7th May 2014 09:19
LONDON (Alliance News) - British pub chain JD Wetherspoon PLC Wednesday reported an increase in sales in the third quarter, but continued to face pressure on its profit margin.
The UK-based pub owner and operator said that like-for-like sales increased by 6.2% in the 13 weeks to April 27, while total sales were up almost 11%. In the year-to-date, like-for-like sales were up 5.6%, while total sales increased 9.7%, it said.
The group said that it saw strong sales throughout February and March, but like-for-like growth decreased in April, while Easter trading was softer than last year.
Besides sales, the group's operating margin in the 13 week period was 8.0%, compared with 8.2% in the first half of the current financial year. In the year-to-date, the operating margin was 8.1%.
JD Wetherspoon said it expects its operating margin for the full year to be in the region of 8.0% to 8.3%.
The group has been facing pressure on its profit margins so far this year, although Chairman Tim Martin told Alliance News in March, that the group is not going to try too hard to protect and maintain margins, as it focuses instead on increasing growth, profit and free cash flow.
JD Wetherspoon said Wednesday it still expects a "reasonable outcome for the year as a whole", but warned that its outcome for the fourth quarter was hard to predict.
"As a result of the slowdown in sales growth in recent weeks and our strong performance in the final quarter of last year, combined with the slightly unpredictable impact of the World Cup, the company retains an element of caution about the exact outcome for the final quarter," the company said in a statement.
The group has opened 28 new pubs, and sold three, since the start of the financial year. It said it has 17 sites currently under development, and it still intends to open around 45 pubs this year, and between 30 and 40 pubs next year.
"Estate expansions is as expected...and we expect Wetherspoon to continue to deliver high single-digit annual revenue growth," said Investec analyst James Hollins in a research note Wednesday.
JD Wetherspoon still says the biggest dangers to the pub industry are the VAT and business rates disparity between supermarkets and pubs, and the continuing imposition of what it calls "stealth taxes", such as the late-night levy and increased fruit and slot machine taxes.
"However, the company welcomes the recent reduction in excise duty for beer. In general, we anticipate that taxation and input costs will continue to rise," the company said in a statement. In its 2014 Budget, the UK government cut tax on beer by 1 pence per pint, effective from March 24.
Shares in JD Wetherspoon were down 3.2% Wednesday morning, trading at 825.00 pence.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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