Pubs and Bars

Wetherspoon warns of costs increase as it reports uplift in sales

Pub group JD Wetherspoon has reported a 5.2% like-for-like sales increase for the 10 weeks to 8 July 2018, but has warned of cost increases for the next year.

The group said it expected business rates, the sugar tax, utility taxes and wages to have an impact on its costs.

Total sales increased by 5.6% in the 10-week period, with growth also seen in the 49 weeks to 8 July – total sales rose by 5.2% and 4.2% respectively.

Wetherspoon said it expected roughly £9m in “exceptional” non-cash losses for the financial year as a result of pub disposals which were below value. It also spent £15m on buying the freehold revisions of pubs where it previously had a tenancy.

Wetherspoon has opened six new pubs since the start of the financial year and has completed the sale of 23 pubs. It has no further openings planned in the current year.
Net debt at the end of this financial year is expected to be about £740m.

Tim Martin, chairman of Wetherspoon, said: “Wetherspoon has started to review its product range and has exchanged French champagne for sparkling wine from the UK and Australia, and German wheat beer for UK and American alternatives. The new products are now available, at reduced prices, in our pubs. We plan further initiatives in this area in the coming months.

“We continue to anticipate a trading outcome for this financial year in line with our previous expectations. As in the current year, we anticipate considerable cost increases next year, in areas including business rates, the sugar tax, utility taxes and wages. In addition, as a result of an increase in our “swaps”, our interest rates will rise by around £7m.”

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