By Scott Wright

SHARES in JD Wetherspoon lost six per cent of their worth yesterday after the pub giant said sales continue to lag pre-pandemic levels, as chairman Tim Martin renewed his attack on the tax burden faced by the hospitality industry.

Wetherspoon reported that like-for-like sales were 13.1% higher in the 25 weeks to January 23, a period covering the crucial festive period, than the same spell a year earlier. However, sales were 0.7% lower versus the 25 weeks to January 26, 2020, immediately before the pandemic.

Like-for-like sales in the most recent 12 weeks were 17.8% higher than last time but 2% adrift of the pre-pandemic period.

READ MORE: Lager and cider maker C&C issues profit warning after tough Christmas

Mr Martin said Wetherspoon is “cautiously optimistic” about its prospects for the current financial year, despite the company noting that costs in the hospitality industry are “far higher than the pre-pandemic period, especially in respect of labour, food, energy and maintenance”.

But Mr Martin declared: “The biggest threat to the hospitality industry is the vast disparity in tax treatment between pubs and restaurants and supermarkets.

“Supermarkets pay zero VAT (value-added tax) in respect of food sales, whereas pubs and restaurants pay 20%. This tax benefit allows supermarkets to subsidise the selling price of beer.”

READ MORE: Hospitality firms defy challenges to invest in major Scottish city

He added: “Unless the industry campaigns strongly for equality, it will inevitably shrink relative to supermarkets, which will not help high streets, tourism, the economy overall, or the ancient institution of the pub.”

Russ Mould, investment director at stockbroker AJ Bell, said it is “damaging” for Wetherspoon that “trading is still behind where it was pre-pandemic”.

He added: “Wetherspoons has always had a model of prizing volume over margins, so when you consider how fast costs are rising it is not surprising profitability is under pressure.

“Outspoken chair Tim Martin points to the threat posed by supermarkets, with people buying booze in stores and drinking at home – a situation he notes is exacerbated by the disparity in tax treatment.

“Barring some kind of concession by the government, all Wetherspoons can do is redouble its efforts to make its venues appealing places for people to visit, rather than just somewhere to buy relatively inexpensive drinks.”

Wetherspoon said yesterday that it had 35 pubs up for sale, and currently has a trading estate of 844.

The company noted that its net debt stood at £745m at January 23, around £60m lower than the level reported at the same stage in its 2020 financial year, prior to the pandemic.

Shares close the day down 28.71p at 450.29p.