3.2 per cent rise in the same period last year.

Most of this was driven by lower margin food sales, while bar volumes remained flat. Year-to-date sales for the 39 weeks to April 29 2007 increased by 6.1 per cent, with "overall company sales up by 7.2 per cent".

Wetherspoon noted that it had increased its "underlying investment in certain areas". It noted that these included repairs in advance of the smoking ban and extra costs stemming from the closure of all its pubs in order to install its new beer and wine chilling system.

No-smoking areas now constituted around 80 per cent of customer space in its pubs since January, a move which the group said had prompted "strong" food growth with what it described as "some adverse impact on bar volumes", although its statement did reveal the extent of this impact.

Marketing activity would continue in its English pubs, the group said, in preparation for July 1, while its 34 Welsh pubs - covered by a smoking ban since the beginning of April - had seen initial results "in line with the Scottish experience".