In a blow to the British pub industry, JD Wetherspoon has issued a profit warning after facing a staggering £45 million surge in costs during the first half of its fiscal year. The chain, which operates around 800 bars and hotels across the UK, cited higher-than-expected expenses, including rising wages and business rates, as the primary culprits behind the anticipated profit decline.
Despite a pick-up in like-for-like sales growth over the festive quarter, reaching 8.8% in the three weeks to 4 January, the company’s first-half profits are now “likely to be lower” year-on-year. And if the current sales momentum continues, the full-year trading outcome is expected to be “slightly below” the previous financial year’s performance.
Founder and chairman Sir Tim Martin lamented the cost increases, stating: “Costs have been higher than anticipated, with energy, wages, repairs and business rates, for example, increasing by £45 million in the first 25 weeks.”
The profit warning comes at a critical time for the pub sector, which has been grappling with the impact of rising business rates. With the Labour Government expected to announce more financial support measures for the industry following criticism over the upcoming rate increases, the industry is hopeful for some relief.
Meanwhile, JD Wetherspoon is preparing to launch its inaugural mainland European establishment at Alicante airport in Spain. The pub, named the Castell de Santa Barbera, is set to open on 9 February and aims to offer UK holidaymakers a taste of Britain before their journey home.
As the British pub industry continues to navigate the challenges of rising costs and evolving consumer preferences, the fate of JD Wetherspoon’s profits will be closely watched as a barometer for the sector’s overall performance.
