Wetherspoon shares hit as update warns of weaker performance

SHARES in JD Wetherspoon fell yesterday as the pub group hinted at weaker annual performance and chairman Tim Martin revealed he would be temporarily working part-time after a health scare.

The share price was down 9.5% before lunchtime as investors absorbed a first-quarter trading update in which the chain said like-for-like sales increased by 5.5% and total sales were up 6.2%.

Despite strong growth, Mr Martin said the company was dealing with tough comparatives, having delivered several years of record profits.

“It is difficult to be too precise at this early stage of the current financial year, but we now expect a trading outcome slightly below that achieved in the previous financial year,” he said

“We will provide further updates on our trading as we progress through the year.”

Mr Martin also revealed he has been recovering from an operation after a burst appendix so will be working part-time from home for “several weeks”.

Senior independent director Liz McMeikan will chair the general meeting next week in his absence.

The group also said it is increasing staff wages in response to record levels of unemployment.

The move follows a strike by a small number of staff last month.

Wetherspoon will not initially raise prices to cover the increase, but could later revise this decision.

“Having had several recent years of record profits, we are not immediately seeking to recoup these increased costs through higher pricing or ‘mitigation’ but will review that during the year,” said Mr Martin.

The company has opened two new pubs in the first quarter and has closed or sold three.

It guided new openings of between five and 10 pubs in the current financial year.

In the trading statement Mr Martin also reiterated his belief that the UK should adopt free trade after Brexit.

Industry analyst Mark Brumby, of Langton Capital, commented: “This is a short statement of 1,400 words with less than a couple of hundred relating to the group’s trading, balance sheet, margins, trading position, outlook, etc.

“The remainder deal with the chairman’s views on Brexit.

“If this ratio reflects the split of effort that is being put into the running of the company, then shareholders may have something to think about.

“The implied cuts to estimates for profits for the full year will need to be digested.”