Wetherspoon bullish about future prospects

Managed pub group JD Wetherspoon said it was "optimistic" about the outlook for the next financial year, as it reported fourth quarter like-for-like turnover down 0.8 per cent.

In a pre-close trading update today the managed pub group said total company turnover for the 11 weeks to July 12, 2009, was up 3.1 per cent.

Like-for-like sales in the first six weeks of the period fell 2.9 per cent against strong comparables, fuelled by a series of voucher promotions, but picked up in the last five weeks, rising two per cent.

Like-for-like turnover for the year to July 12 rose 1.2 per cent, with total sales for the 50 weeks up 5.2 per cent.

Wetherspoon finance director Keith Down argued the performance was the result of "consistent trading over the whole year". The group's optimism for the future stemmed from its ability to trade well in any environment, "not just when the economy is in growth", he said.

The group has opened 33 new pubs in the current financial year, with a further six by the year end and Down confirmed Wetherspoon was considering purchasing seven Chicago Rock sites, currently owned by 3DE. "We're looking at each site individually. This is not a package deal," he added.

At its half year in March Wetherspoon's chief executive John Hutson had acknowledged that the group was prepared to fight for - and achieve - considerably better rental terms from landlords than had previously been the case, due to the economic downturn. Down said this was still the case. "It's a good time to be doing deals," he said.

The group meanwhile said the cost of opening pubs this year was "substantially lower" than in recent years. Down said the cost pressures of the last two years were starting to abate and the requirement for strong like-for-like sales to pay the bills was not as pressing as in recent years.

Lower than anticipated costs meant the group anticipated reporting operating margins for the second half in excess of 10 per cent, "higher than our earlier expectations", Wetherspoons said, while debt has been reduced by some £40m, resulting in year-end net debt to EBITDA expected to be around three times.

In early trading Wetherspoons' shares were up 10p at 439p.