Wetherspoons warns on economic outlook
Rising taxes, higher interest charges relating to its refinancing and "subdued consumer confidence" have prompted JD Wetherspoon to sound a note of caution about next year's trading outlook.
The group's shares fell more than 40p in morning trading today after it reported like-for-like third quarter sales had dipped by 0.8 per cent.
Wetherspoon said its sales, profits and cashflow were "resilient" in January through to March, and the business was confident about its prospects for the current financial year.
But it warned it felt "slightly more cautious about the outlook for the next financial year, as a result of the annualised effect of recent tax and duty increases, and higher interest charges, combined with the risk of more subdued consumer expenditure".
And whichever political party is elected in tomorrow's general election, the tax and duty situation is likely to become even more burdensome for businesses like Wetherspoons.
Noting the group had passed on price rises of around five per cent to its consumers thanks to rising alcohol duty and VAT in the last few months, John Hutson, Wetherspoons' chief executive said: "We've got more cash in the tills, but more of that money is going to the government in VAT and excise duty.
"The consumer is finding it difficult to absorb the kind of price increases being implemented."
Hutson pointed out the group had maintained its margins at around 10 per cent and that sales overall were "good", but he also acknowledged that the cost of re-financing some of the group's debt would prove more expensive in the coming year.
Wetherspoons said that for the 13 weeks to April 25, 2010, like-for-like sales dipped by 0.8 per cent. Total turnover in the period rose by 3.6 per cent.
In the year-to-date like-for-like sales decreased by 0.2 per cent and overall sales increased by 4.0 per cent.
The group revealed it would be opening slightly fewer pubs this financial year than planned: 45 versus an earlier estimate of 52 sites, while it had secured a £14.9m VAT refund relating to its amusement machines.
