UPDATE: JD Wetherspoon Returns To Sales Growth In Fourth Quarter

14th Jul 2010 08:34

(Adds comment from the CFO) By Michael Carolan Of DOW JONES NEWSWIRES LONDON (Dow Jones)--U.K. pub group J.D. Wetherspoon PLC (JDW.LN) Wednesday returned to sales growth in the fourth quarter and said it expects a resilient performance next year. The operator of more than 700 managed pubs across the U.K. said sales from pubs open at least a year grew 1% in the 11 weeks to July 11. This marks a turnaround from May when it said it had grown more cautious about the coming year after tax rises resulted in a 0.8% drop in third-quarter sales. Comparable sales for the year to date are now 0.1% higher than the previous year. The company's financial year ends on July 25. The caution in May resulted in a sharp fall in the company's shares. They had enjoyed a strong year up until May but have since fallen back and are now trading at a similar level to a year ago. By 0723 GMT, the shares were down 6 pence, or 1.3%, at 432 pence in a flat London market. "Although our interest charges next year will be higher and the economy has taxation and employment pressures, the company is confident of a resilient performance for the next financial year," the pub group said in a statement. Finance Director Keith Down said in an interview with Dow Jones Newswires that the return to growth was driven by the company's move to open its pubs early for breakfast. Opening at 7am rather than 9am had resulted in extra sales, though the additional labor costs mean it is not earnings enhancing. Down said the soccer world cup had been a largely neutral event for the company. While the company did show matches on screens in its pubs, Down said Wetherspoon was "not overtly football orientated." The company expects its operating margin for the second half of the year be to about 10%, in line with the first six months. The company said it had opened 41 new pubs in the year and closed two. A further six pubs will open before the year end. Including new openings, sales grew 5.8% in the 11 week period and 4.4% in the year to date. "Our sales, profit and cash-flow continue to be resilient and the performance of our recently opened pubs is encouraging," the company said. "In addition, as previously indicated, we continue to believe there are substantial opportunities for us to acquire sites at reasonable prices." Down said the pub opening program was going to plan. Wetherspoon is planning to open 250 pubs over the next five years to reach an estate size of 1,000 pubs. Down said the company would be happy to accelerate the opening program if more sites became available. "If we could we would," he said, "while the economy stays flat opportunities will arise." JD Wetherspoon usually opens pubs on a site-by site basis but Down said the company would be open to acquiring a package of sites if a suitable one became available. He wouldn't comment on whether the company was looking at any of rival pub group Mitchells & Butlers PLC's (MAB.LN) sites but said "any people that are looking to sell, we will have a look." JD Wetherspoon has been one of the strongest performing pub groups in recent years. As a directly managed pub operator with tight control of prices and costs, it has proved relatively resilient in a difficult time for the U.K.'s pubs. -By Michael Carolan, Dow Jones Newswires; 44-20-7842-9278; [email protected] (END) Dow Jones Newswires July 14, 2010 03:34 ET (07:34 GMT)