JD Wetherspoon’s profits slip on higher costs

By Luke Nicholls

- Last updated on GMT

Related tags Cent Tax Jd wetherspoon

Wetherspoon's total tax bill wfor the six-month period was £273.5m - 43.7 per cent of its sales
Wetherspoon's total tax bill wfor the six-month period was £273.5m - 43.7 per cent of its sales
Pub giant JD Wetherspoon posted a ‘reasonable’ set of results for the half-year ending 27 January 2013, with the burden of what the Group calls ‘stealth taxes’ contributing to a drop of 2.7 per cent in its pre- tax profit to £34.8m.

It faced further increases in wage costs, utility bills and bar and food costs, while its total tax bill was £273.5m - an increase of £23.4m and 43.7 per cent of its sales. 

Like-for-likes did increase, though, by 6.9 per cent, and total sales (including new pubs) were up 10 per cent to £626.4m.

Food sales led the way, with like-for-likes up 13.4 per cent, compared with just 0.1 per cent in 2012. Bar and machine sales rose by 4.1 and 4.4 per cent respectively. 

'Stealth taxes'

Just five new pubs were opened by Wetherspoon during the 26-week period, bringing its total estate to 865 outlets nationwide. The group does, however, expect to open around 30 pubs in this financial year.

Commenting on the results, Wetherspoon’s founder Tim Martin admitted that a difficult trading environment has contributed to the Group’s expectations for a ‘reasonable outcome in the current financial year’.  

“The outcome for the first half of the financial year was reasonable, given the pressures on the UK consumer,” said Martin.

“As previously stated, the biggest danger to the pub industry, is the VAT disparity between supermarkets and pubs and the continuing imposition of stealth taxes, such as the late-night levy, and the increase in fruit/slot machine taxes.

“In the six weeks to 10 March 2013, like-for-like sales increased by 7.3 per cent, with total sales increasing by 9.9 per cent.

“Taxation and input costs will continue to rise, but, overall, the company continues to aim for a reasonable outcome in the current financial year.”

Perhaps due to this increased taxation and considerable inflation costs, Wetherspon’s operating profit before exceptional items decreased by 2 per cent to £52.1m and after exceptional items increased by 3.1 per cent to £52.1m.

Lyons share

Also in the period, Wetherspoon agreed on an out-of-court settlement with developer Anthony Lyons, formerly of property leisure agent Davis Coffer Lyons. Wetherspoon will receive approximately £1.25m Lyons.

The payment relates to litigation in which Wetherspoon claimed that Lyons had been an accessory to frauds committed by Wetherspoon’s former retained agent Van de Berg and its directors Christian Braun, George Aldridge and Richard Harvey. Lyons denied the claim and the litigation was contested.

Explaining JD Wetherspoon's continued progress, today’s Group trading statement concludes: “As in the past, the company has endeavoured to improve as many areas of the business as possible. For example, we have introduced a system for faster credit card payments, as well as contactless payment.

“We have continued to make significant investments in training programmes and also paid £13m in bonuses and free shares to employees.”

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