Higher costs dampen Wetherpoon profits

The firm, which has more than 800 pubs, said pre-tax profits for the 26 weeks to January 27 was £34.8m, down from £35.8m a year ago. Revenues rose 10 per cent to £626.4m, with underlying sales up 6.9 per cent.

Higher costs in areas such as tax and food pushed its margin down one per cent year-on-year to 8.3 per cent for the first-half, reducing the impact of rising sales brought on by cash-strapped customers choosing its value-led offers over more expensive competitors.

“It’s not great to put our like-for-like sales up by seven per cent and to have no profit to show from it, it does make me want to cry into my beer,” said Wetherspoon chairman Tim Martin, adding that he hoped improved products and the look of his pubs would ultimately help to grow profit.

The firm said it expected tax and input costs to continue to rise, but that the firm was aiming for “a reasonable outcome” for the full-year. Like-for-like sales were up 7.3 per cent in the six weeks to March 10, he said.

The group has long called for tax parity between pubs and supermarkets, who pay virtually no value added tax on food, allowing them to sell alcohol at much cheaper prices.

Rather than introduce a minimum pricing legislation on alcohol, an idea being considered in Britain, the company said tax parity between pubs and supermarkets would lead to a rise in the average price paid on alcohol, and help the government to meet health objectives.

Shares in Wetherspoon, which said it now expects to open 30 pubs this financial year, closed at 510p on Thursday, up 20 per cent on a year ago, valuing the firm at around £640m.