JD Wetherspoon posts increase in sales but drop in profit margin
Pub and bar company JD Wetherspoon has posted an increase in like-for-like sales and total sales, but a decrease in operating margin, in its interim results for the 13-week period to 26 October 2014.
Like-for-like sales rose by 6.3%, with total sales up by 11.3%. August and September saw good sales, but like-for-like growth decreased in October, the company announced.
In contrast, this period's operating margin was at 7.7%, compared with 8.3% in the same period last year. The company has attributed this to the 5% increase in hourly wages for its staff, which came into effect in October; a 4% increase in utility costs, and a slowdown in sales in October.
The company estimates its operating margin to be in the 7.2-7.8% range this year, and expects to see a good outcome in the same period next year.
The statement also highlighted that it had opened two new pubs since the start of the financial year, and stated that it expected to open 30-40 pubs in the current financial year. There are currently 15 pubs under development.
JD Wetherspoon welcomed the Chancellor's moves to reduce beer duty, but has also been vocal in the campaign to cut VAT and business rates for the pub industry, in comparison to the lower rates seen for supermarkets.
It also criticised the government's change in stance towards VAT on gaming machines, which barred pubs from offsetting its VAT rates against VAT charged to customers on machines. It characterised this as a "stealth tax", and claimed it had cost the company an additional £3.6m in February-July 2014.
The company also used the statement as an opportunity to state: "It is imperative for the future of pubs that political parties commit themselves to a sensible rebalancing of the tax system, so that there is fairness and equality between pubs and supermarkets."
JD Wetherspoon owns and operates pubs throughout the UK. It posted a record turnover and profit in its yearly results, announced in September, including a 10% increase in revenue to just over £1.4b for the year to 27 July 2014.
It also announced intentions to focus on food and expand its hotel operation, and said it was also focusing on improving its morning coffee offer.
JD Wetherspoon to focus on food after announcing record results >>
