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JD Wetherspoon See Profits Fall In Latest Results

Wetherspoon-Chairman-Tim-Martin-(2)Pub operator J D Wetherspoon has published its preliminary results for the 26 weeks ended 27 January 2019, with profit before tax and exceptional items falling by almost 19%.

Like-for-like sales, however, increased 6.3% and revenue was also up by 7.1% to £889.6m, but operating profit decreased by 14.2% to £63.5m.

Lower profit in the period is attributed to cost increases in areas including labour (+£33.0m), repairs (+£3.7m), utilities (+£2.5m),

interest (+£3.3m) and depreciation (+£2.4m).

Earnings per share, including shares held in trust by the employee share scheme, and before exceptional items, declined by 18.2% to 37.4p.

The chairman’s statement included property details during the period, which saw two new pubs open and six close, bringing the number open at the period end to 879.

Following a review of the estate, in recent years, the company placed around 100 pubs on the market, most of which have now been sold.

Ten years ago the freehold/leasehold split was 41.7/58.3% and at the half year end it was 60.2/39.8%.

The chairman’s statement also said: “Pubs and restaurants pay proportionally far higher levels of UK tax than do supermarkets. The main disparity relates to VAT, since supermarkets pay no VAT in respect of their food sales, whereas pubs pay 20%, enabling supermarkets to subsidise their alcoholic drinks prices. Pubs also pay approximately 18p per pint in respect of business rates, while supermarkets pay less than 2p per pint. In addition, the government has, in recent years, introduced both a ‘late-night levy’ and additional fruit/slot machine taxes, further reducing the competitive position of pubs in relation to supermarkets. The tax disparity with supermarkets is unfair.”

He added: “Pubs create significantly more jobs and more taxes per pint or per meal than do supermarkets and it does not make social or economic sense for the UK tax régime to favour supermarkets. We acknowledge the need for companies to pay a reasonable level of tax, but hope that legislators will make prompt progress in creating a level playing field for all businesses which sell similar products.”

Martin also commented on the ongoing Brexit turmoil, saying: “The vexed debate about Brexit has continued since the referendum, nearly three years ago. Although the public voted to leave, the majority of ‘The establishment’, including most MPs, most universities, the Bank of England, the CBI and media organisations such as The Times ,the Financial Times and The Economist favoured ‘Remain’.

“The result has been a barrage of negative economic forecasts from those quarters, predicting that the UK will go to hell in a handcart without a ‘deal’ with the EU – which will effectively tie the country into EU membership and taxation, yet without representation.

“The doomsters ignore the most powerful nexus in economics, between democracy and prosperity – and the fact that the EU is becoming progressively less democratic, as it pursues an ‘ever-closer union’, for which there is no public consensus.

“Previous referendum results on major constitutional issues have always been respected in the UK, but if parliament votes either for Theresa May’s ‘deal’ (which keeps us in the EU by the back door) or to remain in the EU, the referendum result will not have been respected. This may well have significantly adverse economic consequences, as the country turns in on itself to endure months, or years, of stifling constitutional argument.”

“In the six weeks to 10 March 2019, like-for-like sales increased by 9.6%, helped by excellent weather this year and snow last year, and total sales increased by 10.9%.

“As previously indicated, costs in the second half of the year will be higher than those of the same period last year. The company anticipates an unchanged trading outcome for the current financial year.”

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