Wetherspoon Like-For-Like Sales Up 4% But Tim Martin Warns Profits Set To Miss Expectations
J D Wetherspoon has reported a 4.0% rise in like-for-like sales over the past 12 weeks, but chairman Tim Martin has warned that annual profits are likely to come in below market expectations, as rising costs across food, labour, energy, repairs and business rates weigh on the pub group’s performance.
In a pre-close trading update published today, the company said like-for-like sales rose 4.0% in the 12 weeks to 19 July, compared with the same period a year earlier. On a year-to-date basis, like-for-like sales are up 4.2%.
Despite the sales growth, Martin struck a cautious tone on the outlook for the year, pointing to softer-than-expected trading in the final quarter.
“Profits for the year are likely to be below market expectations, with marginally lower sales than anticipated in the final quarter, combined with higher costs in the areas of food, labour, repairs, energy and business rates,” Martin said.
On the property side, Wetherspoon has opened eight pubs and sold nine so far this year, leaving the company operating 793 managed pubs. The group’s franchised pub estate, meanwhile, continues to expand rapidly, with 15 new franchised openings in the year to date taking the total to 23.
Wetherspoon has continued its long-running share buyback programme, purchasing 6,402,368 of its own shares for cancellation at an average price of £6.52 each during the year to date.
The company has also spent £12.2 million acquiring the freehold reversions of four pubs, bringing its cumulative spend on freehold reversions since 2011 to £489 million.
Year-end net debt is currently expected to come in at £720 million, in line with the level reported at the end of the previous financial year.
Robyn Duffy, Consumer Markets Senior Analyst at RSM UK, said: “Wetherspoons enjoyed a welcome tailwind from favourable summer weather and the World Cup with stronger sales to finish the year. Although its enduring value proposition remains the real engine of growth. At a time when consumers are being selective over their spending, the pub group is proving that affordability still wins, allowing it to outperform much of the wider hospitality sector.
“The bigger story, however, is no longer revenue but profitability. Management has been clear that higher labour and operating costs will continue to weigh on earnings, despite resilient sales.
“That reflects the challenge facing hospitality more broadly. Demand has held up better than many might have expected in the current uncertain environment but translating that demand into profit has become increasingly difficult. For Wetherspoons, the question is no longer whether it can attract customers, but how quickly easing cost pressures and operational efficiencies can convert its market-share gains into stronger margin growth.”