Wetherspoons’ ‘reasonable’ year despite the challenges

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PUBS group JD Wetherspoon is aiming for a “reasonable outcome” to the financial year, it said yesterday.

In a trading update covering the 13 weeks to May 7, it said like-for-like sales were 6.3 per cent ahead while total sales rose 9.3 per cent.

In its year to date like-for-like sales are 6.7 per cent ahead and total sales are 10.1 per cent better.

However, it said it expects lower like-for-like sales levels in the final quarter of the current year.

The group has opened 16 new pubs and sold two since the start of the financial year and said it intends to open a total of 30 pubs in the current financial year, and a further 20 to 25 in the following financial year.

It says the biggest dangers to the pub industry are the VAT disparity between supermarkets and pubs and “the continuing imposition of stealth taxes such as the late-night levy and increased fruit/slot machine taxes”.

And despite the abolition of the duty escalator and a reduction in beer duty by the Chancellor in the recent Budget, it said it expects that taxation and input costs will continue to rise.

However, the group reiterated: “The company continues to aim for a reasonable outcome in the current financial year.”

The chairman of JD Wetherspoon Tim Martin said: “Wetherpoons opened another 16 pubs since the start of the year. It has more than 800 with ambitions for 1600.”

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 yea.

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 per cent 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 in 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.”

JD Wetherspoon, which has more than 70 pubs in Yorkshire, has recently opened new pubs in Whitby, Selby, and Yeadon.

It will also open new pubs in Sowerby Bridge, Hemsworth and Chapeltown, but the dates are yet to be announced.

The group has also identified new sites in Wakefield, Beverley, Bramley, Saltaire, Malton, Knaresborough, Morley, Headingley, Leeds, Sheffield, Northallerton, Pontefract and Holmfirth.

JD Wetherspoon said it is looking for more sites in the region.

JD Wetherspoon is known for its tendency to transform historic buildings of interest into pubs.

In Leeds, for example, Becketts Bank pub in Park Row is located in the city’s 19th-century banking quarter, and is named after one of the area’s best-known former banks.

JD Wetherspoon’s founder and chairman, Tim Martin, was 24 years old when, shortly after qualifying as a barrister, he opened his first pub. Today, it has around 870 pubs.