JD Wetherspoon reports profit slump

JD Wetherspoon has this morning reported a 4.3% drop in like-for-like bar sales for the full year and an 11.4% slump in annual pre-tax profits.

There was a 2.1% increase in total sales to £907.5m and like-for-like food sales were up by 7.9% and, which when combined with the drop in bar sales, resulted in a total drop in like-for-like sales of 1.1%. The group said that including those bar purchases made in association with table meals, diners now accounted for approximately two-thirds of sales.

Food accounted for 29% of sales during the year, compared with 27% in the previous year, 17% 11 years ago, and 5% at the group's flotation in 1992.

Food sales per pub, per week, for the year were £8,800 including VAT, against £8,200 last year.

Tim Martin, the group's chairman, said: "In the light of our competitive prices, we believe that we sell more meals per pub, per week, than any other substantial pub company."

For the year to 27 July — the first following the smoking ban in England — adjusted profits before tax were down by 11.4% to £55m, with operating profits down by 4.3% to £87.2m - a result of the lower margins associated with food sales.

Martin said that the five weeks to 31st August, following the results period, had been the "busiest ever" for the group, with like-for-like sales up by 1.1% and total sales by 5.5%.

Martin said: "As a result of our strong cash flow, our dedicated management team and our efforts to improve every area of the business, we remain confident of our prospects."

Free cash flow at the group was £71.7m, up 37% from £52.4m in the previous year.

The chairman added that, due to rising costs relating to energy, food, labour and tax, the group would need to see like-for-like sales of 3% to record a similar trading performance this year.

The company opened 23 pubs during the year, compared with 18 in the previous year, resulting in a total estate of 694.

The group plans to open around 30 pubs in the year, with future expansion at the same level. Falling property prices and rent are expected to create further investment opportunities for Wetherspoon.