TIDMJDW
RNS Number : 7187C
Wetherspoon (JD) PLC
21 January 2015
21 JANUARY 2015
J D WETHERSPOON PLC
PRE-CLOSE STATEMENT
J D Wetherspoon plc ('J D Wetherspoon' or the 'Company'),
announces an update on current trading, before entering its closed
period for its interim results, for the six months ending 25
January 2015, which are expected to be announced on 13 March
2015.
Current trading
For the first 12 weeks of the second quarter (to 18 January
2015), like-for-like sales increased by 2.8% and total sales by
6.8%. Like-for-like sales slowed to approximately 2% in December
and have slowed further in the last fortnight. In the year to date
(25 weeks to 18 January 2015), like-for-like sales increased by
4.6% and total sales increased by 9.1%.
We expect the operating margin (before any exceptional items),
for the half year ending 25 January 2015, to be around 7.3%, 0.9%
lower than the same period last year. This reduction is mainly due
to an above-inflation increase in pay for staff and an increase in
utility and supplier costs. In addition, gross margins are under
pressure as a result, we believe, of increased price competition
from supermarkets.
Property
The Company has opened 11 new pubs so far this financial year
and currently has 10 sites under development. In line with previous
estimates, we intend to open approximately 30 to 40 pubs in the
current financial year.
The Company opened its second pub in the Republic of Ireland in
December in Dun Laoghaire. We have completed on a further three
sites in Swords, Cork and Dublin.
Financial position
In the period under review, the Company bought back 196,500
shares for cancellation, at a total cost of GBP1.5million, at an
average price of GBP7.96 per share. There have been no significant
changes in the Company's overall financial position since the
publication, on 13 October 2014, of the annual report and accounts
for the year ended 27 July 2014.
Commentary on current trading
Tim Martin, Chairman of Wetherspoon, makes the following
comments on the pub industry:
"Wetherspoon has had significantly better sales growth in the
last couple of years than our main competitors, reflecting a
pattern that has continued since our flotation. Even Wetherspoon,
however, has seen flat bar sales in the last two months, when food
sales have continued to rise. Inevitably, bar sales in the industry
as a whole, especially where pubs have not benefited from
Wetherspoon's level of investment, will have fared less well. This
situation reflects the dire need for the pub industry to campaign
for equal tax treatment for pubs and supermarkets. It is certain
that the current wave of pub closures, which continues at a high
level, will accelerate when economic growth slows or reverses.
The majority of investment in larger pub companies has been in
"food-led" businesses, which have very low levels of bar sales,
apart from those which are consumed with meals. Fewer and fewer
customers, outside pockets of affluence, in an accelerating trend,
are using pubs for "drinking occasions", which do not involve
eating. The main reason behind this trend is not that people prefer
to drink at home, for example, but relates to the huge and growing
price differential between pubs and supermarkets. This differential
has been created and increased by the fact that business rates per
pint are far higher in pubs and that supermarkets pay no VAT in
respect of food, whereas pubs pay 20% - enabling supermarkets to
subsidise the price of beer and other products.
A number of major pub companies believe that they can avoid the
resulting malaise by investing in out-of-town pubs which are really
"quasi-restaurants". Unfortunately, these businesses too are
already starting to suffer the effects of the tax disparity with
supermarkets and they will clearly, in our view, be unable to
escape the consequences of an unequal tax system.
Neither these businesses nor the main pub industry newspaper,
the Publican Morning Advertiser (PMA), have campaigned for tax
equality with supermarkets. In the case of the PMA, the editor has
questioned the financial motives of the leader of the tax equality
campaign, Jacques Borel, but has utterly failed to campaign himself
or through his newspaper for tax equality, which would help to
ensure the future of pubs.
The pub industry is in a strange position, whereby market
research clearly shows that almost 100% of individual licensees
believe their companies should support a campaign for tax equality,
yet several major pubcos and the main trade newspaper have not
actively done so. Following chaos at our banks, the supermarkets
themselves have recently witnessed a situation where the tectonic
plates of the industry moved, even though the boardrooms at the
major industry players were oblivious to this fact. That is the
position now in the pub industry and the companies that do not
speak out about the dangers of tax inequality are likely to be
those that suffer most in the future".
Outlook
As we have previously stated, the biggest financial dangers to
the pub industry continue to be the VAT and business rates
disparity between supermarkets and pubs and the continuing
imposition of stealth taxes, such as the late-night levy and the
reduced allowances for gaming machine income.
Although the reduction in sales growth may have an impact on our
operating margin if the trend continues, the company is aiming for
a broadly satisfactory outcome in the current financial year.
Enquiries:
John Hutson, Chief Executive 01923 477 777
Ben Whitley, Finance Director 01923 477 777
Eddie Gershon, Company
Spokesman 0208 352 5012/07956 392234
Notes to editors
1. J D Wetherspoon owns and operates pubs throughout the UK. The
Company aims to provide customers with good-quality food and drink,
served by well-trained and friendly staff, at reasonable prices.
The pubs are individually designed, and the Company aims to
maintain them in excellent condition.
2. Visit our website: www.jdwetherspoon.co.uk
3. This announcement has been prepared solely to provide
additional information to the shareholders of JD Wetherspoon, to
meet the requirements of the FCA's Disclosure and Transparency
Rules. It should not be relied on by any other party, for any other
purposes. Forward-looking statements have been made by the
directors in good faith, using information available up until the
date on which they approved this statement. Forward-looking
statements should be regarded with caution, because of the inherent
uncertainties in economic trends and business risks.
4. The current financial year comprises 52 trading weeks to 26
July 2015.
5. The next trading update is expected to be the Company's
interim results statement on 13 March 2015.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IMSPGUUUGUPAUMG
Wetherspoon ( J.d.) (LSE:JDW)
Historical Stock Chart
From Mar 2024 to Apr 2024
Wetherspoon ( J.d.) (LSE:JDW)
Historical Stock Chart
From Apr 2023 to Apr 2024
