Wetherspoons sales slow less than expected in second quarter

18th Jan 2017 08:20

(ShareCast News) - Sales slowed and profit margins narrowed at JD Wetherspoon in the second quarter but while the pub group remained cautious its expectations full year results have "slightly improved".Like-for-like sales in the first 12 weeks of the second quarter grew 3.2% and total sales by 0.7%.This was down from the 3.5% and 2.3% in the first quarter and so means the 25 weeks of the year to date have produced LFLs sales increase 3.4% and total sales up 1.6%.Operating margins pre-exceptionals for the half year ending 22 January are now expected to be around 8.0%, 1.7% higher than the same period last year but down from the 8.6% in the first quarter.For the second half of the year, Wetherspoons expect significantly higher costs, around 4% higher on an annualised basis for wages, £7m for business rates and £2m for the Apprenticeship Levy.Furthermore, chairman Tim Martin intends to increase the level of capital investment in existing pubs to around £60m from £34m in the previous financial year."In view of these additional costs and our expectation that like-for-like sales will be lower in the next six months, the company remains cautious about the second half of the year," Martin said."Nevertheless, as a result of modestly better-than-expected year-to-date sales, we currently anticipate a slightly improved trading outcome for the current financial year, compared with our expectations at the last update."Net debt at the end of the financial year is expected to be around £700m, up by around £50m due in part to the purchase of an increased number of freehold reversions, with the group having opened two of the planned 10-15 new pubs since the start of the financial year and sold 21.