Pub chain JD Wetherspoon is set to report a 21% plunge in pre-tax profits to £64.6 million for the year to July 26, after a disappointing year marked by rising costs and weaker-than-expected sales growth.
The group alerted investors to lower-than-expected annual profits in July after sales failed to match forecasts and the firm missed out on the World Cup and warm weather boost enjoyed by many of its rivals.
Sales growth misses forecasts
Wetherspoon, which runs 93 managed pubs and 23 franchise sites across the UK, said sales grew by 4% in the three months to July 19 after the much hoped-for summer bounce failed to materialise.
Founder and chairman Sir Tim Martin said the “marginally” slower-than-expected sales, when combined with soaring costs across the board, was set to see profits miss market forecasts.
Cost pressures mount
He once more flagged “higher costs in the areas of food, labour, repairs, energy and business rates”.
Mr Martin’s warning added to a caution from the boss in May that Government-linked policy costs would drag on its financial performance. The company previously said it was facing £60 million of extra costs linked to wage increases and national insurance contributions for the year.
Investors await guidance
Derren Nathan, head of equity analysis at Hargreaves Lansdown, said investors are already braced for a drop in 2025-26 profits, but added “the bigger question is what the current cost backdrop means for guidance”.
“With margins under pressure, markets will want reassurance that cash generation is strong enough to support future returns, including any dividend and buyback plans. Neither of which is guaranteed,” he added.
Richard Hunter, head of markets at interactive investor, said: “The group’s value model leaves it continually bumping up against a wall of higher costs, which puts perennial pressure on margins and profits.”
“Investors are braced for what could prove to have been another challenging year,” he added.
