Wetherspoon is boosted by cheap booze

PUBS group JD Wetherspoon yesterday said it expected its pre-tax profit for the year to 26 July to come in towards the top end of market expectations, after cost cutting improved margins.

The pub chain, known for its low-cost food and bargain booze said in a trading update that like-for-like sales in the financial year to date were up 1.2 per cent and overall company sales had risen 5.2 per cent as it shrugged off the malaise affecting the rest of the sector.

The company said it hoped to achieve sales in the region of £950m by year-end, with analysts rushing to issue upgrades on the pub chain stock. Consensus forecasts for the year had previously ranged between £51.9m and £64.2m.

KBC Peel Hunt analyst Paul Hickman said: “Because Wetherspoon is structured for value, it is not suffering the margin decline faced by competitors.

“Expected openings for the year are at 39, above the 38 we previously expected, representing five per cent physical growth.”

Hickman upgraded his 2009 underlying pre-tax profit forecast by 7 percent to £62.7m and his 2010 prediction by 10 per cent to £67m.

Britain’s pubs have faced torrid trading conditions over the last two years as a smoking ban, recession, above-inflation tax rises, miserable weather last summer, and cheap drink offers in supermarkets kept drinkers at home.

Six pubs close every week in the UK as landlords struggle with the slump in demand. But Wetherspoon appears to be defying the downturn and in the past year it has opened new pubs, including a number on sites where the previous pub had gone bust.