Profits fall flat at JD Wetherspoon as costs mount

JD Wetherspoon posted a steep drop in interim profits on Friday, and warned that full-year numbers would likely disappoint, as it battled a spike in costs.

The British pub chain saw revenues rise 5.7% in the 26 weeks to 25 January, to £1.09bn, while like-for-like sales were 4.8% stronger. Within that, underlying bar sales rose 7%, food sales by 1.3% and fruit machines by 8.9%.

However, operating profits tumbled 18.4% to £52.9m, while pre-tax profits were 31.9% weaker at £22.4m.

Wetherspoons had warned in January that rising costs would dent interim profits. Analysts, however, had expected a more modest drop in operating profits to £60m.

The chain said it had been hit by increases to employer National Insurance contributions, the minimum wage, repairs and business rates, as well as a packaging levy.

Looking to the second half, and chair Tim Martin said like-for-like sales in the seven weeks to 15 March had risen 2.6%.

But he warned: "There is clearly considerable pressure on consumer finances, combined with higher taxes, wages and energy costs for the hospitality industry.

"This may result in profits that are slightly below current market expectations.

"The forecast for year-end net debt remains unchanged."

Speaking to the BBC, Martin refused to be drawn on whether or not prices would have to rise.

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