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EnergyJD Wetherspoon cheers Olympic boost
Filed under: Investing
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Pub chain JD Wetherspoon cheered an Olympic boost to sales but warned the gold performance could not be sustained as the impact of one-off events tails off.
But the Watford-based group said the level of growth would not continue as taxation and input costs are expected to rise, and maintained its forecast of a "reasonable outcome" for this financial year.
The update came as Wetherspoon reported an 11.7% rise in revenues to £1.2 billion in the 53 weeks to July 29 and a 4.1% drop in pre-tax profits to £58.9 million.
Shares in the pub chain jumped 5% after the results were published.
Douglas Jack, analyst at brokers Numis Securities, said the share price will be driven higher by the strong recent like-for-like growth but warned margin pressure was likely to resume in normal trading conditions.
The group, which also enjoyed a boost from the Diamond Jubilee and Euro 2012 football tournament, reported a 3.2% increase in like-for-like sales for the year to July, within which bar sales increased by 2.8% and food sales rose 4.8%.
The company opened 40 pubs during the year, 18 of which were freehold, while three others closed, resulting in a total estate of 860 pubs at the financial year end. The average development cost for a new pub, excluding the cost of freeholds, in the financial year under review, was £1.4 million, compared with £1.2 million a year ago.
The company said it intends to open about 25 pubs in the year ending July 2013.
Tim Martin, founder and chairman of JD Wetherspoon, reiterated his warning over the difference in VAT between supermarkets and pubs and other rising taxes. He said: "The biggest dangers to the pub industry are the VAT disparity between supermarkets and pubs, combined with the continuing imposition of stealth taxes, such as the late-night levy and the increase in fruit and slot machine taxes."
