November 13, 2019 / 7:48 AM / a month ago

UPDATE 1-J D Wetherspoon first-quarter sales rise, sees in-line full year performance

(Adds analyst comments, sales, background)

Nov 13 (Reuters) - Pub operator J D Wetherspoon Plc posted higher first-quarter total sales on Wednesday, as customers spent more money at its nearly 900 pubs across Britain and Ireland.

The company, which was initially called Martin’s Free House, has seen higher demand for pink gin, coffee, real ale, breakfast and beer, even as Britain is witnessing a move away from drinking by millennials.

Wetherspoon, which expects full-year performance in line with its previous expectations, said total sales rose 5.6% for 13 weeks ended Oct. 27.

Stifel analysts said they forecast full-year like-for-like sales growth of 4.5% and pretax profit of 89 million pounds ($113.88 million).

The company, like most pub and restaurant chains, has been battling increased costs due to a mandatory minimum wage hike, higher property prices and power bills. It has also been investing in its more labour-intensive food and coffee businesses.

Britain’s plan to raise the minimum wage to 10.50 pounds an hour was endorsed by an independent review last week that found setting a floor on pay had a negligible effect on job creation.

Companies are now likely to see wage costs rise after next month’s snap national election whatever the outcome, further threatening cost levels at restaurants and pubs.

But the wider British pub sector is brimming with deals, with Greene King bought out by Hong Kong’s CK Asset for 4.6 billion pounds, while Slug and Lettuce pub chain owner Stonegate agreed to buy Ei Group for 1.27 billion pounds.

J D wetherspoon’s like-for-like sales rose 5.3%, which Stifel analysts called well ahead of the sector.

“This is a strong start to the year in our view, ahead of our forecast revenue growth of 4.0% for the full year, but we are mindful of the early stage of the year, challenging market backdrop...and potential changes to national living wage,” Investec said in a note.

$1 = 0.7815 pounds Reporting by Tanishaa Nadkar in Bengaluru; Editing by Rashmi Aich

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