Wetherspoons profits slump by almost a third as extra costs bite

Founder and Chairman of JD Wetherspoon, Tim Martin. Wetherspoons has warned that higher labour costs, taxes, and energy bills will drag on the group's profits, with profits slumping by almost a third over the past year. Picture: Dominic Lipinski/PA Wire

Pub group Wetherspoons has warned that higher labour costs, taxes, and energy bills will drag on the group's profits, with profits slumping by almost a third over the past year.

Wetherspoons runs six pubs in Dublin across its 794-strong chain. Chairman Tim Martin said the business is facing £60m (€70m) in extra costs each year due to increases in UK national insurance and wages.

JD Wetherspoon is also facing an extra £7m in energy costs and £2.4m of costs from the  UK's Extended Producer Responsibility packaging tax. "These cost increases will undoubtedly add to underlying inflation in the UK economy although Wetherspoon, as always, will endeavour to keep price increases to a minimum," Mr Martin said.

Wetherspoon told shareholders on Friday that pre-tax profits slid by 31.9% to £22.4 million for the 26 weeks to January 25. It said this was particularly linked to higher wage costs, as well as £10 million of repairs and £9 million in business rates costs.

Meanwhile, revenues grew by 5.7% to £1.09bn (€1.26bn) for the half-year, compared with a year earlier, with like-for-like sales up 4.8%. This was buoyed by a 7% rise in bar sales, while food sales grew 1.3% and hotel room sales were down 0.6% after removing a number of third-party booking agents in the UK, "which charged high levels of commission".

Wetherspoons said that, more recently, like-for-like sales grew 2.6% over the seven weeks to March 15. It also revealed that it opened six venues over the past half-year but also shut or sold off six.

The hospitality business is expecting to have opened around 15 managed pubs by the end of the current financial year.