PUBS chain JD Wetherspoon, which has 62 hostelries in Scotland, has posted a strong second-quarter like-for-like sales rise of 6.7% but shows no sign easing off its expansion drive after indicating it will continue investing in its business and new pubs at the expense of margins.
The chain is due to open pubs in Stirling and Alloa in the next couple of months as part of a drive to add between 40 and 50 more establishments to its current 900-strong roster in the current financial year.
It has indicated that it could continue expanding at this rate for the next decade.
After publication of the figures for Wetherspoon's performance for the 12 weeks to January 19, investors sent its shares up 20p or 2.53% to 809p.
Wetherspoon's, which also intends to open pubs in Fraserburgh, Broughty Ferry and Cambuslang in the near future, said its investment meant its first-half operating margin would fall 20 basis points to 8.1% and would be between 8.1% and 8.3% for the year. The margin was 8.7% in 2012/13.
The firm, which will open its first pubs in Ireland in 2014, said it was focused on growing turnover and profits rather than margins and will achieve it through opening more new pubs as well as growing sales of food, teas, coffees and wine.
Greg Johnson, analyst at Shore Capital wrote in a note for clients: "Given commentary elsewhere, especially concerning London, we expected a robust performance in Q2 and over Christmas.
"However, the performance to-date is significantly ahead of our expectations for both the period and our full-year assumptions of LFL (like-for-like) growth of c3%. However, the margin performance continues to frustrate."
While he retained his profit forecasts, analysts at Numis cut their 2013/14 profit forecasts by 4% to £77.4m, below a consensus of 80.2 million pounds, according to Reuters data.
"The business is moving forward and whilst there are challenges we see room for positive surprises in the second half," Peel Hunt analyst Nick Batram said in a note.
Wetherspoon's opened its first motorway services pub on Tuesday off the M40 in south-east England, but has insisted that it expects the bulk of sales to come from food not alcohol.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereComments are closed on this article