Profits take a 18 per cent dive at Wetherspoons
By James Young | 15th March 2019
Profits have taken a sharp dive at pub chain JD Wetherspoons with staff costs rising quicker than sales in the second half of 2018.
Wetherspoons reported a 7.1 per cent in sales for the 26 weeks to January 27 of £889.6million, while like-for-like sales were up 6.3 per cent.
However, due to an increase in labour costs of £33 after the firm increased wages last year, causing profit before tax to fall by 18.9 per cent to £50.3million.
Despite that drop, the chain can point to an increase in like-for-like sales in drink, food and for fruit machines.
Bar sales were up by 5.9 per cent, food by 7.1 per cent and for fruit and slot machines by 5.7 per cent.
Bar sales account for 60.5 per cent of total sales, food for 35.9 per cent, fruit and slot machines accounted for 2.5 per cent of revenue, while 1.1 per cent came from hotel rooms.
Wetherspoons have two pubs in Cheltenham and two in Gloucester as well as an outlets in Stroud and Tewkesbury.
Chairman Tim Martin - a prominent Brexiteer - used the released of the trading update to express further views on the UK leaving the EU.
He added articles from former Australian prime minster Tony Abbott, as well as articles he had written for the in-house Wetherspoons News magazine - both about Brexit.
Martin said: "The vexed debate about Brexit has continued since the referendum, nearly three years ago.
"Although the public voted to leave, the majority of 'the establishment', including most MPs,
most universities, the Bank of England, the CBI and media organisations such as The Times,
the Financial Times and The Economist favoured 'Remain'.
"The result has been a barrage of negative economic forecasts from those quarters,
predicting that the UK will go to hell in a handcart without a 'deal' with the EU - which will
effectively tie the country into EU membership and taxation, yet without representation.
"The doomsters ignore the most powerful nexus in economics, between democracy and
prosperity - and the fact that the EU is becoming progressively less democratic, as it pursues
an 'ever-closer union', for which there is no public consensus.
"Previous referendum results on major constitutional issues have always been respected in
the UK, but if parliament votes either for Theresa May's 'deal' (which keeps us in the EU by
the back door) or to remain in the EU, the referendum result will not have been respected.
"This may well have significantly adverse economic consequences, as the country turns in on
itself to endure months, or years, of stifling constitutional argument.
"In appendix 1 below can be found an excellent article on these issues from The Spectator
magazine, by former Australian prime minister Tony Abbott. In appendix 2, there is a less
good article by me, from the latest edition of Wetherspoon News.
"In the six weeks to 10 March 2019, like-for-like sales increased by 9.6%, helped by excellent
weather this year and snow last year, and total sales increased by 10.9%.
"As previously indicated, costs in the second half of the year will be higher than those of the
same period last year. The company anticipates an unchanged trading outcome for the
current financial year."
Copyright 2019 Moose Partnership Ltd. All rights reserved. Reproduction of any content is strictly forbidden without prior permission.