JD Wetherspoon is taking a cautious view of trading prospects in the face of the Scottish smoking ban.
With most of its pubs TV-free, the high street managed pub operator also expects to lose trade to rivals during this summer's World Cup.
Wetherspoon warned that profits are likely to dip in the second half of its financial year, as these factors counter the benefits of a cost-cutting drive across the business.
In the 11 weeks to January 8, the company saw like-for-likesales increase by 0.3 per cent, compared to a decline of 0.9 per cent in the first quarter.
However, across the first half of its financial year, covering the 24 weeks to January 8, like-for-like sales have fallen 0.3 per cent, with overall sales up by just 0.9 per cent.
Like-for-likes have continued to decline even more sharply in the 49 Wetherspoon pubs now trading as non-smoking outlets. Lower bar sales and machine income have hit margins, despite increased food sales.
The smoke ban in all Scottish pubs from March will affect 38 Wetherspoon pubs. "Combined with the potential impact of the football World Cup in June and July 2006, this leads us to take a cautious view of the possible outcome for the second half of the current financial year," said the company.
With action underway to reduce costs, Wetherspoon still expects operating margins and pre-tax profit for the first half to be 'materially ahead' of last year.
Five new pubs opened in the first half, with 15 expected to open across the full financial year.