JD Wetherspoon saw its pre-tax profits boosted by 36.1 per cent to £54.3million during the half-year to January 28 as customers continued to snap up its cheap drinks and food deals.
The pub chain also increased its revenue 3.6 per cent to £830.4m, while like-for-like sales, a key industry metric, rose 6.1 per cent over the same period.
Indeed, like-for-like sales were up across the board, with the bar up 5.7 per cent, food 6.9 per cent, fruit machines 4.6 per cent, and room sales in its hotel division 3.1 per cent.
Sales warning: Brexit-supporting chairman Tim Martin warned that sales will be lower over the next six months because of rising costs
However, Brexit-supporting chairman Tim Martin warned that sales will be lower over the next six months because of rising costs.
‘The company anticipates higher costs in the second half of the financial year, in areas including pay, taxes and utilities,’ he said.
‘In view of these additional costs, and our expectation that growth in like-for-like sales will be lower in the next six months, the company remains cautious about the second half of the year.’
On current trading, Wetherspoon saw like-for-like sales increase 3.8 per cent in the six weeks to March 11 and total revenue grow 2.6 per cent, leading the group to maintain full-year expectations.
Martin also apologised to customers over a meat recall earlier this year which saw sirloin, rump and gammon steak pulled from the menu of the chain’s 900 UK and Irish pubs.
Wetherspoon has since cancelled its contract with now-defunct supplier Russell Hume and is sourcing its steaks from new suppliers.
Martin also used the latest trading update to launch fresh criticism aimed at the chairmen of Whitbread and Sainsbury’s, who he accuses of misleading the public by saying that food prices will rise if Britain leaves the EU without a deal.
‘The EU is a protectionist organisation which imposes high taxes on food, clothing, wine and thousands of other items from non-EU countries,’ he said in another lengthy tirade that also included criticism of the Confederation of British Industry (CBI) and the British Retail Consortium (BRC).
Martin added that the company’s results vindicated his Brexit stance.
Toasting success: Like-for-like bar sales during the half-year to January 28 were up 5.7%
“There has been a huge debate, since the referendum, about the economic effects of Brexit,’ he said.
‘In particular, trade organisations like the CBI and the BRC, supported by the FT, the Sunday Times, the Guardian, the chairmen of Whitbread and Sainsbury’s and others, have misled the public by saying that food prices will automatically rise if we leave the EU without a deal.
‘This is a fallacy – the EU is a protectionist organisation which imposes high taxes on food, clothing, wine and thousands of other items from non-EU countries – which comprise around 93 per cent of the world’s population.’
The Wetherspoon boss has been an outspoken proponent of Britain’s divorce from the European Union, issuing countless stock exchange announcements extolling the virtues of Brexit.
Richard Hunter, head of markets at interactive investor, said that Wetherspoon has been a rare success story on the UK High Street because of its prices and simple offerings, with today’s figures were further proof of its growth in a strong first half.
Big beef: Martin also apologised to customers over a meat recall earlier this year which saw sirloin, rump and gammon steak pulled from the menu of the chain’s 900 UK and Irish pubs
But he added that of more concern was the company’s guarded outlook for the second half.
‘The potential for extra World Cup income which provides a boost to many other retailers does not necessarily apply to Wetherspoon, whilst it fully expects to be battling with higher costs over the period,’ he said.
‘Although the full year outlook remains unchanged, these comments are somewhat troubling. ‘Meanwhile, from an investment perspective, the current and projected yield of 0.9 per cent is paltry, even if investors have been compensated by growth.’
Hunter added that the company’s share price has risen 88 per cent over the last two years and therefore it seemed that the shares are ‘fully up with events’.
‘As such, the market consensus of the shares is simply a hold,’ he said.
Henry Croft, research analyst at Accendo Markets, added: ‘Shares in JD Wetherspoon (JDW) have turned negative after a strong start this morning as management guides towards lower sales and higher costs in the second half of the year.
‘Investors initially brushed off the warnings at the open, perhaps confident that higher like-for-like sales in H1 can either offset the H2 contraction, or hopeful that current pace of performance will continue and that management are being overly cautious in voicing their concerns, especially in a FIFA World Cup Year.
‘However, in what some may see as a thinly-veiled profits warning, that early optimism has given way to a more vigorous move lower in a swift reversal.’
Earnings per share were up more than 35.2 per cent at 45.7p and the company maintained its interim dividend at 4p.
Shares in Wetherspoon were down 2.32 per cent at 1,265p in morning trading.