JD Wetherspoon PLC (LSE:JDW) warned on Wednesday that profits for the full year could miss expectations, as the British pub chain battles substantial cost inflation despite rising sales.
"As many hospitality operators, including Wetherspoon, have reported, there have been substantial increases in costs, which may result in profits slightly below market expectations,” Chairman Tim Martin said in a statement.
The company reported a 3.4% increase in like-for-like sales for the 13 weeks ending April 26, with year-to-date sales up 4.3%. However, this represents a slowdown in growth compared to previous quarters. The warning comes after a 32% slump in pre-tax profit to £22 million in the first half of the financial year.
Wetherspoon is grappling with significant cost pressures, including an estimated £60 million annual impact from increases to the national insurance and minimum wage, plus a £7 million green levy. These headwinds are compounded by broader issues facing the UK hospitality sector, such as higher energy prices stemming from the Iran conflict and changes to business rates. According to trade body UK Hospitality, two pubs have closed each day in the first three months of the year.
The profit warning signals that even with steady sales growth, margin pressure remains a significant challenge for the pub operator. Investors will be closely watching the company's full-year results to see if cost-saving measures can offset the inflationary pressures.
This article is for informational purposes only and does not constitute investment advice.
