Wetherspoon warns on profits after revamp of food business

Katherine Griffiths
Wednesday 17 July 2002 00:00 BST
Comments

Two UK companies that rely on Britons' taste for booze yesterday insisted they have had a gloomy summer, despite the population having the Queen's jubilee and the World Cup to celebrate.

JD Wetherspoon, the pub operator, and the brewer Fuller saw their shares slump as they gave a variety of reasons for difficult times in the past few months.

Wetherspoon warned profits would be hit this year by extra costs to revamp its food business. The company, which bans TVs in its pubs, also admitted that the policy had had a slightly negative impact on profits in June, when customers who wanted to watch World Cup matches went elsewhere. Its shares fell to 260p, their lowest point since March 2000, before recovering slightly to close down 4 per cent at 262.5p.

Jim Clarke, Wetherspoon's finance director, said annual profits would be towards the lower end of analysts' expectations due to higher costs coming from increased food sales, which pushes up labour costs, and the introduction of new menus and facilities to allow more families with children to visit its pubs.

Mr Clarke added that the group's net operating margin for the full year to late July would be close to its first-half margin of 11.7 per cent. Analysts had hoped that margins would have recovered to about 12 per cent by the year-end. They had predicted annual pre-tax profits of between £53m and £55.5m.

Wetherspoon said like-for-like sales rose by 3.8 per cent in May and increased by 3.5 per cent in the World Cup month of June. Cumulative like-for-like sales for the 48 weeks to June 30 rose by 5 per cent. The company said it would press ahead with plans to open between 85 and 87 new pubs this year.

Separately, Fuller, which also runs a chain of pubs, said "poor weather in May and June" had put punters off.

This dampened record sales, which were recorded in the days ahead of the jubilee bank holiday in June. It said its performance this year would be "mixed", but overall it was still on track to meet expectations.

In a statement Fuller said the impact of the World Cup was "broadly neutral with many customers replacing evening visits with early morning breakfasts in order to view screened matches." Fuller's shares fell 2.5 per cent to 482.5p.

Fuller said its hotel business is matching expectations and would benefit from a full contribution in the financial year from its two newest hotels, the Brigstow in Bristol, and the Chamberlain in the City.

Join our commenting forum

Join thought-provoking conversations, follow other Independent readers and see their replies

Comments

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged inPlease refresh your browser to be logged in