Wetherspoon’s profits to fall despite higher sales as boss insists no-deal Brexit will help pub chain
Rising costs, particularly linked to labour, had an impact on profits in the first half of the year
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Your support makes all the difference.JD Wetherspoon is expecting profits to fall in the first half of this year, despite sales rising so far this financial year.
The company reported like-for-like sales growth of 7.2 per cent for the first 12 weeks of the second quarter, while like-for-like sales in the year to date have risen 6.3 per cent.
However, costs in the first half have been “considerably higher” than the previous year, particularly for labour, which is up by around £30m.
Wetherspoon’s chairman Tim Martin, an outspoken Brexiteer, used the pub chain’s trading update to repeat his calls for a no-deal Brexit.
Last year, the company said it would replace champagne with British sparkling wine, and would buy less beer from the EU, swapping to UK brewers where possible.
“The most frequently asked question, regarding the future, relates to the impact of leaving the EU,” he said.
“I have argued that the UK – and therefore Wetherspoon – will benefit from a free-trade approach, by avoiding a ‘deal’ which involves the payment of £39bn to the EU, for which the House of Lords has confirmed there is no legal liability.
“This approach also means that the UK, without the agreement of the EU, can end some or all of the protectionist tariffs and quotas that apply on non-EU imports, including rice, oranges, bananas, coffee, wine, children’s clothes and over 12,000 other products – many of which are not produced in this country.
“Ending tariffs reduces prices for consumers, without loss of government income, since the proceeds are currently remitted to Brussels.”
Mr Martin cited tariffs on Cambodian rice as “a good example of the EU’s protectionism” which will “inevitably increase prices for businesses and consumers”.
The group has opened two pubs and sold six since the beginning of the financial year, with plans to open between five and 10 this year.
Ed Monk, associate director at Fidelity Personal Investing, said: “There was more Brexit bluster from J D Wetherspoon chairman Tim Martin in the company’s trading update today, but investors will be more focused on the warning that pre-tax profit will be lower in the first half of the trading year.
“The margins at ’Spoons are tight so the challenge has been to grow overall sales in order to keep growing profits. Any hint of higher costs, including staff wages, is bad news so the news of another £30m in labour costs since November will hurt. With unemployment low, thanks in part to lower flows of workers from the EU, labour costs will continue to be a focus at Wetherspoon.”
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