JD Wetherspoon has revealed a rise in like-for-like sales of 2.1 per cent in the 26 weeks to 22 January 2012 but announced it is scaling back its planned pub openings for the financial year and remains cautious about future performance.
In its latest financial statement, the pub operator announced total revenue had risen by 8.4 per cent to £569.4m with like-for-like bar and food sales growing by 3.4 and 0.1 per cent respectively.
The company described the figures which represent the outcome for the first half of the financial year as 'reasonable' but said future performance would remain challenging because of tax pressures on businesses and consumers.
Tim Martin, chairman of JD Wetherspoon, said: "As previously stated, the main challenges for the company, in this financial year will be the continuing cost pressures resulting from Government legislation, including further increases to excise duty, business rates and carbon tax."
Martin revealed sales since the period reported in the released figures had been 'disappointing' with like-for-like sales in the six weeks to 4 March dropping by 0.7 per cent. This, Martin added, had led the company to modify their expectations for the year.
"We expect the operating profit margin before exceptionals to decline in the second half of this financial year due to continuing cost increases, with the current quarter particularly affected. We are, therefore, slightly more cautious about the potential outcome for the current financial year," he said.
The number of planned pub openings for JD Wetherspoon was being cut as a result of the difficult tax regime the business was facing, the company claimed. In the reported period 20 new pubs opened and two closed bringing the total number of sites to 841.
However the company now plans to cut the number of openings in this financial year to 40 and will review plans for future financial years by taking into account the tax system in place for pubs.
The company revealed its tax burden had increased in the first half of the the financial year compared to the same period twelve months earlier. JD Wetherspoon paid £250.1m in tax in the period under discussion including VAT, alcohol duty, corporation tax and the carbon tax. That accounted for 43.9 per cent of sales compared to 43 per cent in the same period a year ago.
Putting the company in direct comparison with supermarkets, JD Wetherspoon said pubs continued to pay 20 per cent VAT on food purchases while supermarkets paid relatively little. This, coupled with drinks and food offers in supermarkets, had led to price disparity in poorer areas of the country and pub closures in these areas, the company argued.
Martin said Government attempts to control binge drinking had hurt pubs and been misconceived as had the increased tax burden for pubs.
"As well as generating large amounts of tax, pubs create large numbers of jobs, far more per pint or meal than supermarkets do, so the current tax subsidy makes no economic sense," he said.
Other announcements in the statement from JD Wetherspoon included news that the company's net bank borrowings had increased, over 3,000 jobs had been created helped by the national launch of an apprenticeship scheme and a new menu would be revealed in late March. The new menu would feature sustainable elements and contain 30 dishes at under 700 calories each.