JD Wetherspoon has issued its third profit warning of the year, with chairman Tim Martin warning that the pub chain could miss expectations due to soaring costs. The company, which operates around 800 pubs across the UK and Ireland, cited increases in energy, food, labour, and tax bills as key pressures.
Martin told investors on Wednesday: “As many hospitality operators, including Wetherspoon, have reported, there have been substantial increases in costs.” The warning comes as the UK hospitality sector struggles with higher minimum wage, business rates, and national insurance contributions. Martin previously estimated that these changes would cost the business about £60m annually.
Wetherspoon also faces an extra £1.6m in tax this year from the extended producer responsibility packaging levy. Additionally, the US-Israel war on Iran and the resulting energy price rises are expected to drive up food and heating bills.
Despite the challenges, the pub chain reported a 3.4% rise in sales at established pubs in the 13 weeks to 26 April, compared with the same period last year. However, analysts warn that Wetherspoon's high debt levels and exposure to energy price shocks pose further risks. The company forecast net debt between £740m and £760m by year-end, exceeding its market capitalisation of about £644m.
Russ Mould of AJ Bell noted that the profit warning might reflect relief that the shortfall could be slight, but added that Wetherspoon's operating profit margin of 6.9% leaves it vulnerable to rising interest rates. Meanwhile, drinks giant Diageo maintained its profit guidance despite geopolitical uncertainty, reporting a 0.3% rise in organic sales.
