JDW delays conversion of pubs to no-smoking
The plan to open 60 non-smoking pubs at JD Wetherspoon will be delayed by a couple of months as the company "learns lessons" on the non-smoking pubs open so far. It had planned to have 60 non-smoking pubs by the end of this month but now believes it could be July or August before it reaches this level.
Finance director Jim Clarke said: "We are learning lessons as we go along. We have 17 non-smoking pubs in total so far. One thing the openings have taught us is the need to have a plan for each one. This involves closing pubs down for a day and freshening them up with a lick of paint.
"It also means making sure staff are ready for the changes the increase in food sales, for example, means having more staff in the kitchen. You have to have a plan for each pub and (the conversion programme) is taking longer than we thought."
The first 17 conversions have seen an increase in food sales and a decrease in liquor sales. Trading is broadly in line with expectations but margins are under pressure. The company expects to have 30 non-smoking pubs open by the end of this month with the other 30 to follow.
Earlier this year, JD Wetherspoon revealed that food accounted for 40% of sales at it first two non-smoking openings. Overall, like-for-like sales for the 13 weeks to 24 April were down by 2%.
The net operating margin for the quarter declined by 1%compared to the previous year. Buyers have been found in principle for all 16 pubs the company put on the market earlier this year.
Profits for the 12 months to the end of July 2005 are expected to be in line with analysts' expectations.
Analyst Douglas Jack, of Panmure Gordon, said: "Free cash flow is continuing to decline, having fallen by 17% in the first half. Given the deterioration in profits and the balance sheet with fixed charge cover falling to 1.7 times we see no commercial logic in the share buy-back programme continuing."
