JD Wetherspoon warns that higher costs will squeeze its profit margins
Pubs group JD Wetherspoon saw its shares hiccup after warning that higher costs would squeeze its profit margins.
Unlike the wider industry, Wetherspoon has been faring well and is opening up to 40 new pubs this year.
But the company, which brought in a 5 per cent pay rise for its staff last month, said its energy and utility bills had risen 4 per cent and blamed the Government for ‘stealth taxes’ on gambling machines and VAT.
Shares fall: Rising costs are taking the froth off strong trading at JD Wetherspoon, with the pub chain giant warning that its margin will fall in its current financial year
It said that margins had fallen from 8.3 per cent to 7.7 per cent in the quarter and expects full-year margins to be between 7.2 per cent and 7.8 per cent.
This took the froth off buoyant trading figures that saw sales rise 6.3 per cent in pubs open for more than a year, while overall sales in the three months climbed 11.3 per cent.
Shares, which have risen 12 per cent in the last year, immediately slipped as analysts cut back profit forecasts, falling by as much as 9 per cent before easing to close 34p lower at 798p.
Wetherspoon’s, and particularly founder and chairman Tim Martin, has long campaigned for tax parity between supermarkets and pubs.
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