5th Nov 2014 08:01
LONDON (Alliance News) - British pub chain JD Wetherspoon PLC Wednesday said like-for-like sales rose 6.3% in the first quarter of its new financial year, but warned that growth in October decreased, and its operating margin declined year-on-year on the back of salary increases for its staff and higher supplier costs.
"As a result of the slowdown in sales growth in October, combined with the cost increases referred to above, the company is currently anticipating an operating margin in the range of 7.2% to 7.8% for the current financial year," the company said in a trading update Wednesday.
JD Wetherspoon said total sales were up 11.3% in the 13 week quarter ended October 26, and up 6.3% on a like-for-like basis.
"Sales were good through August and September, but like-for-like growth decreased in October," it said.
The company said its operating margin in the first quarter was 7.7%, compared with 8.3% in the first quarter of last year. The pub chain said it increased pay for its hourly paid staff in October to 5%, while utility costs increased by about 4%.
"In addition, during the period, there have been several cost increases from suppliers," it added.
JD Wetherspoon said it has opened two new pubs since the start of the financial year, while it has 15 pubs under development and plans to open around 30 to 40 pubs this financial year.
Having agreed an addition five-year banking facility with one of its lenders, the company said its overall facilities have increased to GBP740 million.
The company said it is still aiming for a "satisfactory" outcome for the current financial year.
Back in September, JD Wetherspoon posted strong profit and revenue growth in its last financial year, boosted by new pub openings and impressive sales of its food and beverages, but said investment it's making in the business continue to squeeze its profit margin.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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