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JD Wetherspoon PLC on Friday warned of the increased pressures from rising labour and utility costs as it reported half-year profit below market expectations, but it restored its interim dividend. The 796-strong pub chain said pretax profit spiked 58% to £41.3 million in the 26 weeks to January 26 from £26.1 million a year earlier. Wetherspoon got a £8.5 million boost to profit from ‘separately disclosed items’, compared to a £9.9 million hit a year prior. Included in these items this time around was a £11.1 million boost from the positive movement in the value of interest rate swaps. Last year, it had suffered property losses totalling £15.2 million, hurting its bottom line. Before separately disclosed items, pretax profit for the half-year fell 8.6% to £32.9 million from £36.0 million, missing FactSet consensus of £40.4 million. Operating profit before separately disclosed items fell 4.3% to £64.8 million from £67.7 million with an operating margin of 6.30%, down from 6.83%, reflecting higher labour and utility costs. In response, shares in JD Wetherspoon were 10% lower at 534.75 pence each in London on Friday, the worst performer in the FTSE 250 index. Revenue improved 3.9% to £1.03 billion from £991.0 million. Like-for-like sales rose 4.8% on-year during the 26 weeks with bar sales up 4.3%, food up by 5.4% and slot/fruit machines up by 12%. Looking ahead, Wetherspoon said that so far in the second half of the company’s financial year, the seven weeks that ended March 16, like-for-like sales increased by 5.0%. Chair Tim Martin said the firm ‘currently anticipates a reasonable outcome for the financial year, subject to our future sales performance.’ Wetherspoon’s financial year ends on July 27. But he said a rise in national insurance contributions and pay will add £60 million to its annual costs. This amounts to approximately £1,500 per pub, per week, Martin noted. ‘Since labour costs are around 35% of the pub industry’s sales, compared to around 11% for supermarkets, increases of this nature inevitably have a disproportionate impact on pubs, exacerbating the already-wide price differential for customers between the on and off-trade. The combination of much higher VAT rates for pubs than supermarkets, combined with increased labour costs will weigh heavily on the pub industry,’ he warned. The company said it will provide a trading update on May 7. Wetherspoon declared a 4.0 pence per share half-year dividend. It did not pay an interim dividend a year prior. The company had returned to dividend payments last autumn with a 12.0p final payout for financial 2024, having paid no dividend since before the Covid-19 pandemic. Copyright 2025 Alliance News Ltd. All Rights Reserved.
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