JD Wetherspoon was yesterday toasting another surge in Christmas sales – a day after it controversially opened its latest pub at a motorway services station.
Like-for-like sales for the 12 weeks to January 19 were up 6.7 per cent while they were 5.2 per cent ahead over the 25-week period to that date.
However, the group warned that operating margins will be squeezed for the first half of the financial year due to increased investment, including training, IT and staff. Corporation tax is also expected to be slightly higher for the full year.
JD Wetherspoon recently announced that its Knaresborough pub will be opening at the beginning of April as part of its UK expansion plans.
Wetherspoons also opened pubs in Whitby, Selby, Yeadon, Sowerby Bridge, Hemsworth and Chapeltown last year.
The group has identified new sites in Wakefield, Beverley, Bramley, Saltaire, Malton, Morley, Headingley, Leeds, Sheffield, Northallerton, Pontefract and Holmfirth.
The trading update comes after the chain opened the Hope and Champion pub at the M40 services at Beaconsfield, Buckinghamshire.
Alcohol campaigners and doctors have raised concerns about the move, but Wetherspoons says it expects customers will act responsibly, and the majority will be drinking non-alcoholic beverages.
The chain, which has more than 800 pubs, has opened 18 new sites so far this financial year and has 11 under development. It expects to open 40 to 50 in the 12-month period.
In its outlook, the company again drew attention to the “unequal and unfair” VAT and business rates burden faced by pubs, meaning they pay far higher taxes than supermarkets do, widening price differences and forcing thousands to close.
But while there was pressure on its margins, the group said: “Assuming reasonable sales growth, the company is targeting a reasonable outcome for the current financial year.”
Shore Capital analyst Greg Johnson said the performance to date was significantly ahead of expectations though the margin performance “continues to frustrate”.
Investec’s James Hollins said the programme of pub openings combined with the success in driving sales added to confidence about the prospects of “strong returns in an improving UK consumer environment”.
JD Wetherspoon said preparations for expansion would keep margins under pressure this year, as it reported accelerating sales growth in its second quarter.
The firm also plans to open its first pubs in Ireland in 2014.
In October last year, it was revealed that the company’s chief executive had landed a near 30 per cent hike in his pay and bonus package to £1.1m, after the group toasted another year of record annual sales and profits.
John Hutson saw his total pay and shares swell after being awarded a £95,000 cash bonus, as well as £109,000 worth of shares under a long-term incentive scheme and a £358,000 share windfall in deferred payments from a plan set up in 2005.
The group’s annual report revealed that on top of a 2.5 per cent rise in annual salary, executive directors also received 16.5 per cent of their pay as a bonus after underlying pre-tax profits leapt 6.3 per cent to a record-breaking £76.9m in the year to July 28, 2013.
Another five per cent of salary was paid as an extra cash bonus for making pub visits each month to carry out mystery shopper-style assessments and to talk to landlords – a long-standing bonus policy at the group.
In October last year, it was also revealed that Mr Hutson makes a minimum of 40 pub calls every month, while chairman and founder Tim Martin also spends the majority of the week out of the office visiting pubs in the chain, although he does not pick up a bonus.
Pub number 900 for JD
JD Wetherspoon recently opened its 900th pub.
The Poulton Elk in Poulton Le Fylde, Lancashire, opened on the site of a former bar following a £1.4m redevelopment project.
Wetherspoon chief executive John Hutson said last month: “Wetherspoon continues to go from strength to strength and I am delighted that the company has reached this milestone.
“We will continue to open new pubs and create jobs for many more years to come.”