Wetherspoon boosts sales but counts the cost of riots

Sales at JD Wetherspoon hit record levels last year, but rising costs and the London riots mean the group is not confident about growing profits this year.

The pub chain's annual revenues rose 7.6 per cent to just over £1bn, although higher interest charges dragged pre-tax profits down 6 per cent to £66.8m.

Yet current trading is "fairly lacklustre", with like-for-like sales up just 0.4 per cent since the end of the group's financial year on 24 July, according to Simon French at Panmure Gordon, who blames "the impact of the riots".

Paul Hickman, an analyst at Peel Hunt, agreed: "Wetherspoon was probably the worst affected of all pub companies, with its concentration of pubs in town and city centres."

Wetherspoon's chairman, Tim Martin, said he was pleased with the progress made last year but said it would "be difficult to increase profit" as consumer confidence fell and the cost of utilities and food rose.

He once again called on the Government to change the tax disparity between supermarkets and pubs. He named the issue as the "biggest danger" to the industry.

"In addition our pubs pay far higher VAT than those of our nearest neighbours, Ireland and France, as well as having the second-highest rates of excise duty on beer and wine in Europe," he said.

Full-year sales of food performed the strongest, rising 4.2 per cent over last year, with bar sales up 1.7 per cent. Mr Hickman said the chain's "differentiation from the rest of the pub market puts the company in a strong position against its main town-centre competitor, Mitchells & Butlers".

The group, which has about 800 pubs, has been on an expansion drive, and has opened 50 new sites during the year, with 12 in the last two weeks. Wetherspoon expects to open a similar number this year as well.

Analysts at Altium Securities said the trading environment "clearly remains challenging", especially as the costs of electricity and food have risen. "Nevertheless, new openings momentum will go some way to offset this," they added.