Wetherspoon frustrates with slower sales and margin guidance

9th Jul 2014 08:10

- LFL sales up 4.9% in previous 10 weeks- On track to open 45 pubs for full year- "Sales slowed in recent weeks"- Guidance to flat or lower margins in FY 2015Sales have slowed in recent weeks at JD Wetherspoon as England crashed out of the World Cup, but the pubs group is confident of meeting expectations for the full year after solid trading in May and June. Like-for-like (LFL) sales increased 4.9% in the 10 weeks to July 6th, with total sales up 10.3%. "Sales have been slightly weaker during the World Cup," the company revealed, as expected, in a pre-close trading update.It added: "Sales have slowed in recent weeks, [but] the company remains confident of a reasonable outcome in the current financial year".These results mean LFL sales for the 49 weeks of its financial year so far rose 5.4% and total sales were up 9.8%. Wetherspoon said its operating margin was 8.1%, in line with 8.1% year-to-date and meaning the full year should come in around this level. However, management guidance for the next financial year was that operating margin was likely be in a range between flat or falling to 7.7%, subject to sales, new pubs openings and other costs.With eight sites under development, the FTSE 250 company said it was in line to open around 45 pubs in the current financial year, having opened 40 new pubs and closed five so far. It plans to open around 30-40 in the following financial year.Broker Shore Capital was frustrated by the new margin guidance. "We continue to scratch our heads over the margin decline against such strong LFL sales growth noting the continuing investment in the business. However, until we see stability in the margin we retain our 'hold' stance."Shares in JDW were down 22.5p, or 2.96%, to 737.5p at 08:06 on Wednesday.OH