Strong fourth quarter at Wetherspoon as chairman attacks FCA

Like-for-like sales at pub chain JD Wetherspoon rose 5.3% in the 11 weeks to 9 July, its said in its pre-close trading update on Wednesday, with total sales in the period rising 3.6%.

The FTSE 250 company said for the financial year to date - the 50 weeks to 9 July - like-for-like sales were ahead 3.9% and total sales were up 1.9%.

Its board said the full-year operating margin before exceptional items and before a £1.6m gain on property was expected to be between 7.6% and 7.8% for the 53-week period, compared to 6.9% last year.

“Sales have been good in the last 11 weeks, probably helped by unusually good weather,” said chairman Tim Martin.

“As previously stated, the company anticipates that like-for-like sales of about 3 to 4% will be required to maintain profits at this year's levels in our next financial year.”

On the property front, the company opened nine new pubs since the start of the financial year and sold or closed 38.

It said it expected to open one more pub before the financial year end, and it also expected around £24m of exceptional, non-cash losses in this financial year, which were mainly associated with pub disposals and closures.

As it previously announced, the company increased capital expenditure in older pubs, which would be about £65m in the current year.

Areas of expenditure included staff rooms, kitchen and garden upgrades, and IT improvements, and the board said it anticipated expenditure continuing at the same or a slightly higher rate for the next few years.

Also as previously announced, the company bought the freeholds of a number of properties of which it was previously the tenant.

Wetherspoon said it spent £89.5m on 44 of those freeholds in the year to date, and had spent £190.9m on 102 freeholds since 2011.

The company said it remained in a “sound” financial position, with net debt at the end of the financial year was currently expected to be around £715m.

Wetherspoon had bought back 3.4 million shares, at a total cost of £31m, since the start of the financial year, the board confirmed.

In what has become a typical style for the chairman, Tim Martin took the opportunity offered by the trading update to comment on the UK’s departure from the European Union, claiming that as was noe the case for most public companies, shareholders and the media were interested in the firm’s views on the Brexit process.

“In general, it is my view that requests to the government, like the one last week from the FCA, for ‘clarity’ and to ‘hammer out a post-Brexit transitional arrangement this year’ are unrealistic and increase pressure to agree unfavourable terms,” Martin said.

“It also makes the FCA and similar organisations seem rather weak.

“Everyone knows that these sorts of deals aren't within the government's gift - and the City and businesses are supposed to be able to deal with uncertainty.”

JD Wetherspoon was still due to announce its preliminary results for the financial year to 30 September, which the board said would be on 30 July.