J D Wetherspoon plc has announced an update on current trading, before entering its close period for its interim results, for the six months ending 22 January 2017, and chair
man Tim Martin hits out at the “doom and gloom” predictions following the UK’s decision to leave the EU.
For the first 12 weeks of the second quarter (to 15 January 2017), like-for-like sales increased by 3.2% and total sales by 0.7%. In the year to date (25 weeks to 15 January 2017), like-for-like sales increased by 3.4% and total sales increased by 1.6%.
We expect the operating margin (before any exceptional items) for the half year ending
22 January 2017 to be around 8.0%, 1.7% higher than the same period last year.
The Company has opened two new pubs, since the start of the financial year, and has sold 21. We intend to open 10 to 15 pubs in the current financial year. We have now sold the majority of those pubs which had been put on the market in 2016, with a remaining small number which is either ‘under offer’ and going through the sales process or being marketed by our agents.
The chairman of J D Wetherspoon, Tim Martin, said:
“In recent weeks, I have been asked frequently by the media to comment on the difference between the apocalyptic predictions by most economists for the economy and the actual outcome, following the referendum.
“The Bank of England’s chief economist, Andy Haldane, called these predictions a ‘Michael Fish’ moment for economists, but his comments demonstrate a deep misunderstanding of the situation.“Michael Fish’s predictions were a misinterpretation of data on one evening, under great time pressure. In contrast, the majority of economists, economic institutions, politicians and intellectuals has consistently misunderstood the implications of the euro, its predecessor the exchange rate mechanism and the implications of leaving the EU, over a period of about 30 years.”
“The underlying reason for their catastrophically poor judgement is a semi-religious belief
in a new type of political and economic system, represented by the EU, which lacks
both proper democratic institutions and the basic ingredient for a successful currency
– a government.
“It also lacks any genuine commitment to free trade, other than to countries which are in,
or on the borders of, the EU. Unless these lessons are learned and acknowledged by economists, their historic mistakes will be repeated.
“As regards the other frequently asked question about the government’s stance
on dealing with the EU, the golden rule in any negotiations, ignored by David Cameron,
is the willingness to walk away.
“Most people now understand that the mutual imposition of World Trade Organisation (WTO) tariffs would create a windfall for the UK, so a sensible basic mantra for the UK is ‘free trade or World Trade Organisation rules – the EU can choose’.
“As previously indicated, the Company anticipates significantly higher costs in the second half of the financial year. On an annualised basis, these are expected to rise by about 4%
for wages, by £7m for business rates and by £2m for the Apprenticeship Levy, in addition to cost increases at around the level of inflation in other areas. As previously announced, the Company intends to increase the level of capital investment in existing pubs from £34m
in 2015/6 to around £60m in the current year.
“In view of these additional costs and our expectation that like-for-like sales will be lower in the next six months, the Company remains cautious about the second half of the year. Nevertheless, as a result of modestly better-than-expected year-to-date sales, we currently anticipate a slightly improved trading outcome for the current financial year, compared with our expectations at the last update.”