Wetherspoon’s sales up but margins squeezed

By MARTIN FLANAGAN
Published on 16/01/2013 21:52

PUBS operator JD Wetherspoon toasted a rise in festive sales yesterday, but warned that profit margins are being squeezed by rising costs and its low prices.

Wetherspoon, which has 800 pubs across Britain including a growing Scottish presence, said higher energy bills and wage costs meant its operating margin would be 8.2 per cent for the half-year. This is 1.1 per cent lower year-on-year.

The company, whose near-40 Scottish outlets include The Playfair and The Standing Order in Edinburgh and Elgin’s Muckle Cross, said sales and profits were holding up despite “the continuing taxation and regulation burden on the pub industry and the ongoing pressure on consumers’ disposable incomes”.

Wetherspoon also shrugged off the severe wet weather late last year to post an 8 per cent sales rise in the 11 weeks to

13 January. The resilient performance helped like-for-like sales to increase by 7.6 per cent so far in its current financial year.

Analysts at Peel Hunt said Wetherspoon’s “value proposition continues to resonate with customers, but the resolute pursuit of this strategy continues to be paid for by margin erosion”.

Chairman Tim Martin, who founded Wetherspoon in 1979 and still holds a 23 per cent stake, said the group was focused on increasing sales rather than profit margins.