Wetherspoon beats expectations but eyes tough Q4

Pub chain Wetherspoon beat expectations in third-quarter trading and lifted profit margins on the previous period.

Pub chain Wetherspoon beat expectations in third-quarter trading and lifted profit margins on the previous period.

Like-for-like sales increased 6.3% and total sales 9.3% in the 13 weeks to April 28th, meaning for the year to date that like-for-like sales are up 6.7% and total sales 10.1%.

But due to tough comparatives last year and additional cost pressures, Wetherspoon expects lower like-for-like sales in the final quarter of this financial year.

Furthermore, the fourth quarter will be hit by a full quarter of new government measures, with Machine Gaming Duty and automatic pension enrollment expected to cost a respective £2.0m and £3.0m per year extra.

Operating margins advanced rose 40 basis points to 8.5%, from 8.3% in the first half of the year, after Chairman Tim Martin said in March that the company would have to raise prices in response to rising costs.

The group, which opened its first pub in Colney Hatch Lane in Muswell Hill in 1979, said it expects to open 30 pubs in the current financial year, having opened 16 new sites and sold two so far.

Management warned this rate will slow in the subsequent financial year, with the intention being to open between 20 and 25 pubs.

Broker Numis calculated that the combination of 60% of new sites this year being freeholds and a neutral level of working capital should result in net debt increasing by £26m to £489m.

Analyst Douglas Jack said: "After five years of falling like-for-like profits, 2013 is likely to bring a fall profit before tax and an increase in debt. Despite this, the market appears to have already priced in the benefit of expansion over the next year."

Shares in JD Wetherspoon were up 0.51% at 597p at 09.49.

OH

Recommended

Delivering profits : should you buy Royal Mail shares?
Share tips

Delivering profits : should you buy Royal Mail shares?

The volume of parcels delivered by Royal Mail soared during the pandemic, and so did its profits. But it has been coming under pressure lately. So, as…
19 May 2022
Avoid easyJet shares – there are better airlines to invest in
Share tips

Avoid easyJet shares – there are better airlines to invest in

EasyJet used to be one of Europe’s most impressive airlines. But now it is facing challenges on all fronts and losing out to the competition. Rupert …
19 May 2022
Tech stock crash – dotcom bust 2.0 is upon us
Tech stocks

Tech stock crash – dotcom bust 2.0 is upon us

It’s carnage in the tech sector as the market crashes. But that spells opportunity for canny investors, says Matthew Lynn
19 May 2022
Three things you should learn from Bill Ackman's brilliant Netflix trade
Investment strategy

Three things you should learn from Bill Ackman's brilliant Netflix trade

Hedge fund guru Bill Ackman has lost $400m selling Netflix shares. John Stepek explains why this was a brilliant trade, and outlines three things that…
19 May 2022

Most Popular

Get set for another debt binge as real interest rates fall
UK Economy

Get set for another debt binge as real interest rates fall

Despite the fuss about rising interest rates, they’re falling in real terms. That will blow up a wild bubble, says Matthew Lynn.
15 May 2022
Is the oil market heading for a supply glut?
Oil

Is the oil market heading for a supply glut?

Many people assume that the high oil price is here to stay – and could well go higher. But we’ve been here before, says Max King. History suggests tha…
16 May 2022
Value is starting to emerge in the markets
Investment strategy

Value is starting to emerge in the markets

If you are looking for long-term value in the markets, some is beginning to emerge, says Merryn Somerset Webb. Indeed, you may soon be able to buy tra…
16 May 2022