Margins still under pressure, says JDW

JD Wetherspoon said today that margins continued to be under pressure from increased costs and bar sales were a cause for concern.

In a trading update issued this morning the managed pub group said: "We reported on 7th March 2008 that operating margins declined to 10.1 per cent in the first half of the financial year, compared to 10.6 per cent in the first six months of last year.

"We anticipate continuing pressure on the operating margin in the second half, as a result of higher marketing, food, and labour costs."

The chain reported like-for-like sales down by 0.1 per cent in the 13 weeks to April 27, 2008, with what it called a "slow February" followed by an improvement in March and April.

The managed pubco said sales in the quarter were helped by a successful beer festival in April and by increased marketing investment, following slow sales in the second quarter.

In the year-to-date (39 weeks to April 27 2008), like-for-like sales decreased by 1.5 per cent and overall company sales increased by 1.5 per cent.

The group labelled its recent ale festival a success, selling the equivalent of approximately 2.5 million pints, an increase of more than seven per cent on a like-for-like basis.

"Wine sales continue to improve, and premium bottled beers and spirits are also showing positive trends," the group said.

"We continued to see growth in coffee and tea sales during the period and have upgraded our food offer by re-launching our curry and steak 'club' nights with great success."

Looking ahead the group said: "The market for bar sales remains challenging and the company continues to be cautious in the short term, in line with the comments in our interim results."

It had opened 19 pubs since the start of the current financial year and remained on course to open 30 in the next financial year, it said.