Wetherspoons reports solid sales but falling margins

J D Wetherspoon has today announced its half-year results with like-for-like sales rose by 4.8% for the half and are up 5.0% in the last seven weeks and their operating profit fell by 4.3%

Labour-related costs will rise by around £60 million per annum from 1 April.

Charlie Huggins, manager of the ‘Quality Shares Portfolio’ at Wealth Club, said, “Wetherspoons has delivered a solid like-for-like sales performance in the period and trading in the last seven weeks has been robust. However, its profit margins have fallen due to higher utility and labour costs, meaning profits are slightly down.

The extent of cost increases is going to get much worse from 1 April. Labour costs will rise by £60 million which is frankly crippling and will likely eat further into profit margins going forwards.

The cost of a burger and pint will have to rise to help mitigate this pressure, which hardly encourages more punters through the door.

In all, aside from the depths of the pandemic, life has probably never been tougher for pub and bar operators. Wetherspoons has scale advantages others lack and a mightily loyal customer base, which really helps. But it is not immune to industry pressures.”