Wetherspoons’ record prof­its – and ris­ing costs

Western Mail - - BUSINESS WALES / SATURDAY BUSINESS - SION BARRY Busi­ness edi­tor sion.barry@waleson­line.co.uk

JD Wether­spoon’s prof­its rose to record lev­els in the year to July, but the pub group warned it would need to main­tain sales mo­men­tum to keep up with ris­ing costs.

Profit be­fore tax was up 4.3% to £107.2m, the group’s high­est profit in its 39-year his­tory.

Like-for-like sales, which ex­clude new pubs, rose 5% in the 52 weeks to July 29. Rev­enue climbed 2% to £1.69bn, an­other all-time high.

Chair­man Tim Martin said the cur­rent fi­nan­cial year had been “rea­son­able”, with 5.5% growth in like-for-like sales in the six weeks to Septem­ber 9.

But he warned higher run­ning costs could threaten 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% will be re­quired for the com­pany to match last year’s record prof­its.”

Emma-Lou Mont­gomery, as­so­ciate di­rec­tor at Fidelity Per­sonal In­vest­ing’s share deal­ing ser­vice, said Martin’s com­ments touched on “the very real pres­sure fac­ing pubs to­day”.

“Claim­ing 50% of beer sales have been lost to su­per­mar­kets in the last 35 years, his calls for tax equal­ity, with gov­ern­ment treat­ing pubs as ‘le­niently’ as su­per­mar­kets when it comes to tax, looks much-needed,” she said.

Trade bod­ies and cam­paign groups in­clud­ing the Cam­paign for Real Ale (Camra), Wine and Spir­its Trade As­so­ci­a­tion (WSTA) and UK Hos­pi­tal­ity have urged the Chan­cel­lor to freeze al­co­hol duty for a sec­ond year in a row to lessen the tax bur­den on pubs.

JD Wether­spoon main­tained its full-year div­i­dend at 12p. Shares in the com­pany were flat in early trad­ing yes­ter­day.

Martin, an out­spo­ken sup­porter of Brexit, said in a state­ment ac­com­pa­ny­ing the re­sults that there will be a “huge gain” for busi­nesses and con­sumers if politi­cians opt for a free-trade ap­proach af­ter leav­ing the EU.

“End­ing tar­iffs will re­duce shop and pub prices, im­prove liv­ing stan­dards and will help non-EU sup­pli­ers, cur­rently dis­cour­aged by tar­iffs, quo­tas and the ex­ten­sive para­pher­na­lia of EU pro­tec­tion­ism,” he said.

Ear­lier this week the com­pany an­nounced an­other tranche of changes to its drinks menu, re­plac­ing EU-made prod­ucts with al­ter­na­tives from the UK and coun­tries out­side the bloc.

The pubs will stop serv­ing Jager­meis­ter as well as French brandies Cour­voisier VS and Hennessy Fine de Co­gnac. This fol­lowed the chain’s an­nounce­ment in June that it would stop re­place Cham­pagne with sparkling wines from the UK and Aus­tralia as well as Ger­man wheat beers with those from the UK.

Martin said the new prod­ucts would be of­fered at a lower price that those they re­place.

TIM EASTHOPE BPMSTF

> JD Wether­spoon has en­joyed record prof­its

> Tim Martin

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