By Neil Maidment
LONDON Jan 22 British pub chain JD Wetherspoon
posted a strong second-quarter sales rise and said it
would continue investing in its business and new pubs at the
expense of margins.
The firm, which has grown to over 900 pubs on the back of
popular food and drinks deals, will open between 40 and 50 new
pubs in 2013/14, with similar plans for future years and has
been investing in IT, staff and training in preparation.
As a result, the group, which on Wednesday posted a
better-than-expected 6.7 percent rise in second quarter sales,
said its first-half operating margin would fall 20 basis points
to 8.1 percent and would be between 8.1 and 8.3 percent for the
The margin was 8.7 percent in 2012/13.
That led analysts at Numis to cut 2013/14 profit forecasts
by 4 percent to 77.4 million pounds ($127.43 million), below a
consensus of 80.2 million pounds, according to Reuters data.
Shares in the firm however rose 3.5 percent to 817 pence at
0932 GMT, as it impressed investors with a 6.7 percent rise in
sales at pubs open over a year for the 12 weeks to Jan. 19.
That was up from 3.7 percent in the first quarter, and ahead
of analyst forecasts for a 4 percent rise. Total sales including
new pubs rose 10.6 percent.
"The business is moving forward and whilst there are
challenges we see room for positive surprises in the second
half," Peel Hunt analyst Nick Batram said in a note.
Wetherspoon Chairman and founder Tim Martin told Reuters the
firm was focusing on a longer term plan.
"I think I would go with Warren Buffett, one year is more
important than three months, and five years is more important
than one year," he said. "So it doesn't really make too much
difference if you spend a bit more and reduce your profits a
bit, provided it's a move which produces future benefits."
The firm, which will also open its first pubs in Ireland in
2014, said it was focused on growing turnover and profits rather
than margins and will achieve it through opening more new pubs
as well as growing sales of food, teas, coffees and wine.
"My best guess is that 30-50 openings is achievable for the
next decade or so," Martin added.
Wetherspoon also opened its first motorway services pub on
Tuesday off the M40 in Beaconsfield, southeast England, a move
that has been criticised despite the firm expecting
three-quarters of sales to come from food rather than alcohol.
"All our pubs are on roads," Martin said, excluding those at
airport and train stations. "We've got the confidence now that
if we don't do much in the way of bar sales because people are
driving we can still earn a buck."