JD Wetherspoon PLC (LON:JDW) saw sales surge over the Christmas period, but the low-cost pub chain warned again that higher costs mean this growth won’t filter down to the bottom line.
At the beginning of its current financial year (August), ‘Spoons said it would need like-for-like sales growth of around 4.0% to match last year’s record profits.
But despite same-pub sales jumping 7.2% over the 12 weeks ended 20 January and climbing 6.3% so far this year, chief executive Tim Martin still expects annual profits to be lower than those achieved last time around.
READ: ‘Spoons’ shares drop on wage hike warning
That is because he and his team were forced to up staff wages in November given the competitive jobs market, adding to the soaring costs hitting most of the industry.
At the time, Wetherspoon said this would lead to a trading outcome “slightly below” last year’s, a view that hasn’t changed despite the continued strong performance.
“Sales growth has been strong since our last update,” said Martin.
“Costs, as previously indicated, are considerably higher than the previous year, especially labour, which has increased by about £30mln in the period, but also in other areas, including interest, utilities, repairs and depreciation.”
He added: “Profit before tax in the first half is expected to be lower than the same period last year. Our expectations for the full year are unchanged.”
JD Wetherspoon shares rose 0.7% to 1,204p in early deals on Wednesday.