Wetherspoon sales break £1bn barrier but profit dips

pub & bar

By Becky Paskin

- Last updated on GMT

Related tags: Public house

Tim Martin, chairman of Wetherspoon blames higher interest rates and VAT for tough trading conditions
Tim Martin, chairman of Wetherspoon blames higher interest rates and VAT for tough trading conditions
JD Wetherspoon has seen total annual sales break the £1bn barrier for the first time, although the managed pub operator blames higher interest charges for a reduced profit before tax and exceptional items of 5.9 per cent.

In its accounts for the year to 24 July 2011, Wetherspoon reported an increase in total sales for the year of 7.6 per cent, with like-for-like sales up 2.1 per cent.

Like-for-like bar sales increased 1.7 per cent while food sales improved by 4.2 per cent on the same period last year.

However chairman Tim Martin criticised high interest rates and VAT as contributing to an already ‘tough trading environment’.

“The biggest danger to the pub industry is the tax disparity between supermarkets and pubs, creating a serious and unsustainable competitive disadvantage,” he said.

“In addition, our pubs pay far higher VAT than those of our nearest neighbours, Ireland and France, as well as having the second highest rates of excise duty on beer and wine in Europe.

“The well documented increases in areas such as utilities and bar and food supplies, combined with ongoing pressure on consumers’ income continue to make this a tough trading environment.

“Nonetheless, given our resilient sales, profit and cash flow, together with the potential to open further new pubs, the board is aiming for a reasonable outcome in the current financial year."

Wetherspoon opened 50 pubs during the year, 34 of which were freehold, and closed two others, resulting in a total estate of 823 pubs at the end of the financial year.

The group intends to open a further 50 pubs in the coming year.

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1 comment

Environment is Right for JD Wetherspoon

Posted by Steve Evans,

Is it just me or is the supermarket and pub occasion quite different? Anyway JD Wetherspoon will always be at a price disadvantage to the major supermarkets because they add so much more value to the product and then there is the service.
Clearly in the areas that they are adding the most value they are winning more consumer £’s as food sales are increasing. Coupled with this the beer range has significantly improved in diversity over the last six months. Mirroring beer into the wine sector I believe that they need to move away from brands available in supermarkets to those that are specifically designed for the British entry level and mid-market on-trade consumers.
Coupled with this their easy to find branded model, i.e. everyone knows what a JD Wetherspoon looks and feels like, has worked for them in this economic environment in which disposal cash is decreasing. Coupled with this pubs with weaker corporate structures have gone out of business enabling JD Wetherspoon to buy and develop their latest sites at a lower than previous cost. Expansion at 50 sites per annum is very impressive.
With the minimum alcohol lobby increasing in power the UK Government is unlikely to decrease VAT and hence pricing. Instead the industry needs to focus on gaining financial support to increase Corporate Social Responsibility and reduce alcohol abuse. Active self regulation on these points needs to accelerate in an era where self regulation is other business sectors has clear failed.

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