Pub operator JD Wetherspoon has said better than expected year-to-date sales have left it with improved but cautious trading expectations for the current financial year, despite rising costs.
Reporting its Q3 trading update for the 13-week period up to 23 April 2017, the pub operator said like-for-like sales had increased by 4%, while total sales were up 1.3%. Year-to-date like-for-like sales are up by 3.5% and total sales have increased by 1.4%. Its operating margin was 7.3% compared with 6.4% in the same 13 weeks last year.
However, the company will have to increase its like-for-like sales of 3-4% to maintain its profits, in the wake of substantial rising costs said chairman Tim Martin.
'As previously reported, the company expects significantly higher costs in the second half of the financial year, mainly for business rates, utility taxes, excise duty and labour,' he said.
'In view of these costs and stronger sales comparisons, the company remains cautious about the second half of the year.
'Nevertheless, as a result of better-than-expected year-to-date sales, we currently anticipate a slightly improved trading outcome for the current financial year, compared with our expectations at the last update.'
The company has opened nine pubs since the start of the financial year and has sold 36. In addition, three pubs have been closed and placed on the market. It said about £16m of exceptional, non-cash losses are expected in this financial year, mainly due to its disposal programme.
Regarding the outcome of Brexit negotiations, Martin added: 'As many people have said, including many remain supporters, it is essential to adopt an approach that stresses the UK's willingness to trade on World Trade Organisation (WTO) terms, possibly abolishing import tariffs unilaterally, which would lead to substantial reductions in consumer prices- and increased living standards.'