JD Wetherspoon posts record annual profit but warns on costs
Pub group says sales have grown briskly in current financial year
The Wetherspoon-owned Three Tun Tavern pub in Blackrock, Dublin. Photograph: Bryan O’Brien
JD Wetherspoon said on Friday that sales have grown briskly as the pub operator has kicked off its new financial year, but it warned that it expects higher costs ahead.
Like for like sales, a metric that is closely watched by City analysts, climbed 5.5 per cent in the six weeks to September 9th, the group said.
“The company has had a reasonable start to the financial year, but taxes, labour and interest costs are expected to be higher than those of last year, so we estimate that like-for-like sales growth of about 4 per cent will be required for the company to match last year’s record profits,” said Tim Martin, chairman.
Wetherspoon’s owns and operates more than 900 pubs, including five in Ireland. The pub operator famous for its varied carpets said like for like sales increased 5 per cent in the year ended July 29th. That represented an uptick from 4 per cent in the previous 12 months.
Overall revenues rose 2 per cent to £1.69 billion, while pre-tax profits increased to £89 million from £76.3 million.
Both revenues and operating profit of £132.3 million (up 2.9 per cent) were at the lower end of consensus forecasts.
Mr Martin, who was born in Ireland, is a staunch advocate of Brexit. He commented extensively on the UK’s upcoming divorce from the EU in his letter to investors – something of a theme in most Wetherspoons filings.
“There will be a huge gain for business and consumers if the UK copies the free trade approach of countries like Singapore, Switzerland, New Zealand, Australia, Canada and Israel, by slashing protectionist EU import taxes (“tariffs”), on leaving the EU in March next year,” he said.
He added that if UK parliament ditches the bloc’s tariffs, it would “reduce shop and pub prices, improve living standards, and will help non-EU suppliers, currently discouraged by tariffs, quotas and the extensive paraphernalia of EU protectionism”.
Earlier this week the company announced another tranche of changes to its drinks menu, replacing EU-made products with alternatives from the UK and countries outside the bloc. The pubs will stop serving Jagermeister as well as French brandies Courvoisier VS and Hennessy Fine de Cognac.
This followed the chain’s announcement in June that it would stop replace Champagne with sparkling wines from the UK and Australia as well as German wheat beers with those from the UK. – Copyright The Financial Times Limited 2018/PA