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JD Wetherspoon (JDW.L) has reported an increase in first-half sales and earnings for the period to 26 January and reintroduced its dividend as the British pub chain sounded the alarm on rising staffing costs.
Like-for-like sales were 4.8% higher versus the previous year, while basic earnings per share rose from 20.3p to 21.5p, it announced on Tuesday.
The company also said that in the last seven weeks, to 16 March 2025, like-for-like sales increased by 5%.
Although sales were on the up, the company warned of the impact a hike in national insurance payments will have on 1 April, with an estimated increase in cost of approximately £60m per year.
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“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," said company chairman Tim Martin in an emailed statement.
“The combination of much higher VAT rates for pubs than supermarkets, combined with increased labour costs will weigh heavily on the pub industry," he added.
For its first half, operating profit was down 4.3% to £64.8m. Profit before tax also fell 8.6% to £32.9m.
"The cost of a burger and pint will have to rise to help mitigate this pressure, which hardly encourages more punters through the door," said Charlie Huggins, manager of the Quality Shares Portfolio at Wealth Club.
"In all, aside from the depths of the pandemic, life has probably never been tougher for pub and bar operators. Wetherspoons has scale advantages others lack and a mightily loyal customer base, which really helps. But it is not immune to industry pressures."
The company currently anticipates a reasonable outcome for the financial year, subject to future sales performance.
As for expansion, Wetherspoon (JDW.L) expects to add to its three franchise pubs, adding a further five in the second half of the current financial year – four of these will be at Haven Holiday Parks.
Its stock price fell as much as 4.4% in early trade following the results.
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