J D Wetherspoon plc has issued a pre-close statement prior to the end of the current financial year on 27 July 2014. Their preliminary results are due to be announced on 12 September 2014.
Current trading
For the 10 weeks to 6 July 2014, like-for-like sales increased by 4.9%, and total sales increased by 10.3%. In the year to date (49 weeks to 6 July 2014), like-for-like sales increased by 5.4%, and total sales increased by 9.8%. Sales have been slightly weaker during the World Cup.
The operating margin, in the 10 weeks to 6 July 2014, was 8.1%, in line with 8.1% year-to-date (49 weeks to 6 July 2014) – and the full year is now expected to be around this level. In the next financial year, they expect the operating margin to be in the region of 7.7% to 8.1%, subject to the level of like-for-like sales, the number of new openings and cost pressures.
Property
The Company has opened 40 new pubs and closed five since the start of the financial year. They have eight sites under development and, in line with the last update, intend to open around 45 pubs in the current financial year. Plans are to open around 30–40 pubs in the following financial year.
Financial position
The Company has bought back 2,278,108 shares, at a total cost of £18.5 million, since the start of the financial year. There have been no other significant changes in the Company’s overall financial position since the publication of the interim management statement on 7 May 2014.
Impact of late night levy
The impact of the coalition government’s ‘late night levy’ is starting to take effect, with annual charges of up to about £4,000 per annum for pubs opening beyond midnight in Newcastle and Islington, for example.
Wetherspoon has decided to reduce opening hours from the current 1am to midnight on Fridays and Saturdays, at most of its affected pubs, as and when the levy is introduced or renewed – a retrograde step for pubs, which will have a positive impact on supermarkets, since they will benefit from earlier pub closures.
Although sales have slowed in recent weeks, the Company remains confident of a reasonable outcome in the current financial year.