JD Wetherspoon reports 25% fall in pre-tax profit despite revenue increase

J D Wetherspoon plc has reported significant growth in total sales despite seeing a decline in pre-tax profit.

The pub chain’s yearly financial results ending 26 July 2015 revealed that there was a 3.3% increase in like-for-like sales compared to last year, and total sales rose by 7.4% to £1.51bn, (2014: £1.4bn).

Like-for-like bar sales increased by 1.2%, food sales by 7.3%, but slot/fruit machine sales saw a decrease of 2.8%.

Wetherspoons saw further dips in its operating profit before exceptional items, which decreased by 3.8% to £112.5m (2014: £117.0m). The operating margin, before exceptional items, decreased to 7.4%, mainly as a result of a lower gross margin and increases in staff costs, utilities and depreciation.

In addition, pre-tax profit dipped 25% to £58.7m, compared to £78.4m last year.

During this period, total capital investment was £173.3m (2014: £177.5m), with £106.3m invested in new pubs and extensions to existing pubs (2014: £97.7m).

There was expenditure of £44.8m on existing pubs and IT infrastructure (2014: £56.2m) and £21.6m on freehold reversions, where Wetherspoon was already a tenant, and investment properties (2014: £23.6m).

Free cash flow, after capital investment of £44.8m on existing pubs, £6.8m on share purchases for employees and payments of tax and interest, increased by £16.9m to £109.8m (2014: £92.9m). The working capital inflow was £27.3m in the year (2014:£29.6m). Free cash flow per share was 89.8p (2014: 74.1p).

Tim Martin, the Chairman of J D Wetherspoon plc, said: “I am pleased to report a year of progress for the company, with record sales and free cash flow.

“As previously stated on 15 July 2015, a number of factors likely to influence our trading performance this financial year are difficult to quantify at this early stage. Positive aspects include an increase in pub numbers, a better economy and slightly lower interest rates; less favourable aspects include heightened competition from supermarkets and restaurant groups and increased staff, repairs, bar and food costs. We continue to anticipate a trading performance similar to, or slightly above, that achieved in the last financial year.”

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