Peach Report

Wetherspoon's maintains like-for-like sales growth

2 May, 2012

JD Wetherspoon, Britain's leading high street pub operator, saw like-for-like sales grow 2% in the 13 weeks to 22 April, with total sales up 8.4%.

The third quarter performance maintains its growth rate for the year as a whole - with like-for-likes for the first 39 weeks also up 2.0% and overall sales ahead 8.4%.

The company opened 29 new pubs and closed two pubs since the start of the financial year. "We have several sites under development and, in line with our last update, intend to open around 40 pubs in the current year. It is our intention to open 20 to 30 pubs in the next financial year," said chairman Tim Martin.

However, Martin again attacked the Government for the increasing tax pressure on the pub sector: "The pub industry was burdened with considerable additional taxes at the time of the Budget. As well as excise duty, a change in allowances for fruit machine taxation has resulted in increased costs for Wetherspoon of £2m a year. The government  also announced the introduction of a ‘late-night levy’, in effect another tax, which will also cost approximately £2m. The effect of the three tax increases in the next financial year will be approximately £11m.
"The extra taxes on fruit machines and the late-night levy are not applicable to supermarkets, so the tax disparity between supermarkets and pubs has been further increased.  The total tax bill for Wetherspoon in the current financial year, including VAT, excise duty, corporation and other taxes will be approximately half a billion pounds, about a £50m  compared with the previous financial year.

"We have also created approximately 3,000 jobs in the same period, but all of the economic benefits of our expansion are currently being levied by the government as taxes - an unsustainable situation," Martin concluded.

Margins were coming under pressure, Martin said. Operating margin before exceptionals in Q3 was 8.1%, compared to 9.3% in the first half. He added that the company expected to see the operating margin improve in the final quarter, although for the second half as a whole it would likely be below that achieved in the first half.
The company had bought back 4 million shares, at a total cost of £16.6 million, in recent weeks, he added.