JD Wetherspoon PLC (LSE:JDW) said it is trading in line with market expectations as it reported a 9.5% increase in like-for-like sales from its pubs in the first 14 weeks of its new financial year, though inflation remains a threat to the bottom line.
In an update on trading, the group said bar sales had seen a 10.7% rise, with food sales not far behind at an 8.2% increase. The slot and fruit machine sector also showed a strong performance, contributing 10.0% growth. Additionally, hotel room sales have climbed by 6.2%.
The upbeat assessment of current trading did come with this cautionary statement from chairman and founder Tim Martin, which might explain the opening 3% fall in the share price.
"Inflationary pressures have eased, but energy costs, in particular, remain at far higher levels than pre-pandemic, putting pressure on suppliers and the wider economy," he said.
Turning to the balance sheet, Wetherspoon has strategically disposed of all interest rate swaps, receiving £14.8 million. The company has also secured fixed interest rates for £600 million of borrowings, stabilising its financial outlook for the coming years. Despite these changes, the anticipated interest costs for FY24 are projected to remain in line with FY23, at approximately £51 million.
The company's property portfolio has seen expansion and consolidation, with the opening of a new pub at London's Heathrow Airport, and the sale of four pubs and the surrender of six leasehold pubs to landlords. Wetherspoon's current estate stands strong at 816 pubs.
At 8.01 am, the shares were down 22p at 654p.