Wetherspoon serves up lukewarm like-for-like growth

6th May 2015 09:45

Like-for-like sales growth at pub chain JD Wetherspoon continued to slow in the third quarter, with margins also watered down by increased breakfast promotions.The FTSE 250 group, which operates over 900 pubs across Britain, said like-for-like sales rose 1.7% in the three months to 26 April.This continued a sluggish trend that had seen growth decline from 6.3% in the first three months of the year to 2.7% in the second quarter.In statement released on Wednesday, the company revealed it grew total sales by an impressive 5.8% in the quarter but that the extra promotional activity for its breakfast offer saw operating margins fall 0.5% quarter-on-quarter to 7.5%.The group, which after 20 openings so far remains on track to open around 30 pubs this year, said its annual expectations were unchanged, though it warned of the competition from supermarkets remained a serious issue."The Late Night Levy, combined with higher business rates per pint and a huge VAT disparity, mean that pubs continue to trade at a great disadvantage to supermarkets," the group said in a statement.Broker Numis left its annual forecast unchanged, reiterating they expected life-for-like sales to grow 3.5% in 2015, with margins decline to 7.35%.Meanwhile analysts at Canaccord said: "We believe the catalyst for a re-rating would be an expansion in operating margin; however, we do not anticipate this in the near future, hence our 'hold' recommendation. If the share price continues to remain soft, we would expect Wetherspoon to continue to buy back shares."JD Wetherspoon shares were up 4.34% to 767.95p at 10:09 on Wednesday.