- Pubs group warns that higher costs will offset good growth in sales
- Chair Tim Martin cites increases in wages, energy, repairs and business rates
- Trading update does not even mention tax, another bugbear of the FTSE 250 firm
- Net result is profits will be lower in the current financial year than in the year before the pandemic despite much higher revenues
“JD Wetherspoon chair Tim Martin can be forgiven for feeling more than a little frustrated, as good second-quarter sales and a particularly cheery Christmas trading period is not leading to higher profits at the pubs group,” says AJ Bell investment director Russ Mould.
“Costs continue to pile up and as a result first-half profits are expected to come in below those of a year ago. More gallingly still for Mr Martin and his shareholders, full-year profits are now likely to drop as well and Wetherspoons looks set to make around £25 million less profit in the year to July 2026 than it did in the pre-pandemic year to July 2019, even though sales will be higher by some £400 million.
Source: Company accounts, Marketscreener, analysts’ consensus forecasts. Financial year to July. *Excludes exceptional items.
“Competition, not just from rival pub groups but other suppliers of food and drink (including supermarkets) and other leisure options remain a constant challenge for the company, and one that it meets head on with the value, quality and range of choice that Wetherspoons seeks to offer to its hungry and thirsty customers.
“Changes in eating and drinking habits are a further issue the company has to address, and its range of vegan and vegetarian meals and coffee offering show the FTSE 250 firm is adapting here, too.
“But the UK tax regime, and input cost inflation in the form of higher national insurance contributions, utility bills, wages and business rates, leave the company running fast to stand still with regard to its profits.
“The benefits of a tightly and well-managed estate, where the number of pubs is down over the last 10 years but revenue per pub per week is much higher, are not coming through to the bottom line.
Source: Company accounts
“In the fiscal year to July 2019, the one before the pandemic and all of the changes that brought in terms of social interaction and behaviour during and after lockdowns, Wetherspoons generated £1.8 billion in sales in made £102 million in pre-tax profit.
“After today’s trading alert, analysts expect the company to generate revenues of just over £2.2 billion in the year to July 2026. But Mr Martin now says that pre-tax income is likely to come in slightly below the £81 million generated in the year to July 2025.
“Investors were already aware of the myriad challenges that faced the firm, as evidenced by how the share price has never returned to its pre-pandemic highs.
Source: Company accounts
“The slide reflects fresh concerns about how difficult the backdrop really is for the company, as healthy like-for-like sales growth is gobbled up by rising costs.
Source: Company accounts
“Net debt is expected to increase a little in the current fiscal year, to between £740 million and £760 million, compared to £724 million as of July 2025. This is not an uncomfortable level, but a higher interest bill may limit the company’s scope to run a share buyback scheme, after returns of over £100 million to investors via this mechanism in the last two years and 2025’s return to the dividend list after a four-year hiatus.
“The company is responding to all of these issues, as it continues to actively manage its pub estate. In the first six months of the fiscal year, six new openings offset six sales, while JD Wetherspoon opened eight more franchised pubs. That takes the total to 16 and the company has plans for 10 to 15 more franchised openings in the second half of its financial year. This approach lessens the initial amount of money and investment needed to open a site and could also mean that the new sites make a quicker contribution to the bottom line.”
Source: Company accounts
