Wetherspoon Pubs Helped By World Cup, Warns Of Rising Costs
UK pub operator JD Wetherspoon Plc reported a solid rise in sales on the back of England's run in the World Cup while saying it faced considerable rises in costs next year due to increases in the minimum wage and taxes.
Wetherspoon, like its rivals, has been reeling under significant cost pressures due to wage inflation, property cost rises and the weakness of the pound. It has also been spending to upgrade facilities at its older pubs.
The company reported a 5.2% year-on-year increase in same-store sales for the 10 weeks to July 8, roughly steady from last year's growth of 5.3%.
Total sales grew 5.6%, up from 3.6% for a similar period a year ago, reaping the benefits of favourable weather and a popular Russian World Cup.
But it said factors including the imposition of a new sugar tax on beverages would weigh on results in the next fiscal year.
"As in the current year, we anticipate considerable cost increases next year, in areas including business rates, the sugar tax, utility taxes and wages," the company said.
"In addition, as a result of an increase in our 'swaps', our interest rates will rise by around £7 million."
The company, which kept its full-year outlook unchanged, said it will not open more pubs this year and added that it will take non-cash losses of about £9 million as it sells a number of pubs below their previous valuations.
UK pubs and restaurants have been hit by higher import costs as the pound has weakened following the 2016 Brexit vote, and rising inflation along with stagnant wages means many consumers have cut back on non-essential spending.
In June, Brexit-supporting Chairman Tim Martin said that the company's pubs would sell more British and non-European drinks, shunning French champagne and offering British and American beer instead of German competitors.