LONDON (Reuters) - British pub chain JD Wetherspoon (L:JDW) said on Wednesday that sales had slowed significantly in its second quarter, blaming cheap supermarket prices for keeping bar receipts flat over Christmas and New Year.
The company said it still expected a "satisfactory" full-year outcome, despite margins pressure, but its shares fell 4.4 percent in early trade to 783 pence.
Wetherspoon, which has grown to over 900 pubs on the back of cheap drinks and food deals, said sales at outlets open over a year rose 2.8 percent in the 12 weeks to Jan. 18, its fiscal second quarter, well below the 6.3 percent posted in its first quarter.
Underlying sales growth in December was 2 percent and had slowed further in the past two weeks, the company said.
Margins also fell in the period, due to wage rises and increased utility costs, with its half-year operating margin expected to be 7.3 percent, 0.9 percent lower than a year ago.
"Fewer and fewer customers, outside pockets of affluence, in an accelerating trend, are using pubs for "drinking occasions",which do not involve eating," Wetherspoon founder and chairman Tim Martin said in a statement on Wednesday.
Martin said this was due to the much cheaper price of drinks at supermarkets, which pay no VAT on food allowing them to subsidise alcohol prices, while pubs pay 20 percent VAT on food. Martin has long campaigned for tax equality.
British rival Greene King (L:GNK) posted flat underlying sales for the six weeks to Jan. 11 on Monday.
Wetherspoon is focussed on sales growth and new sites and plans to spend 400 million pounds ($607 million) on 200 new pubs over the next five years.