Wetherspoon’s annual profit falls 28% as sales rise
J D Wetherspoon increased annual sales but reported a 28% fall in profit before tax and separately disclosed items, to 58.6 million pounds. Higher wages, repairs and business rates added to operating expenses. Sales accelerated in the new financial year, partly supported by warm weather, while the annual dividend stayed at 12 pence per share.
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Annual sales rise while profit contracts
J D Wetherspoon, the pub operator, reported a 28 per cent decline in profit before tax and separately disclosed items for the 52 weeks ending 26 July. Profit on that basis fell from 81.4 million pounds to 58.6 million pounds. Annual revenue increased 5.2 per cent, from approximately 2.13 billion pounds to 2.24 billion pounds, while sales at comparable pubs grew 4.2 per cent. The profit measure separates out items disclosed individually in the accounts.[1], [2]
Wages and repairs add to operating expenses
Operating costs increased by 5.3 per cent. Wetherspoon reported an additional 46 million pounds of wage costs, 31 million pounds of repairs expenditure and 9 million pounds of business rates. Operating profit before separately disclosed items fell 17.9 per cent, from 146.4 million pounds to 120.2 million pounds. The corresponding operating margin declined from 6.88 per cent to 5.37 per cent.[1]
Free cash inflow rose from 56.6 million pounds to 100.1 million pounds. After adjusting for working-capital movements, underlying free cash flow was 66.6 million pounds, compared with 72.6 million pounds in the previous year. Net debt excluding lease liabilities declined from 724.3 million pounds to 715.8 million pounds. The annual dividend was maintained at 12 pence per share.[1]
Warm weather supports the new year’s opening weeks
Like-for-like sales increased 8.6 per cent in the first nine weeks of the new financial year, ending 27 September. Wetherspoon attributed part of that improvement to unusually warm weather and investment in beer gardens and outdoor seating. The company cautioned that the weather-related sales boost was unlikely to continue at the same rate. Management expects profit before tax and separately disclosed items to meet market expectations for the new year, which it puts at 74 million pounds.[1]
Wetherspoon ended the year with 792 managed pubs. During the year it opened eight and disposed of 15 properties, comprising ten trading pubs and five non-trading properties. Approximately 15 managed pub openings are planned for the current financial year. The franchised estate reached 23 pubs.[1]
