Rise in staff pay expected to dent profits at JD Wetherspoon

Pub company JD Wetherspoon has seen a rise in yearly like-for-like sales of 2.8%, and a rise in total sales of 6.1%, but with an expected fall in operating margin thanks to an increase in the hourly rate paid to staff.

Profits for the year were expected to be "at the lower end of analysts' expectations", the results added, and said that the company's net debt was expected to reach a total of £601.1m, slightly above last year's figure.

Despite this, the company also posted an increase in like-for-like sales of 3.3% and total sales by 6.3%, for the first 12 weeks of the second quarter (to 17 January 2016), and said it was "in a sound financial position".

Overall, the 1,000-strong group has opened 5 new pubs since the start of the financial year, and has also sold two sites. It confirmed plans to open 10 to 15 new pubs by the end of the current financial year.

Chairman Tim Martin commented: "Like-for-like sales have improved in the second quarter so far. However, as indicated in our November trading update, increased labour costs will be an important factor in the outcome for this financial year. Our current view is profits for this year are likely to be towards the lower end of analysts' expectations."

JD Wetherspoon operates just under 1,000 pubs and 40 hotels across the UK, with a focus on beer, affordable food, and more recently, on coffee and breakfast. It also operates the Lloyds No 1 Bars group.

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