Wetherspoon shares slump 9% after downbeat update

Tax increases, higher interest charges and the risk of dampened consumer spending meant it was "slightly more cautious" about the next financial year, the firm said in a trading update.

Wetherspoon had been one of the better performers in the pubs sector throughout the recession as offers including ham, egg and chips for 2.99 and a pint of Greene King IPA beer for 99p proved attractive to cash-strapped consumers.

However, the group, whose 767 pubs include The Standing Order in Edinburgh and The James Young in Bathgate, said that comparable sales fell 0.8 per cent in the 13 weeks to 25 April. That compared with a 0.2 per cent decline in the nine months of its financial year to date.

Total company sales increased 3.6 per cent in the third quarter, compared with 4 per cent in the year so far.

The group opened 26 sites in the year so far and closed two, and expects to add a total of 45 pubs in the year to July.

A spokesman said: "The performance of our pubs which opened within the last two years is encouraging.

"We continue to believe there are substantial opportunities for us to acquire sites at reasonable prices. However, we now feel slightly more cautious about the outlook for the next financial year.

Chairman and founder Tim Martin, who holds a 24 per cent stake, said in April that the company might buy a block of pubs to speed up expansion.

Numis cut its 2011 pre-tax profit forecast to 77.9 million from 79.7m, but held its 2010 forecast at 74m. It downgraded the shares from "add" to "hold".

KBC Peel Hunt analyst Paul Hickman downgraded his 2011 pre-tax profit forecast 6 per cent to 77m, but kept a "buy" recommendation on the stock.

The shares, which had risen 33 per cent over the past three months after the company secured a 530m refinancing deal, closed the day down 9.5 per cent at just below 492p.