Sales figures should be strong when pub group JD Wetherspoon (JDW) releases its final results next week. But broker Numis warns that a 5 per cent increase in like-for-like sales and similar growth in the size of the property estate could be offset by squeezed margins, which were down 60 basis points to 8.1 per cent at the 49-week mark.
Growing demand for food has underpinned the growth, with food sales rising ahead of bar sales and machine game income. And approximately 45 pubs have opened during 2014, with only five closures. This will boost growth, but add to net debt. Numis reckons debt could be up as much as £100m to cover the working capital commitments associated with the new openings. About 70 per cent of Wetherspoon's new properties are freehold, which bodes well for margins in the future as rental costs fall.
As far as the current year is concerned, analysts believe the figures should benefit from easier comparatives. Margins could drop by a further 20 basis points, but Numis is still forecasting 15 per cent earnings growth, with 35 new sites due to open.
