JD Wetherspoon cautious as sales fall

Managed pub operator JD Wetherspoon has added its own note of caution about pub trading to those of other operators as it updated the market on trading today.

The group warned that it "remained cautious" regarding the outlook for the current financial year. However it said it was "confident that a non-smoking environment will result in growth in both bar and food categories in the medium and long term".

Wetherspoon reported like-for-like sales for the 11 weeks to January 13 2008 falling by 3.2 per cent, "with the anticipated pattern of strong food sales growth combined with a decrease in bar sales".

In the year to date - 24 weeks to January 13 - like for like sales decreased by 2.0 per cent, while overall group sales rose by 0.4 per cent.

Wetherspoon pointed to what it called "a strong trend" of reduced sales of premium lager and spirits and a rise in sales of real ale, food and coffee. The group said it sold one million cups of coffee and tea in the Christmas fortnight.

The group said margins, which had fallen by 0.6 per cent in the first quarter, to recover "primarily as a result of lower energy and repairs costs".

Wetherspoon chief executive John Hutson told thepublican.com​ the group always knew it would lose smoking customers "from day one" of the ban, but that the new regime would prove to be a "good foundation" for the business going forward.

"We've pushed hard with our food sales, which now account for more than half of our overall sales. The decline in lager sales comes from our pubs attracting new customers who want to eat and who don't want to drink that sort of product," he said.

Hutson said he didn't envisage any major price hikes cross the bars of his pubs: "We've got long term contracts for the next couple of years and we're not seeing much input inflation on drinks. Food is under a bit of pressure, however."

Panmure Gordon analyst Douglas Jack said he was concerned that Wetherspoon's gross margins would come under more pressure as prices remained flat and high margin drink sales fell, in part due to the smoking ban.

"Things are very tough out there for Wetherspoon, but then it's tough for everyone right now," he added.

Wetherspoon's shares were trading at 280p, down 12.5p.