JD Wetherspoon PLC (LSE:JDW), the pub chain, issued its third profit warning in four months alongside interim results on Friday, prompting a split in analyst opinion, with Deutsche Bank retaining a 'sell' recommendation and a 460p target price while Panmure Liberum 'holds' at 625p.
The shares, down 11% on Friday, were trading at 548p.
Pre-tax profit for the 26 weeks to 25 January 2026 came in at £22.4 million, a fall of 31.9% year on year and around 18% below both Deutsche Bank's estimate of £28 million and market consensus of approximately £29 million.
Revenue of £1.09 billion rose 5.7%, but weak profit conversion meant the drop-through from like-for-like sales growth to operating profit was negative 12%, as cost pressures continued to erode margins.
The company said full-year profit guidance had shifted from "slightly below FY25" to "slightly below current market expectations," prompting Panmure Liberum to cut its current-year profit before tax forecast by 11% to £70.2 million and Deutsche Bank to reduce its target from 490p to 460p.
The principal cost pressures were a £28 million increase in wages driven by National Living Wage uplifts, a £10 million rise in repairs and maintenance, and a £9 million increase in business rates.
Panmure noted that repair and maintenance costs are now running at 9.1% of sales, above pre-pandemic levels, and that elevated repair spending now looks structural rather than a one-off catch-up.
Like-for-like sales growth slowed sharply to 2.6% over the seven weeks to 15 March, from 6.1% in the second quarter, with management noting there is "clearly considerable pressure on consumer finances."
Panmure cut its like-for-like sales growth assumption to 3.6% for the full year.
Deutsche said the interims were around 18% below expectations and flagged that Wetherspoon's thin margins leave it exposed to broader inflation, with financial leverage at 4.7 times adjusted net debt to EBITDA among the highest in the sector.
Panmure Liberum agreed on the structural vulnerability, noting that Wetherspoon's EBIT margin of 6.9% in 2025 was around 140 basis points below its pre-pandemic level and materially below a pub peer group range of 8% to 18%. It forecast only a modest margin recovery to 6.3% by FY27.
Net debt excluding leases rose to £772.9 million from £724.3 million at the start of the year, reflecting capital expenditure, the share buyback programme and a working capital outflow.