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Sales growth slows at UK pub groups J D Wetherspoon

Published 22/03/2024, 07:14
© Reuters. FILE PHOTO: Signage is seen on a window of a Wetherspoon pub in London, Britain, October 16, 2020. REUTERS/Toby Melville/File Photo
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By Radhika Anilkumar

(Reuters) -British pub group J D Wetherspoon (LON:JDW) said on Friday sales growth had slowed at the start of its fiscal second half and that margins were still below pre-pandemic levels, sending its shares down as much as more than 9% in early trade.

The group, which owns and operates pubs across Britain and Ireland, reported a 5.8% increase in like-for-like sales for the seven weeks to March 17. That was down from a 9.9% increase in the half-year ended Jan. 28.

".. For now like-for-like growth has taken a step down. 5.8% isn't awful but if it stays at this level for the rest of the year the market’s likely to be disappointed," Derren Nathan, head of equity research at Hargreaves Lansdown (LON:HRGV), said in a note.

While the high inflation of recent years has moderated, pubs still face pressures from labour costs and the price of some raw materials.

Britain needs to have a tax system that attracts foreign investment and also needs more rental accommodation, Chairman Tim Martin said in a text message to Reuters, ahead of an election that Prime Minister Rishi Sunak is expected to call later this year.

Wetherspoon reported an operating profit margin of 6.8% for the first half, still below the pre-COVID level of 7.1%.

"It's been a very slow climb back from the pandemic, with an acceleration (of margins) this financial year- if the improvements continue we'll be back to pre pandemic levels in the next year or two," Martin added.

The group reported a profit before tax of 36 million pounds ($45.46 million) for the 26 weeks ended on Jan. 28, compared with 4.6 million pounds a year earlier.

© Reuters. FILE PHOTO: Signage is seen on a window of a Wetherspoon pub in London, Britain, October 16, 2020. REUTERS/Toby Melville/File Photo

The shares were down 7.5% at 0958 GMT to 733.6 pence.

($1 = 0.7920 pounds)

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