Dip in profits expected for Wetherspoon

Related tags Marketing

City analysts have been watching JD Wetherspoon with interest to see if the company's cut price promotions during January have harmed profits.The...

City analysts have been watching JD Wetherspoon with interest to see if the company's cut price promotions during January have harmed profits.

The company's interim figures are due to be released on Friday (March 1).

According to Alan Millar, associate director of Hospitality Analyst, the market was disappointed with Wetherspoon's January trading which revealed that although total year-to-date sales (for the 23 weeks to January 6, 2002) were running 26 per cent ahead of last year, its like-for-like sales had slowed since the first quarter.

Like-for-like sales were up 3.7 per cent (in 2001 they were up 9.4 per cent) in the six weeks to January 6 - lower than expected considering what Mr Millar called "buoyant consumer activity ahead of Christmas".

"Investors will focus on current trading, post-Christmas, to see whether this deceleration has continued," said Mr Millar.

"Any further deterioration in net operating margins could put some forecasts under pressure and analysts will seek assurance that aggressive promotions introduced for three weeks in January have not further undermined this position."

Mr Millar said analysts were looking for profit before tax of £25.5m to £26m on sales of £284m. He added there was risk of competition from rivals including Six Continents, Luminar and Yates Group, all increasingly interested in the discount sector of the trade.

Looking to the future, Mr Millar said he thought it unlikely the company could remain self-financing.

"It is not inconceivable the company could return to the market for further fundraising at some stage in order to make the most of its high rating," he said.

Related topics JD Wetherspoon

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