Wetherspoon warns of mounting cost pressures as profits hit record high
Pubs giant JD Wetherspoon’s profits hit record levels in the year to July, but the firm once again warned of rising costs.
Chairman and founder Tim Martin – who has been a prominent Brexit campaigner – described the current financial year as “reasonable”, with 5.5 per cent growth in like-for- like sales in the six weeks to 9 September.
But he warned that higher running costs could impact profit growth, saying: “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.”
Profit before tax was up 4.3 per cent to £107.2 million in the full year while like-forlike sales rose 5 per cent in the 52 weeks to 29 July. Revenues were up 2 per cent to £1.69 billion, marking another record high.
Martin founded the chain in the late 1970s with a single pub in Muswell Hill, London. It now has 900-odd watering holes include the Caley Picture House in Edinburgh and Dunfermline’s Guildhall & Linen Exchange.
The group maintained its full-year dividend at 12p.
Alasdair Ronald, senior investment manager at Brewin Dolphin Scotland, said: “There are few surprises in this set of results from JD Wetherspoon.
“We continue to have concerns over the company’s ability and willingness to pass on required price increases to offset input cost pressures.
“It has the lowest margins of the large UK pub companies and these cost pressures have a greater proportional impact on its profitability than they do its peers. The pub and restaurant sector is an incredibly competitive environment.”