November 8, 2017 / 8:23 AM / a year ago

UPDATE 1-JD Wetherspoon's Q1 comparable sales growth nearly doubles

(Adds details, analyst and company comments)

Nov 8 (Reuters) - British pubs operator JD Wetherspoon said comparable sales growth nearly doubled in its first quarter from a year earlier, but it remained cautious on outlook for the current year, anticipating an outcome in line with expectations. The owner and operator of more than 900 pubs in Britain and Ireland said like-for-like sales for the 13 weeks to Oct. 29 rose 6.1 percent compared to growth of 3.5 percent a year earlier.

The company said sales continued at a “slightly higher-than-expected level” since it last reported in September.

Total sales rose 4.3 percent in the period compared to 2.3 percent growth year-ago.

In September, Wetherspoon posted an increase of almost 28 percent in annual pretax profit, saying that a typically wet British summer had boosted sales at the pub chain.

Its shares, up by more than 40 percent this year, gained 1.6 percent by 0815 GMT.

The company is battling higher costs related to its purchases made in foreign currencies following the decline in the value of sterling since Brexit vote in June 2016.

“Costs, as many pub and restaurant companies have indicated, have been significantly higher than last year, and further increases are expected in areas including labour, business rates, utilities and sugar taxes,” Chairman Tim Martin said.

Rival pub and restaurant groups including Mitchells & Butlers and Whitbread are battling similar issues.

Wetherspoon, which opened two new pubs since the start of the financial year and sold six, said on Wednesday that it intends to open between 10 and 15 pubs in the current financial year.

Rising inflation and muted wage growth following Britain’s vote to leave the European Union last June is forcing many consumers to tighten their belts.

However, sales have held up at the pub chain with a helping hand from orders via its smartphone application — which allows pub-goers to order from their table rather than going to the bar.

“Management remains cautious on the outlook .. With the consumer environment remaining tough, we believe JD Wetherspoon is likely to continue seeing the benefits of trading down within the sector,” said Karl Burns, an analyst with Investec. (Reporting by Justin George Varghese and Rahul B in Bengaluru; editing by Jason Neely and Keith Weir)

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