Wetherspoon sales flat as government-fuelled inflation hits home

Against a background of rising costs and sliding consumer confidence JD Wetherspoon has reported like-for-like sales up 0.4 per cent in the 11 weeks to July 13, 2008.

In a pre-close trading statement the group said like-for-like sales decreased by one per cent in the 50 weeks to the same date, and overall group sales increased by 2.2 per cent.

Aiming a swipe at the Gordon Brown-led administration, Wetherspoon said that "although it is widely believed that current inflationary costs stem from external sources, a significant proportion of our cost increases (especially excise duty and labour cost increases) stem from government legislation.

"In spite of these increases, we remain confident of our future prospects, due to our resilient sales performance and strong free cashflow," it added.

Back in March Wetherspoon had said it expected sales in the second half of the financial year to have been broadly in line with the second quarter, when like-for-like sales declined by 3.1 per cent.

The group revealed today that actual sales have been ahead of this estimate, "due in part to the marketing activities we have undertaken, and we consider the outcome a satisfactory performance in the current environment.

"Sales in the last 24 weeks have been approximately flat, in line with record sales last year. Our expectations for the financial year are unaltered," the group said.

Wetherspoon's finance director Keith Down said the figures "demonstrate that we can drive sales and attract customers into our pubs".

Down said the pubco had already flagged that margins would be tighter in the second half of the year and that the burden of costs would continue to make its presence felt. But he said the group was happy with overall trading and hoped to see sales growth improve next year.

Cashflow remained good, Down said, and the group was "open-minded" on the issue of new pub openings. "We're aiming for 30 a year but that could slow down to pay back debt or use for other purposes," he said.

Wetherspoon opened new 23 pubs in the current financial year.

The City broadly welcomed Wetherspoon's numbers. JP Morgan's James Ainley said the group's "strong consumer focus and operationally geared business model should perform well as and when the consumer environment improves".

Wetherspoon's shares were up 6.72 per cent at 186.5p.