JD Wetherspoon issues warning over cost pressures

It said it expected operating margin for the half year ending 22 January to be “slightly below” that achieved in the first quarter and that this had the potential to fall further in the second quarter due to continuing cost pressures resulting from government legislation, including further increases to excise duty, business rates and carbon tax.

Total sales, including new pubs, for the 12 weeks increased by 9.9% compared to 7.3% in the first quarter, and helped by being up against the adverse weather conditions faced last December.

The c.835-strong chain said that sales growth for the period before and after December was “approximately in line with the first quarter”.

In the year to date – 25 weeks to 15 January – like-for-like sales increased by 2.3% and total sales increased by 8.5%.

The group, which is led by Tim Martin, said that sales, profit and cash flow remained resilient. It said it was aiming for a “reasonable outcome” for its current financial year.
The company also reiterated its stance on VAT, and again called for a reduction from the government for pubs and restaurants.
It said: “In addition, as previously stated, pubs pay VAT on food, whereas supermarkets do not, and also pay far higher rates of VAT than similar businesses in Ireland and France, for example. In order to maximise job creation and taxation revenues, we believe the government needs to reduce VAT for pubs and restaurants as a priority. Notwithstanding these issues the company is aiming for a reasonable outcome in the current financial year.”
The company has opened 18 new pubs and closed two pubs since the start of this financial year. It said it had a number of sites under development and, in line with previous estimates, intends to open approximately 50 pubs in its current financial year.