J D Wetherspoon plc has announced its interim management statement for the 13 week period up to 26 April 2015, with like-for-like sales increasing by 1.7%, and total sales increasing by 5.8%. In the year to date (39 weeks to 26 April 2015), like-for-like sales have increased by 3.6% and total sales have increased by 7.9%.
The operating margin in the 13 weeks to 26 April 2015 was 7.5%, compared with 8.0% in the same period last year. At this stage, the company expects the full-year margin to be in the region of 7.3% to 7.7%.
Douglas Jack at Numis commented:
“Trading weakened further in Q3 (the 13 weeks to 26 April), with LFL sales slowing to 1.7% (H1: 4.6%), with margins falling 50bps, compounded by additional breakfast/coffee discounting and weaker LFL sales. We are holding our 2015E forecast which anticipates LFL sales growing by 3.5% and margins falling 85bps to 7.35%.”
Property
The Company has opened 20 new pubs and disposed of 4 since the start of the financial year. There are 12 pubs under development and, in line with the last update, Wetherspoon intends to open around 30 pubs in the current financial year, with a similar number opening in the following financial year.
Financial position
The company has bought back 1,621,163 shares, at a total cost of £12.5 million, since the start of the financial year.
There have been no other significant changes in the Company’s overall financial position since the publication of the interim accounts on 13 March 2015.
Outlook
The Late Night Levy, combined with higher business rates per pint and a huge VAT disparity, mean that pubs continue to trade at a great disadvantage to supermarkets.
As previously stated, the second half of the last financial year was strong, which will make it difficult to improve on that performance in the current year. The expectations for this full financial year remain unchanged.
For the next financial year, there are a number of factors which are likely to influence trading performance, although they are difficult to quantify at this stage. Positive aspects include an increase in pub numbers, stable utility prices and slightly lower interest rates. Other trends include increased competition from supermarkets and restaurant groups, together with additional staff and repair costs.
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