Bullish update from Wetherspoon adds fizz to the share price

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The Independent Online

Shares in the pubs group JD Wetherspoon rose by 5 per cent yesterday after it revealed that underlying sales had increased by 5.7 per cent in the third quarter.

The group, which is known for selling cheap beer in pubs with no music or television, said it had opened 21 pubs in the second half, increasing its estate to 577.

Wetherspoon, which is headed by its founder Tim Martin, has come under fire from analysts for slowing its expansion programme. The group yesterday confirmed that it intends to open 80 pubs this year, down from its earlier target of 90 to 100.

Its shares, which added 19.5p to 377.5p, have suffered from a series of downgrades sparked by disappointing sales over the Christmas and concern that in targeting an estate of 1,500 pubs over the next 10 years, the group risks cannibalising its own sales.

"Will they be able to sustain even 80 pubs a year into the medium to long-term? I have my reservations," said Nigel Popham, an analyst at Teather & Greenwood.

Wetherspoon said sales in the three months to 28 April increased by 25 per cent to £152.9m, which was in line with market expectations. Underlying sales for the year to date increased by 5.4 per cent, which compares well with the rest of the pubs sector. Wetherspoon is forecast to report a full-year pre-tax profit of £55m compared with £44.3m last year.

The group is upgrading its bar menus with a wider selection of food in an attempt to buoy its margins, although analysts are concerned that could increase its cost base.