Wetherspoon reveals profit blow amid surging costs

Pub group JD Wetherspoon has warned over profits as it revealed a £45 million cost hit in its first half.

The chain, which runs around 800 bars across the UK, said it was being knocked by higher-than-expected costs in the first 25 weeks of its financial year, including rising bills for energy, wages and business rates.

It said profits in the first half are “likely to be lower” year on year, with the annual trading result also set to come in “slightly” below the previous year, if sales continue on the same path.

Shares in the pub giant fell 7% in morning trading on Wednesday.

The alert comes despite a pick up in like-for-like sales growth over the festive quarter, to 6.1% in the 12 weeks to January 18, up from 4.7% in the previous three months.

Over the key Christmas period, comparable sales jumped 8.8% in the three weeks to January 4.

Founder and chairman Sir Tim Martin said: “Costs have been higher than anticipated, with energy, wages, repairs and business rates, for example, increasing by £45 million in the first 25 weeks.

“Profits in the first half are likely to be lower than the comparable period in the previous financial year.

“If the current sales momentum continues, the company currently anticipates a full year trading outcome slightly below that achieved in 2024-25.”

It comes amid hopes in the pub sector of an imminent support package from the Government to help lessen the blow from rising business rates.

Pubs are broadly set to face increases to their business rates payments due to higher property valuations in tax calculation following the autumn budget.

The Labour Government is now expected to announce more financial support measures for the industry following criticism over the upcoming rates increases.

Dan Coatsworth, head of markets at AJ Bell, said: “Value has always been a key part of Wetherspoon’s appeal, and the business has always had a focus on volumes rather than margins.

“While this has been a successful approach over the long term, it does leave the company exposed when costs go up.”

He added: “As a large-scale employer of people on relatively lower wages, Wetherspoon is exposed to increases in the national living wage and employer national insurance contributions.

“Maintenance and energy costs also continue to tick higher.

“While Wetherspoon can probably pass some extra costs to customers, it must walk a tightrope as it looks to keep prices keen enough to keep its clientele coming through the doors.”