Wetherspoon loses some fizz as staff costs to hit mar­gins

The Daily Telegraph - Business - - Business - By Oliver Gill

PUB chain Wetherspoon has warned profit growth will fiz­zle out as in­creased staff costs squeeze its bot­tom line.

Its chair­man Tim Martin, who is re­cov­er­ing from a burst ap­pen­dix, said the com­pany ex­pected “a trad­ing out­come slightly below that achieved in the pre­vi­ous fi­nan­cial year”.

In­vestors took fright, with plung­ing 13.2pc to £11.38. With the un­em­ploy­ment at a record low, Wetherspoon will in­crease pay from this week, Mr Martin said, though de­clined to say by how much.

“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,” he said.

The chain, which op­er­ates more than 900 venues, re­ported a 5.5pc rise in like-for-like sales for the three months to Oc­to­ber.

Liberum an­a­lyst Anna shares Barn­fa­ther was “con­cerned” about Wetherspoon’s abil­ity to drive earn­ings growth “par­tic­u­larly in a higher in­ter­est rate and labour cost en­vi­ron­ment”. While the FTSE 250 com­pany’s profit mar­gins are some of the low­est in the pub sec­tor, its like-for-like sales growth “is one of the high­est”, pointed out Ms Barn­fa­ther.

Kate Calvert, at In­vestec, noted: “Wetherspoon con­tin­ues to out­per­form the rest of the UK pub sec­tor, show­ing the of­fer con­tin­ues to res­onate with the con­sumer”, although she re­duced her tar­get price on its stock.

Mr Martin said se­nior in­de­pen­dent di­rec­tor Liz McMeikan would chair next week’s AGM. The share­holder ad­viser Pirc has urged in­vestors to vote against the Wetherspoon founder’s re-elec­tion as chair­man, cit­ing con­cerns that Mr Martin – who owns about a third of the Wetherspoon stock – is not suf­fi­ciently “in­de­pen­dent”.

While con­va­lesc­ing, the Wetherspoon boss took the op­por­tu­nity to write “a few hun­dred words … on the ad­van­tages of free trade, which greatly out­weigh the il­lu­sory ben­e­fits of a ‘deal’ with the un­demo­cratic EU”.

“Wetherspoon has set an ex­am­ple by swap­ping EU prod­ucts like Jäger­meis­ter, Cour­voisier and Ger­man beer for UK or non-EU prod­ucts of equal or bet­ter qual­ity and price. It fol­lows that UK busi­nesses and con­sumers have the power to re­duce EU ex­ports to the UK to zero, or al­most zero,” he wrote.

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