Wetherspoon set to weather the storm of winter

After a strong period of Christmas trading, sales were driven down by bad weather which brought parts of the country to a standstill.

Wetherspoon, which has 744 pubs, said sales at pubs open for more than a year fell by 0.3 per cent in the 12 weeks to January 17, with the last two weeks affected by the weather.

By contrast, like-for-like sales over the 10 weeks to January 3 were up 1.2 per cent on a year earlier.

"A couple of bad weeks in January we'll have to take on the chin, but we're trading well," said chief executive John Hutson. "We think about one per cent growth in the second half is, based on current trading, where we're at."

Wetherspoon said it had opened 15 pubs since July, and now plans to open 50 pubs this financial year, up from its previous aim of 40. This includes two in Sheffield which are set to open next month.

Wetherspoon has capitalised on the appetite for value during the recession, selling pints of beer from 99p and main meals starting at 2.99.

Wetherspoon said it expects operating margins for the six months ending on January 24 to be in line with last year, with the benefits of lower energy costs offset by higher levels of repair spending.

Wetherspoon is now in talks with its banks over refinancing its main 435m facility, which expires in December. It is also considering a rights issue, equity placing, US private placement or a bond issue.

However, Mr Hutson said his preference would be to replace debt with debt, with a rights issue the least preferred option.

The group added that it has reduced debt by 50m over the past year and is confident about its prospects for the rest of its financial year, thanks to new pub openings and sales growth.

Analysts said the trading update underpinned their positive view.

"As Wetherspoon is not involved in the heavy end of the discounting market but rather follows a value-for-money strategy towards its pricing, it is well positioned to weather a crackdown on irresponsible drinks promotions," said analysts at Altium Securities.