Wetherspoon on track for strong full-year performance but cost pressures loom

Alys Key
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Wetherspoon's Opens The First Motorway Pub On The M40
Analysts expect a strong fourth quarter from the chain (Source: Getty)

Pub chain JD Wetherspoon is expected to confirm it has maintained steady sales growth this week as it unveils a fourth quarter trading statement, despite a slowdown in consumer spending and the rising cost of food and drink.

The company has previously stated that its like-for-like sales will need to grow by between three and four per cent to continue turning a profit.

Read more: British consumer confidence takes a big inflation hit

Analysts at Investec are predicting that the final quarter of the year will see sales rise 3.3 per cent, delivering £94.6m in annual pre-tax profits, up from £75.2m last year.

Peel Hunt analysts took a less bullish stance, though still anticipated profit of £91.5m. But they warned that the long-term outlook was not good, predicting sliding profits in 2018 and 2019 even as sales increased.

They said this was due to “a backdrop of significantly higher operating costs and a weaker consumer outlook.”

Read more: Restaurant and pub groups feel the pinch

In its latest trading update, Wetherspoon said it expected sales performance in the fourth quarter to be slightly better than expected, even though overall consumer spending is down this quarter as uncertainty over Brexit negotiations hits confidence.

The chain was founded by chairman Tim Martin, who was a prominent supporter of Brexit during the referendum campaign.

He has brushed off concerns that leaving the EU could hurt business, most recently telling the BBC’s Today programme that the CBI’s Carolyn Fairbairn “doesn't speak for a business as a whole” when she called for the UK to remain in the single market and customs union until a trade deal was in place.

Shares in Wetherspoon have risen rapidly since the Brexit vote last June, hitting a record price of over 1,000p in May this year.

Read more: Wetherspoon boss' Brexit diatribe: Tim Martin rants at CBI chief

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