Profits, sales jump at JD Wetherspoon

Pubs chain JD Wetherspoon posted a jump in full-year sales and profits on Friday, despite a slew of higher costs.

Revenues sparked 4.5% in the 52 weeks in 27 July, to £2.13bn, while pre-tax profits came in at £81.4m, a 10.1% improvement on the previous year.

Like-for-like sales were up 5.1%.

The group, which had 794 managed pubs by the end of the period, said increases in the minimum wage and employers’ National Insurance contributions would add around £60m per year to its cost base.

Both increased in April this year.

Higher energy prices are expected to add £7m, it continued, while the new extended producer responsibility tax – which is designed to reduce packaging waste – would cost £2.4m in the current year.

Tim Martin, Wetherspoon’s outspoken founder and chair, said: “Cost increases such as these undoubtedly add to underlying inflation in the UK economy, although Wetherspoon as always will endeavour to keep price increases to a minimum.”

Looking to current trading, the chain said like-for-like sales increased 3.2% in the nine weeks to 28 September.

Martin did not provide further details, other than to add: “The company currently anticipates a reasonable outcome for the financial year, although government-led cost increases in areas such as energy may have a bearing on the outcome.”

As at 1130 BST, shares in the FTSE 250 firm were down 4% at 638.5p.

Richard Hunter, head of markets at Interactive Investor, said: “Wetherspoon’s dogged determination to fight its corner has won the brand many friends, but from an investment perspective the jury remains out on prospects.

“The shares have had a decent run over the last six months, with a bounce of 17%, but this has merely reduced the decline over the year to 7%.

"The overarching headwinds which the group faces simply cannot be ignored, and the further slump of the shares at the open reflects this caution.”

Russ Mould, investment director at AJ Bell, said: “The full-year numbers are decent, with record sales and profits up by double digits.”

But he continued: “Holding the dividend flat suggests management are not felling overly confident about the outcome, with the guidance for a ‘reasonable outcome’ for the current year open to interpretation and unlikely to get pulses races.”