July 10, 2019 / 7:48 AM / 12 days ago

UPDATE 1-J D Wetherspoon comparable sales rise, but sees higher debt

(Adds details, background)

July 10 (Reuters) - British pub operator J D Wetherspoon Plc on Wednesday reported a higher comparable sales for the 10 weeks to July 7 and tries to keep a tight lid on rising costs that plagued the entire sector.

Like-for-like sales increased 6.9% for the 10 weeks and total sales was up 6.6%.

“This (comparable sales rise) is still failing to convert to PBT and margin growth, both of which have fallen in 2019E based on today’s guidance,” peel Hunt analyst said in a note.

The company, which operates 900-odd pubs in Britain and Ireland, has been seeing a surge in costs because of rising wages and property prices.

Initially called Martin’s Free House, it has also been spending to upgrade facilities at its older pubs. The efforts come even as the company faces rising debt levels.

Net debt at the end of the financial year ending July 28 is expected to be about 745 million pounds, the company said, 5 million pounds more than its prior estimate in May.

To keep a check on cost related to rent, it spent 71 million pounds ($88.44 million) on buying the freeholds of pubs of which it was previously the tenant.

Wetherspoon said it expects to incur non-cash losses of about 3 million pounds in the current fiscal year as a result of disposals of underperforming pubs. ($1 = 0.8028 pounds) (Reporting by Sangameswaran S in Bengaluru; Editing by Arun Koyyur)

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