Wetherspoon bullish but sales surge ‘is unlikely to last’

By SCOTT REID
Published on 09/11/2012 00:00

Pubs giant JD Wetherspoon yesterday cheered a 7.1 per cent hike in underlying sales as it enjoyed an Olympics lift but said the rate of growth was set to cool.

The firm, whose 860-strong estate includes the Alexander Graham Bell in Edinburgh and Glasgow’s Counting House, said the jump in like-for-like sales in the 13 weeks to 28 October – its first quarter – compared with a 1.1 per cent increase a year earlier. “We do not expect this level of sales growth to be sustained for the rest of the financial year,” the firm added.

Wetherspoon, which posted a 6 per cent rise in full-year 2011-12 profit in September, has been one of the better performing pub companies throughout the economic downturn because of its cut-price drink and food specials. It has continued opening pubs while others have been going out of business.

Releasing a trading update to coincide with its annual shareholder meeting, the firm reiterated its aim for a “reasonable outcome” for the current year.

Analysts at Investec Securities noted that sales had been underpinned by “exceptional trading” around the Olympic and Paralympic games, as well as soft comparatives with a year earlier, when the first quarter included the August riots.

The broker, which retained its “buy” rating on the shares, said: “In our view, Wetherspoon is an undervalued and highly cash generative operator, with an excellent earnings growth track record.”

Wetherspoon, founded in 1979 by its chairman Tim Martin, said its operating margin was 8.6 per cent, down 0.4 of a percentage point because of higher costs combined with increased marketing expenses.

The group said Elizabeth McMeikan would become senior independent non-executive director.