J D Wetherspoon has announced its interim management statement for the 13-week period up to 25 October 2015 showing total sales up 6.1% but margin down to 6.2% due to increased staff pay rates. An impact to be felt by many more in hospitality in the months to come?
Current trading
For the 13 weeks to 25 October 2015 like-for-like sales increased by 2.4% and total sales increased by 6.1%. Sales have been slightly higher in the last 6 weeks, which has coincided with the Rugby World Cup.
The operating margin in the 13 weeks to 25 October 2015 was 6.2%, compared with 7.7% in the same 13 weeks last year. The lower margin was due to increases in the starting rates for hourly paid staff in October 2014 and August 2015, which totalled approximately 13%.
Property
The Company has opened 3 new pubs since the start of the financial year and has sold 1. It intends to open approximately 15 pubs in the current financial year.
Following a review of its pubs, as previously reported, the Company offered 20 leasehold pubs for sale and is now considering a small number of freehold disposals in the course of the financial year.
Financial position
The Company remains in a sound financial position. Net debt at the end of this financial year is currently expected to be slightly above the 26 July 2015 total of £601.1million.
Outlook
The chairman of Wetherspoon, Tim Martin, said:
“As we indicated in September, it is difficult to quantify exactly the factors which will influence our trading performance in the early stages of a financial year. Increased labour costs are clearly an important factor for all pub and restaurant companies and may result in our annual profits being slightly lower than the last financial year. We will provide updates in our regular statements.”
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