Despite positive like-for-like sales growth of 2.9 per cent during the first half of the financial year, margins are still under significant pressure at pub chain JD Wetherspoon (JDW). Rather than raise prices and risk alienating customers, Wetherspoon's has coped with rising costs - largely related to increasing staff salaries ahead of the national living wage - by letting margins take the hit. In the first half margins slipped 110 basis points to 6.3 per cent, which would have hit the bottom line even harder had it not been for a one-off property gain worth £3.8m.
Aside from the usual grumblings about VAT, chairman Tim Martin has also weighed in on the upcoming Brexit referendum. The results even included an article by Mr Martin saying the United Kingdom should withdraw from the European Union - his argument resting on democracy and accountability at Westminster, rather than any impact from the vote on the business.
Returning to the matter at hand, like-for-like sales are tracking 3.7 per cent ahead in the six weeks since the period-end. A further increase in staff wages is also due in April, but bosses are hoping for a "reasonable outcome" by the financial year-end.
Analysts at Investec expect pre-tax profit of £70.4m for the year ending July 2016, giving EPS of 42.2p (from £77.8m and 47p in FY2015).
| JD WETHERSPOON (JDW) | ||||
|---|---|---|---|---|
| ORD PRICE: | 696p | MARKET VALUE: | £823m | |
| TOUCH: | 696-699p | 12-MONTH HIGH: | 818p | LOW: 590p |
| DIVIDEND YIELD: | 1.7% | PE RATIO: | 17 | |
| NET ASSET VALUE: | 200p | NET DEBT: | 285% | |
| Half-year to 24 Jan | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 744 | 55.1 | 23.5 | 4.0 |
| 2016 | 790 | 53.9 | 26.6 | 4.0 |
| % change | +6 | -2 | +13 | - |
Ex-div: 28 Apr Payment: 26 May | ||||
