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(Sharecast News) - JD Wetherspoon posted a slump in annual profits on Friday, hit by mounting costs, but flagged a strong start to the new year.
Posting full-year numbers, the pub chain confirmed revenues had risen 5.2% in the 52 weeks to 26 July, to £2.24bn, or by 4.2% on a like-for-like basis. However, pre-tax profits before separately disclosed items slid 28% to £58.6m following a 5.3% spike in costs, including wages, repairs and business rates. Consensus had been for around £60m.
Including separately disclosed items, such as impairments and property gains, pre-tax profits were 13% lower at £77.7m.
Founder and chair Tim Martin said: "The hospitality industry...has borne the brunt of government-led tax and regulatory costs increases, especially in the last two Budgets. This has resulted in pubs becoming even more expensive that supermarkets, leading to job losses, closures and high street dereliction.
"It is to be hoped that the powers-that-be will refrain from any further increases, since pubs and restaurants pay around 40% of their receipts as taxes of one sort or another."
However, looking to current trading, and Wetherspoons said underlying sales had surged in the nine weeks to 27 September by 8.6%, including a 7.7% uplift in August, on the back of the unusually warm summer weather.
Martin said: "Wetherspoon has made a good start to the financial year, although it is at least partially due to weather, which will inevitably revert to the norm.
"At this early stage, we continue to anticipate profit before tax and separately disclosed items in line with current market expectations."
Consensus is for the 2027 full year is for pre-tax profits before separately disclosed items of £74m.
As at 0930 BST, the FTSE 250 stock was trading up nearly 8% at 874p.
Richard Hunter, head of markets at Interactive Investor, said: "Wetherspoons has been dealt some difficult hands over the years which, for the most part, it has been resolute in turning into profit. The group's value model leaves it continually bumping up against a wall of higher costs, which puts perennial pressure on margins and profits.
"Even so, the dogged determination to fight its corner has won the brand many friends, although from an investment perspective the jury remains out on prospects."
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