Wetherspoon offers little cheer as Martin warns of price hikes

Pubs chain JD Wetherspoon warned again yesterday that drinkers were facing higher prices as rising costs throughout the sector are passed on.

Chairman Tim Martin said he expects prices across the pub and catering industry to rise by between 4 and 7 per cent over the next 12 months in order to reflect higher purchase costs of food and drink and utility bills.

He could not comment on the group's own pricing plans and emphasised the estimate was for the industry overall, but it follows a year when prices across the industry have risen by more than inflation after the VAT rise.

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In March, the group said it expected prices to rise by 4 per cent across the sector.

Wetherspoon, which runs a managed estate of more than 800 pubs, including about 40 in Scotland, said sales rose by 7.1 per cent over the 11 weeks to 10 July, with a like-for-like increase of 1.6 per cent, below some forecasts in the City. In the 50 weeks of the current financial year so far, Wetherspoon's sales are up by 2.2 per cent like-for-like and by 7.5 per cent overall.

As well as rising costs, the group said it is having to contend with lower disposable incomes for its customers, though it added that the performance of its recently-opened pubs is encouraging, which should enable it "to produce a reasonable outcome in the current financial year".

The firm has opened 38 pubs and sold two this year, with a further 14 set to open this month. That will create 650 jobs and take the chain's estate to 822 pubs. In April, Wetherspoon opened its 800th outlet in a milestone for the chain that started life as a single pub in north London in 1979.

Douglas Jack at brokerage Numis trimmed his profit forecast for the year to July 2012 to 70.4 million after the update as he expects margins to be hit by higher labour, food, drink and utility costs. "Our view is that the company's low-margin model remains the most sensitive to increases in costs," he added.