Wetherspoon profit margin slimming

Pubs firm JD Wetherspoon said its operating margin declined in the second quarter of its fiscal year and will come under further pressure in the second half due to continuing cost increases.

"We expect the operating margin for the half year ending 22 January 2012 to be slightly below that achieved in the first quarter of this financial year, with the potential for further decline in the second half of this financial year due to continuing cost increases," it said in a statement.

The company, which has over 830 pubs across Britain, said in November that its operating margin was 9.3 per cent in the first quarter, about 0.2 percentage points lower than in its last fiscal year.

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Wetherspoon said on Wednesday it was facing cost increases resulting from government legislation, including further increases to excise duty, business rates and carbon tax.

In an interview with Reuters last Friday, Wetherspoon's Chairman and Founder Tim Martin said the company is ready to scale back its expansion plans, blaming a tough tax regime for exacerbating already dire trading conditions.

Wetherspoon said sales at its pubs open more than a year were up 3.6 per cent in the 12 weeks to 15 January, an acceleration on growth of 1.1 percent in the first quarter, reflecting a weak comparative period last year when snow affected sales.

The company has been one of the better performing pub chains throughout the economic downturn, with its food-and-drink offers such as a curry and beer for £5.49 proving popular with cash-strapped customers.