Wetherspoons set for profit spike as it braces for Budget tax hit
JD Wetherspoon is expected to reveal soaring sales this week, as experts tip the pub group to seize more market share from smaller competitors amid tax rises coming in April.
The London-listed firm, which has around 800 pubs across the UK, is set to report its half-year results on 21 March.
In a January trading update, Wetherspoons forecast a nearly five per cent rise in food and drink sales for the six months to 26 January, compared with the same period the year before.
Meanwhile, it is expected to get an 11 per cent sales boost from its high-margin slot machines and fruit machines, helping push up profit by one-tenth.
Chair Tim Martin said in January the company is set to face a £60m jump in labour-related costs in April, amid increases in employers’ national insurance contributions and the minimum wage.
But experts said the measures could actually help Wetherspoons increase its presence on UK high streets even further.
“In our view, there is now an opportunity for JDW to grow market share by maintaining its operational model, whilst smaller pub and restaurant operators cut back following April’s tax rate increases,” analysts at Jefferies wrote.
Wetherspoons also highlighted earlier this year that sales accelerated around Christmas, with a 6.1 per cent increase over the three weeks from 16 December to 5 January.
However, this was weaker growth than reported by pub rivals such as Marston’s and Young’s over the festive period.
Wetherspoons currently runs an estate of 796 pubs after selling six sites over the past year, while it has opened two new venues.
Martin has previously warned over price rises after the Budget, as he said “all hospitality businesses” are planning to pass on higher costs to consumers.
He said in November: “Cost inflation, which had jumped to elevated levels in 2022, slowly abated in the following two years, but has now jumped substantially again following the Budget.
“All hospitality businesses, we believe, plan to increase prices, as a result.”
By Alex Daniel, PA Business Reporter