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Morning Briefing for pub, restaurant and food wervice operators

Wed 7th May 2014 - Breaking News - JD Wetherspoon reports 6.2% like-for-likes
JD Wetherspoon reports 6.2% like-for-likes: JD Wetherspoon has reported 6.2% like-for-like sales growth in the 13 weeks to 27 April 2014 and total sales up by 10.9%. In the year to date (39 weeks to 27 April 2014), like-for-like sales increased by 5.6%, and total sales increased by 9.7%. The company stated: “Sales were good through February and March, but like-for-like growth decreased in April – and Easter was below last year. The operating margin, in the 13 weeks to 27 April 2014, was 8.0%, compared with 8.2% in the first half of the current financial year. In the year to date (39 weeks to 27 April 2014), the operating margin was 8.1%. At this stage, we expect the full year margin to be in the region of 8.0 to 8.3%.” The company opened 28 new pubs and disposed of three since the start of the financial year. It added: “We have 17 sites under development and, in line with our last update, intend to open around 45 pubs in the current financial year. It is our present intention to open approximately 30-40 pubs in the following financial year. The company has bought back 1,056,949 shares, at a total cost of £8.5 million, since the start of the financial year. There have been no other significant changes in the company’s overall financial position since the publication of the interim accounts on 14 March 2014.As previously indicated, the biggest dangers to the pub industry are the VAT and business rates disparity between supermarkets and pubs and the continuing imposition of stealth taxes, such as the late-night levy and increased fruit/slot machine taxes. However, the company welcomes the recent reduction in excise duty for beer. In general, we anticipate that taxation and input costs will continue to rise. As a result of the slowdown in sales growth in recent weeks and our strong performance in the final quarter of last year, combined with the slightly unpredictable impact of the World Cup, the company retains an element of caution about the exact outcome for the final quarter, but anticipate a reasonable outcome for the year as a whole. Wetherspoon, in association with a large number of breweries, pub and related companies, has campaigned for some time for VAT equality between pubs and supermarkets. Supermarkets pay no VAT in respect of food sales, allowing them to subsidise their alcoholic drinks prices, to the detriment of pubs. A recent survey by Cardinal Research has demonstrated that almost 100% of pubco tenants support the campaign for VAT equality. In fact, it seems clear that informed workers in the licensed trade are almost entirely united in support of VAT equality and Jacques Borel’s VAT Club, which has been created to campaign for this objective. It is disappointing, therefore, that a small number of pubco directors have not joined the VAT Club and are not actively campaigning for tax equality with supermarkets. The chairman of Wetherspoon, Tim Martin, has recently written an article on this subject which has appeared in various trade publications, including Propel, Hospitality & Catering News, The Publican’s Morning Advertiser and Eat Out.”
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