JD Wetherspoon blames supermarkets for slowdown

British pub chain JD Wetherspoon, which has plans to open 30 new pubs in Ireland over the next five years, said that sales had slowed significantly in its second quarter.

The company blamed cheap supermarket prices for keeping bar receipts flat over Christmas and New Year but said it still expected a “satisfactory” full-year outcome, despite margins pressure.

Shares in the group fell 4.4 per cent in early trade to 783 pence.

Wetherspoon, which has grown to over 900 pubs on the back of cheap drinks and food deals, said sales at outlets open over a year rose 2.8 per cent in the 12 weeks to January 18th, its fiscal second quarter, well below the 6.3 per cent posted in its first quarter.

Underlying sales growth in December was 2 per cent and had slowed further in the past two weeks, the company said.

Margins also fell in the period, due to wage rises and increased utility costs, with its half-year operating margin expected to be 7.3 per cent, 0.9 perc ent lower than a year ago.

"Fewer and fewer customers, outside pockets of affluence, in an accelerating trend, are using pubs for "drinking occasions", which do not involve eating," Wetherspoon founder and chairman Tim Martin said in a statement.

Mr Martin said this was due to the much cheaper price of drinks at supermarkets, which pay no VAT on food allowing them to subsidise alcohol prices, while pubs pay 20 per cent VAT on food. Mr Martin has long campaigned for tax equality.

British rival Greene King posted flat underlying sales for the six weeks to January 11th on Monday.

Wetherspoon is focused on sales growth and new sites and plans to spend £400 million on 200 new pubs over the next five years.

The chain, which already operates two pubs in south Dublin, has acquired five more sites in Dublin, Cork and Waterford. Last month it also bought the former Camden Hall hostel on Camden Street in Dublin, which it plans to turn into a 100-room hotel and pub on the back of a €4 million investment.

The company’s aggressive Irish expansion plan is expected to create up to 1,350 new jobs as it proceeds with plans to open 30 pubs here over the next five years.

Reuters