It also spent £2.9m buying back shares in the period.
Total sales in the period grew 10.6%. In the year to date (25 weeks to 19 January), like-for-like sales increased by 5.2% and total sales increased by 9%.
The company said: “We expect the operating margin (before any exceptional items), for the half year ending 26 January 2014, to be around 8.1%, 0.2% lower than the same period last year, due primarily to increased investment in a number of areas, for example, (IT, training and additional operating personnel) as we prepare for an increased number of pubs in the years ahead.
“We now estimate an operating margin (before any exceptional items) in the region of 8.1% to 8.3% for this financial year, assuming that we achieve reasonable sales growth.
“We now anticipate a slightly higher corporation tax rate for this financial year, at around 27%, due to higher-than-expected non-qualifying capital expenditure.”
Openings
The company has opened 18 new pubs so far this financial year and currently has 11 sites under development. In line with previous estimates, it intends to open approximately 40 to 50 pubs in the current financial year.
In the period under review, the company bought back 411,000 shares for cancellation, at a total cost of £2.9m, at an average price of £6.98 per share. The company also entered into agreements to fix the interest rates on part of its existing debt from July 2018 to July 2023 at rates which are lower than the average rate currently being paid.
“There have been no significant changes in the company’s overall financial position since the publication, on 11 October 2013, of the annual report and accounts for the year ended 28 July 2013.”
Tax equality
Wetherspoons said: “As the company has pointed out on previous occasions, the pub industry continues to pay far higher taxes than supermarkets do, mainly as a result of an unequal and unfair VAT and business rates burden. This tax inequality has greatly widened the pricing differential for beer and other products between the on and off trade.
“Approximately 10,000 pubs have shut down in the last decade, about 15% of the total, and these closures are certain to continue unless politicians and governments create a fair tax system. Since pubs generate much higher taxes and many more jobs per pint or per meal than supermarkets do, tax equality would be beneficial for the wider economy, as well as the pub industry.
“We have highlighted the impact on our margin of the increased investment which we are making to prepare for an increased number of pubs and the continued pressure from taxes. Assuming reasonable sales growth, the company is targeting a reasonable outcome for the current financial year.”