Shares in JD Wetherspoon fell by 9 per cent this morning after the British pub chain issued its fourth profit warning this fiscal year, saying annual earnings would miss expectations due to weaker sales and rising costs for food, labour, repairs, energy and business rates.
British pubs, long central to community life, have faced years of pressure from changing drinking habits and demographic shifts.
Rising energy costs linked to the Iran conflict have further squeezed margins across the hospitality sector, which was already contending with weak consumer spending as households face higher prices for essentials ranging from food to fuel.
British inflation cooled by more than expected last month, driven by lower petrol prices following a brief de-escalation in the Iran war; however, the renewed fighting has pushed energy costs higher again.
Wetherspoon, recognised for its relatively low prices, has sought to limit price increases for customers despite the mounting cost pressures, weighing on profit margins.
Europe’s devastating early summer heatwave has also emerged as another challenge for pub operators as studies showed drinkers are less inclined to reach for a chilled beer when temperatures exceed 32 degrees.
Wetherspoon reported like-for-like sales growth of 4 per cent in the 12 weeks to July 19 compared with the prior year; however, year-to-date sales were up 4.2 per cent, marginally below the 4.3 per cent reported in the previous quarter.
Analysts expect Wetherspoon to report pretax profit of £69.52 million (€81.51 million) for the year, according to LSEG data. – Reuters
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