Wetherspoon Q1 margins slip, but pub opening target raised

6th Nov 2013 07:23

Pubs group JD Wetherspoon said it sees a 'reasonable outcome' this financial year despite a dip in margins in the first quarter, as it raised its target for new site openings.Total sales in the 13 weeks to October 27th increased by 7.6% year-on-year, with like-for-like sales rising by 3.7%, a slight improvement on the fourth quarter of the previous financial year. The firm opened eight new pubs during the quarter and now expects to open a total of 40-50 pubs in the current financial year, slightly more than previously estimated due to an increased bank facility and a number of recent acquisitions.The operating margin was 8.3% during the period, down 0.3 percentage points on the year before as a result of increased labour, repairs, markets and central overheads."The margin in the quarter is a possible indicator for this financial year, assuming we achieve reasonable sales growth," it said. Wetherspoon again reiterated its opposition to the VAT disparity between supermarkets and pubs, highlighting that supermarkets pay almost no VAT on food sales while pubs pay 20%, allowing supermarkets to subsidise their drink prices "to the detriment of pubs". The company said that this "does not make economic or social sense".Nevertheless, it assured that in spite of the continued pressure from costs and taxes, "the company remains confident of a reasonable outcome for the current financial year".BC