Wetherspoon wows City but rising costs a concern

Pub giant JD Wetherspoon today reported the best growth in sales so far across the industry for the final three months of last year but warned that rising costs would eat into profit margins.

The group, led by Tim Martin, saw sales from pubs which have been open at least a year increase by 8% in the three months to last Sunday and up 11.3% including new openings. That is better than the 7.1% growth reported in the first quarter which was boosted by the European football and Olympics and which Martin said he did not expect to continue for the rest of the year.

On the downside, Wetherspoons said higher costs — particularly on utility bills — meant profit margins were coming down and would be around 8.2% for the half year which is 1.1% lower than the full year to last July.

The chain has opened five new pubs so far this financial year and have 12 sites under development. It expects to open approximately 25 pubs in the full year.

Martin said: “Our sales, profit and cash flow continue to be resilient, in spite of the continuing taxation and regulation burden on the pub industry and the ongoing pressure on consumer’s disposable incomes.”

Analysts trimmed profit forecasts on the margin news with Investec cutting from £74.2 million to £70.4 million.