Wetherspoons sales slow less than expected in second quarter

Sales slowed and profit margins narrowed at JD Wetherspoon in the second quarter but while the pub group remained cautious its expectations full year results have "slightly improved".

Like-for-like sales in the first 12 weeks of the second quarter grew 3.2% and total sales by 0.7%.

This was down from the 3.5% and 2.3% in the first quarter and so means the 25 weeks of the year to date have produced LFLs sales increase 3.4% and total sales up 1.6%.

Operating margins pre-exceptionals for the half year ending 22 January are now expected to be around 8.0%, 1.7% higher than the same period last year but down from the 8.6% in the first quarter.

For the second half of the year, Wetherspoons expect significantly higher costs, around 4% higher on an annualised basis for wages, £7m for business rates and £2m for the Apprenticeship Levy.

Furthermore, chairman Tim Martin intends to increase the level of capital investment in existing pubs to around £60m from £34m in the previous financial year.

"In view of these additional costs and our expectation that like-for-like sales will be lower in the next six months, the company remains cautious about the second half of the year," Martin said.

"Nevertheless, as a result of modestly better-than-expected year-to-date sales, we currently anticipate a slightly improved trading outcome for the current financial year, compared with our expectations at the last update."

Net debt at the end of the financial year is expected to be around £700m, up by around £50m due in part to the purchase of an increased number of freehold reversions, with the group having opened two of the planned 10-15 new pubs since the start of the financial year and sold 21.