JD Wetherspoon warns over profits

The group saw its shares tumble by 9 per cent after chairman Tim Martin said full-year profits were now set to come in at the lower end of City expectations despite a rise in trade over the festive season.

Wetherspoon - which claims its wage bill makes up around 25 per cent, or 75p, of every pint sold in its pubs - said staff costs were likely to knock around 1.1 per cent off its underlying operating margin for the six months to January 24.

It said this follows moves to hike the starting rates for hourly-paid staff in October 2014 and August 2015, which saw their wages rise by around 13 per cent overall.

The latest profit alert comes after Wetherspoon warned in November that staff costs could see annual profits drop slightly on the previous year.

But Wetherspoon said it saw improved trading in its Christmas quarter, with like-for-like sales up 3.3 per cent in the 12 weeks to January 17.

So far in the first 25 weeks of its half-year, sales in established pubs are up 2.8 per cent.

Mr Martin said: “Like-for-like sales have improved in the second quarter so far.

“However, as indicated in our November trading update, increased labour costs will be an important factor in the outcome for this financial year.

“Our current view is profits for this year are likely to be towards the lower end of analysts’ expectations.”